Key Factors to Consider When Incorporating Business in the USA

Last Updated at: January 08, 2020
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Key Factors Consider When Incorporating Business in the USA

If you don’t live in the USA, but want to start a business there, you will need to register the company, have it incorporated and then obtain an EIN. While this might seem like a lot of work, with the right help, the process will go by faster than you imagined. Consult with our experts on tax law before taking the plunge, to ensure that you remain protected and don’t lose any money. Here’s a look at what all you need to consider when opening a company in the United States.

  • BANKING

While it is not required to register your company, an Employer Identification Number (EIN) is necessary to open a bank account and to secure a business license. It is also a requirement when it comes to hiring employees, applying for loans and even to pay taxes making it a very integral part of setting up shop in the US.

Approach a business formation specialist to assist you with the process of gaining one from the IRS. The Patriot Act has made it cumbersome for foreigners to open and operate a U.S. bank account. The new laws have made it mandatory for banks to verify the identity of the person opening the account and has also made laws regarding anti-terrorism and anti-money laundering extremely strict. Some methods you can use to set-up an account are:

  1. Get a visitor visa, and then approach an American bank to open an account
  2. Visit an American bank with a local branch in your country for identity verification.
  3. Use third-party services
  • COMPANY STRUCTURE

One has to choose between a Limited Liability Company (LLC) or a corporation (C).

Why opt for C-Corp

  • More scalable and gives you the option to go public.
  • Much easier to raise capital.

Why opt for an LLC

  • Safer option
  • Protects your personal assets
  • Lower taxes
  • Less strict with regards to book-keeping

As a downside, all dividends made by a C corporation are subject to double taxation.

Incorporate Your Business in USA

  • REGISTRATION

U.S. companies are registered at the state level instead of the federal level making it crucial for you to pick the right state to start your business in to maximise profits and gain more benefits. Delaware and Nevada are good to foreign investors, thanks to their low taxation and profitable employment rules, making them a favourite among investors. But in most cases, the best option is to register the business in the state you plan to focus on.

Why Delaware

  1. Does not require a Delaware-based bank account or address
  2. Does not impose an income tax imposed corporations operating outside the state
  3. Fair and consistent corporate laws
  4. Common stockholders do not have the authority to block a merger
  5. Delaware laws offer indemnification from losses due to suing
  • CITIZENSHIP

Citizenship by investment occurs when someone gets granted citizenship by virtue of investing money in that country. Countries like Austria, Cyprus, Russia and the U.S. offer this as a form of encouraging people to invest in their markets. The green card is eligible to those individuals who invest a minimum of $500,000, and such people are given permanent residence, along with their spouses and children under 21 years of age. The US Government allows a maximum of 10,000 visas to be granted per fiscal year to entrepreneurs from foreign nations.

  • WORK PERMIT

While a foreign citizen may work as a director in the US, he or she may not receive a salary unless they have a work permit. While some licenses allow foreigners to work for any employee others, will enable them to work for only a sponsoring employer. While you can own a business without a permit, you will not be allowed to work for your company in the US without a license.

  • PROCESSING TIME

While the time required for incorporating a company varies depending on the state of origin, size of the company and number of employees, it roughly takes about two months to start a shop in the US.   You can check state processing times to gain an idea of how long the wait will be. It takes the Government 30 days to issue an EIN while obtaining a Tax ID requires extra paperwork to be filed resulting in additional delay.

While not necessarily being easy, foreign residents can legally establish and run U.S. companies. All it takes is knowing what to focus on, who to approach and overall having an adept understanding of how the law works in the US. If owning a company in the US is your dream, make sure you are aware of the options available to you and also the all the possible obstacles you might have to face because as they say, one can never be too prepared.

 

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Key Factors to Consider When Incorporating Business in the USA

1429

If you don’t live in the USA, but want to start a business there, you will need to register the company, have it incorporated and then obtain an EIN. While this might seem like a lot of work, with the right help, the process will go by faster than you imagined. Consult with our experts on tax law before taking the plunge, to ensure that you remain protected and don’t lose any money. Here’s a look at what all you need to consider when opening a company in the United States.

  • BANKING

While it is not required to register your company, an Employer Identification Number (EIN) is necessary to open a bank account and to secure a business license. It is also a requirement when it comes to hiring employees, applying for loans and even to pay taxes making it a very integral part of setting up shop in the US.

Approach a business formation specialist to assist you with the process of gaining one from the IRS. The Patriot Act has made it cumbersome for foreigners to open and operate a U.S. bank account. The new laws have made it mandatory for banks to verify the identity of the person opening the account and has also made laws regarding anti-terrorism and anti-money laundering extremely strict. Some methods you can use to set-up an account are:

  1. Get a visitor visa, and then approach an American bank to open an account
  2. Visit an American bank with a local branch in your country for identity verification.
  3. Use third-party services
  • COMPANY STRUCTURE

One has to choose between a Limited Liability Company (LLC) or a corporation (C).

Why opt for C-Corp

  • More scalable and gives you the option to go public.
  • Much easier to raise capital.

Why opt for an LLC

  • Safer option
  • Protects your personal assets
  • Lower taxes
  • Less strict with regards to book-keeping

As a downside, all dividends made by a C corporation are subject to double taxation.

Incorporate Your Business in USA

  • REGISTRATION

U.S. companies are registered at the state level instead of the federal level making it crucial for you to pick the right state to start your business in to maximise profits and gain more benefits. Delaware and Nevada are good to foreign investors, thanks to their low taxation and profitable employment rules, making them a favourite among investors. But in most cases, the best option is to register the business in the state you plan to focus on.

Why Delaware

  1. Does not require a Delaware-based bank account or address
  2. Does not impose an income tax imposed corporations operating outside the state
  3. Fair and consistent corporate laws
  4. Common stockholders do not have the authority to block a merger
  5. Delaware laws offer indemnification from losses due to suing
  • CITIZENSHIP

Citizenship by investment occurs when someone gets granted citizenship by virtue of investing money in that country. Countries like Austria, Cyprus, Russia and the U.S. offer this as a form of encouraging people to invest in their markets. The green card is eligible to those individuals who invest a minimum of $500,000, and such people are given permanent residence, along with their spouses and children under 21 years of age. The US Government allows a maximum of 10,000 visas to be granted per fiscal year to entrepreneurs from foreign nations.

  • WORK PERMIT

While a foreign citizen may work as a director in the US, he or she may not receive a salary unless they have a work permit. While some licenses allow foreigners to work for any employee others, will enable them to work for only a sponsoring employer. While you can own a business without a permit, you will not be allowed to work for your company in the US without a license.

  • PROCESSING TIME

While the time required for incorporating a company varies depending on the state of origin, size of the company and number of employees, it roughly takes about two months to start a shop in the US.   You can check state processing times to gain an idea of how long the wait will be. It takes the Government 30 days to issue an EIN while obtaining a Tax ID requires extra paperwork to be filed resulting in additional delay.

While not necessarily being easy, foreign residents can legally establish and run U.S. companies. All it takes is knowing what to focus on, who to approach and overall having an adept understanding of how the law works in the US. If owning a company in the US is your dream, make sure you are aware of the options available to you and also the all the possible obstacles you might have to face because as they say, one can never be too prepared.

 

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