How to Set Up a Foreign-owned Company in the USA?

Anyone who wants to set up a notable foreign owned company right in the USA can read this blog!

The United States, with its thriving economy and the unwavering support of the federal government through aid and trade agreements, has evolved into a haven for international investors. The expanding middle-income demographic and shifting consumer perspectives further enhances its appeal, encouraging foreign nationals to establish and register enterprises within the nation. In our upcoming blog, “Navigating the Path: How to Set Up a Foreign-Owned Company in USA,” we delve into the detailed process, regulatory nuances, and strategic considerations for international investors looking to capitalize on the vibrant economic landscape of the United States. Stay tuned to make your mark in the land of opportunities.

Key Considerations in Choosing the Right Business Structure for International Investors in the USA

Establishing and operating a business in the United States involves navigating through crucial laws, notably the Law on Investment and the Law on Enterprise. International investors face choices among four distinct business structures, each tailored to specific market entry strategies, operational scopes, and various considerations.

1. Limited Liability Company (LLC):

   The most common and favorable choice for small to medium-sized international investors is the Limited Liability Company (LLC). This structure allows for flexibility, starting with as few as one member and expanding up to 50. Investor responsibility in an FDI LLC is directly proportional to the capital provided. The appeal lies not only in reduced paperwork but also in increased transparency, streamlined processes, and a quick startup within 45 days.

2. Joint-Stock Corporation (JSC):

   For larger enterprises, the Joint-Stock Corporation (JSC) is a suitable option, with no limit on the total number of owners. Establishing a JSC requires at least three shareholders. Shareholder shares can be traded even in the event of a shareholder’s death, ensuring continuity. As the firm grows, a JSC provides the possibility of being listed on a public stock market.

3. Representative Office:

   When expanding an existing firm into the U.S. market, setting up a Representative Office allows for market research and presence building. While it cannot earn income or operate as a full-fledged business, a Representative Office offers benefits such as participation in events, promotional activities, recruiting, and TRC sponsorships.

4. Subsidiary Office:

   After testing the U.S. business waters, the next step is often establishing a Branch Office. Operating under the parent firm overseas, a Branch Office eliminates the need for a distinct legal entity. Integration into the global brand network allows for profit generation across various operations. However, setting up a Branch requires collaboration with a Legal Representative.

Choosing the appropriate business structure involves careful consideration of factors such as business size, operational goals, and legal requirements. Each structure offers distinct advantages and caters to different unique needs of international investors seeking opportunities in the dynamic U.S. business landscape.

Procedure for Establishing a Foreign Corporation in the United States

Setting up a foreign corporation in the United States involves a distinct process for each of the four legal entities, with the overall timeline ranging from one to three months. International investors are advised to meticulously follow the  stages outlined below to ensure seamless compliance with the U.S. registration process for foreign companies.

1. Submission of Documentation:

   Investors should initiate the process by providing comprehensive documentation about their company and key individuals involved. This forms the foundational step in the registration procedure.

2. Legal Representation and Office Address Registration:

   Finding a legal representative is crucial, and ensuring the registration of your office address is a prerequisite. Legal representation adds a layer of compliance and expertise to the registration process.

3. Investment Registration Certificate (IRC):

   Obtain an Investment Registration Certificate (IRC) from the Department of Planning and Investment. This certificate serves as formal acknowledgment and approval of your foreign investment activities within the United States.

4. Enterprise Registration Certificate (ERC):

   Secure the Enterprise Registration Certificate (ERC) to formalize and authorize your business operations in the U.S. This certificate validates your company’s legal status within the jurisdiction.

5. Corporate Seal Creation:

   Engrave an authentic corporate seal. This seal holds significance as it is required for the authorization of any issued document, adding a formal and official touch to your business transactions.

6. Bank Account Establishment:

   Create a dedicated bank account specifically for your investing funds. This step is integral to financial management and ensures proper segregation of business and personal finances.

7. Tax Registration and Electronic Signature:

   Register for taxes and acquire an electronic signature before submitting the required forms, especially if engaging in e-invoicing. Compliance with tax regulations and electronic documentation is critical for business operations.

8. Additional Business Licenses:

   Depending on the industry, secure any additional business licenses required for your specific business activities. Different industries may have specific licensing requirements, and compliance is essential.

By meticulously following these stages, international investors can navigate the procedural intricacies of establishing a foreign corporation in the United States. 

Required documents to set up a foreign-owned company in the USA.

Setting up a foreign-owned company in the United States involves a comprehensive documentation process, with additional paperwork based on the type of company being established. To initiate the entry into the U.S., obtaining an Investment Registration Certificate (IRC) is a prerequisite, as mentioned earlier. The following essential documents are required for the subsequent step of launching an official business and obtaining an Enterprise Registration Certificate (ERC):

1. Application for Enterprise Registration:

   – Includes vital details such as the enterprise’s name, registered office address, business line, charter capital of owners, types of shares, number of employees, specific information about partners or representatives, and tax registration credentials.

2. List of Board Members:

   – A comprehensive list detailing the members of the board overseeing the company’s operations.

3. Constitution and Articles of Association:

   – Documents outlining the organizational structure, internal regulations, and governing principles of the company.

4. Personal Identification Documents:

   – Copies of each member’s passport, identity card, or any other valid personal identification document.

5. Copy of the IRC:

   – Following the requirements outlined in the Law of Investment, a copy of the Investment Registration Certificate must be submitted.

Conclusion

Creating a company in the United States involves going through several steps, each of which is time-consuming and highly formal. Having specialists on your side skilled in company setup, such as those found at Vakilsearch, can help you save a lot of time and simplify the process of registering your business.

Other Related Topics:

• Benefits of Incorporating a Company in the USA
• Who Must Form an LLC or Corporation in the United States?