Establishing a global marketplace is key to the success of a majority of businesses today. Setting up a company in USA is fairly simple. The main aspects to consider are filing for an Employer Identification Number (EIN) and choosing the type of company. Having a skilled team conversant with technicalities of company formation, immigration, import and export, international tax, supply chain, and real estate helps greatly. Non-US citizens are permitted to be shareholders and directors of US corporations. However, to carry out any business activities as an officer of the corporation from within the US, a visa is mandatory. A US company helps with the opening of online business accounts without hassles. It also supports in marketing your business to domestic US clients. Most crucially, a US company offers your business the chance for a global footprint.
Here are some major points to address before starting on setting up a company in USA:
Decide Your Company Structure
The most important aspect of setting up a company in USA is understanding the kind of business best suited to you and the market indicators pointing towards the same. Choosing the right business is important because the type of business you choose will matter when running everything starting from daily operations to taxes and how much your assets are at risk.
LLC is the most common and recommended type of business for non-residents in the US. An LLC can protect your business and assets from debts and laws. This means in case your business does not take off as envisioned, it will not affect your assets acquired, such as your personal bank account, home, automobile, etc. Add to this the fact that an LLC structure is simpler, and offers a cheaper tax structure. For non-residents, C-Corporation is also considered as the right choice. Corporations are preferable if the company wants to have shares for the company and investors. We can tell corporations are good for investors as they don’t have to worry about tax consequences. In C-Corporations investors can passively hold shares without worrying about taxes until they sell the business in the future.
The one negative side of C-Corporations is they are double-taxed. The Corporation is taxed when a Corporation earns income. The shareholders are taxed on the amount they receive anytime the Corporation issues a dividend. This results in the income being taxed twice.
Choose the State
The location of your company depends on the type of business you choose to start. The most critical decision when you are planning to start a business in the US is choosing the location. The decision has to be taken considering the demographics, supply chain logistics, competitor analysis, a clear understanding of budgets, state statutes, and laws. If you want to run the business of your non-US company in more than one state, you must be registered to do business in other states through Foreign Qualification. An LLC or Corporation running a business in one state but incorporated in another state is considered as a foreign corporation.
Appoint a Registered Agent
To incorporate a company in the US you definitely need a “Registered Agent” who can be an individual or a company that should have a physical address in the state of formation of your business. The Registered Agent must be available during working hours and able to accept and sign legal/official state documents on behalf of the business. The Agent is the link between the person who owns the business in the US and the US Government. The Registered Agent will also help to choose the company name which is available in the state you have chosen to start the business.
If the business is set up as an LLC, the foreign business has direct ownership of the US company. This is facilitated by appointing the foreign company as managing member instead of any individual. In case the business is registered as a corporation, an individual has to be named as the director at the time of registration. One should submit the details of directors, members of the proposed company / LLC along with KYC documents like passport, address proof, ID proof, etc. After successful form filing and documentation, your company/ LLC gets incorporated in one to two days.
Register Your Company
Once you decided where to start your business and incorporate your company, the next step is registering your company. The incorporation process can take up to 4 weeks, depending on the state selected. Registration process and requirements also vary from state to state. However there are many online services that are available to aid with entity formation, and states provide online guidance to help individuals to file paperwork. Once the business is incorporated, it must file a report and pay franchise tax annually.
Obtaining Employer Identification Number
To start a business in the US, every business needs an Employer Identification Number (EIN) or Tax ID number. Having an EIN is essential for LLC or Corporation to conduct business activities legally in the US. An individual needs an EIN to open a US bank account, apply for business permits and license, start a business, hire employees, and file taxes. One can apply for EIN for free directly with the IRS. There are also a number of online services that offer support with getting the EIN. Obtaining an EIN will take a minimum of 30 days for non-US citizens.
Determine Your Tax Responsibilities and File Taxes
It is imperative to consult with an accountant to understand the tax laws, ensure taxes are filed on time, and set up payroll if needed. An accountant can reduce tax burdens and maximize the deduction.
Open a US Bank Account
A business account must be open before you start spending and accepting money for your business needs. A business bank account helps you be legally compliant and protected. A merchant service account allows you to accept credit and debit card transactions from customers. An individual can open a bank account after he/she receives EIN.
The individual planning for setting up a company in USA must consult a business lawyer to ensure you are compliant with state, federal, and county rules and regulations.