The ultimate guide to Incorporating a US company as a Non-Resident (Foreigner)

The ultimate guide to Incorporating a US company as a Non-Resident (Foreigner)
The ultimate guide to Incorporating a US company as a Non-Resident (Foreigner)

If you are a non-resident (Foreigner) you can incorporate your own company in the U.S. This article will give you a step-by-step guide to help incorporate your own business in the United States. The guide will also give you information on how to make payments. This article details everything you need to know about forming a company in the USA. Setting up a company in the United States can increase your company’s credibility, gain access to the US market and investors.

As a non-resident looking to set up a US company, you have a few more steps to go through than a US resident. There are more income tax issues for non-residents who want to take their income out of the US. Obtaining an appropriate US work visa and opening a bank account are also concerns that one must look into.

Company or Business incorporation in the United States is administered at the state level, not the federal level. To incorporate a company as an LLC or corporation, formation documents must be filed with the appropriate state agency. U.S. residents will likely need a Federal Tax Identification Number (EIN) to start their business. For foreign businesses, an Individual Taxpayer Identification Number may satisfy the requirement. To obtain an ITIN from the IRS, one has to complete and mail IRS Form W-7 and the associated instruction sheet. The Internal Revenue Service issues these tax processing numbers to individuals who have to pay U.s. taxes but are not eligible for a Social Security number.

Which business type should you choose?
The primary business formation structures are sole proprietorships, partnerships, corporations, and LLCs. With LLCs, there are no limitations on the number of investors who can own interests in the business. A non-U.S. citizen may own shares in a C corporation, but may not retain shares in an S corporation. S corporations allow shareholders to report their portion of business income and expenses on their personal income tax returns and avoid corporate-level taxation.

Note: A foreigner can not form an S Corp in the United States because shareholders must be US citizens or residents

Which state should you choose to incorporate your company?
If your company has an office in Miami, you may wish to incorporate your business in Florida. Delaware or Nevada, the two most business-friendly states, may be preferable. In some cases, the laws of your company’s home country may dictate the choice of entity. consult with an attorney familiar with both U.S. and international law to make an informed decision. Back to Mail Online home.

Do you need a U.S. address to incorporate a business in the United States?
You will need to name a registered agent in your state of incorporation. The registered agent is responsible for important legal and tax documents on behalf of incorporated companies. The legal address of your company has to be your home or office in your country. You cannot use the registered agent address as your legal address. The agent is intended for receipt of official documents only.

How do you determine your resident status?
Resident status is not limited to those having a green card. The resident status also applies to those with a physical presence in the United States. Non-U.S. businesses that do not operate in the U.S., do not owe any federal income taxes. There may be annual state charges or fees for maintaining the LLC or corporation. For details on determining residency and tax obligations, see IRS Publication 519, U.s. Tax Guide for Aliens. For companies that want to form a business here but merely wish to import their products, explore the Commercial Importing Procedures and Requirements.

Will I need a visa to open a US business?
We’ve already established that you don’t need to be a US citizen to own a US business to work in the US.

E-1 Visa: To qualify for an E-1 visa, you must be a citizen of a country with which the US maintains a treaty of commerce and navigation.

E-2 Visa: E-2 visas are valid for a period of five years and can be renewed with two-year extensions as long as you maintain the necessary qualifications. The visa is valid for two years if the spouse of the visa holder is permitted to work, but the children are not.

E-3 Visa: E-3 visa allows you to bring over your relatives, your spouse, and any dependents (children) under 21. The visas allow you to travel in and out of the U.S. to work legally in the business that is your primary “investment vehicle” and bring your spouse and your spouse’s family members over the E-4 and E-5 visas for the first two years. Both visas are for employees who are considered essential for trading and investment and investment.

EB-5 Visa: The EB-5 visa is an expensive investment visa. To get it, you must invest at least $1,800,000 in a US business and create 10 jobs for US workers over 2 years. The visa holders are allowed to apply for US citizenship 90 days prior to their five year visa anniversary.

H-1B Visa: H-1B visa allows US companies to hire and employ workers from specialized fields such as finance, accounting, IT, engineering, medicine, science, architecture. H-1B is a non-immigrant visa that allows US companies to hire and employ workers from specialized fields. Holders of H-1b visas are required to hold a bachelor’s or master’s degree in most cases.

L-1 Visa: L-1 Visa enables foreign companies to transfer managerial, executive, and specialized knowledge employees to a US subsidiary, affiliate, or branch who have been employed at the foreign company for at least one year. The L-2 Visa allows for the transfer of one managerial or executive employee to open and manage the new US entity through the initial start-up phase.

Do foreign businesses that wish to operate in the U.S. carry heavier tax burdens?
A business will be taxed at the same rate as U.S. corporations (35% currently) on all income connected to said business. C-Corporations are subjected to two levels of tax, one at the entity level and another at the stockholder level. A C-Corporation held by a foreign business operating in the U.s. via a branch will be subject to a 30% withholding tax.

What is the process for registering my company?
The process for registration varies slightly from state to state, and is somewhat dependent on whether you’re forming an LLC or a C-Corp. Delaware’s process is a good model for the basic steps and requirements. The fee for filing the certificate of incorporation starts at $89 and increases based on the amount of stock issued or raised capital. The EIN will allow you to hire employees, open a bank account, pay taxes, and obtain whatever licenses you need. You can apply for an EIN online for free with the IRS, but you must have already obtained a Taxpayer Identification Number. If neither of you has, you can still get an EIN- but you’ll need to apply by mail or fax.

USA Company incorporation checklist for foreign entrepreneurs

a. Choose a Company Name
Choosing a name for your business is a crucial step. It can take time to find just the right name. Once you decide on a name, you need to register it so that your company’s identity is protected. Your state’s laws will restrict you from using a name that another business in your state is already using. In some states, you can’t use a name deceptively similar to another business’s name. At worst, the other business could accuse you of trademark infringement and you could find yourself fighting a lawsuit. You can search the U.S. Patent and Trademark Office database for names that have been registered as trademarks.

b. Provide a Registered Agent
State laws require corporations and LLCs to maintain a registered agent in any state that a company does business. The registered agent is responsible for receiving and important legal and tax documents. Failure to properly maintain a registered agent can affect a company negatively by leading to a loss of good-standing status and the ability to legally carry on business. Having a registered agent and registered address within the state of formation is a requirement to form a new company. The agent’s name and office address are included in the articles of incorporation to give public notice of where to send important documents to your corporation.

c. Provide Names and Addresses of the initial board of directors
An “incorporator” is a person or company that is responsible for incorporating a business. Most states require you to provide the name and address of one or more “incorporators” In some states, you have at least the option if not the requirement for corporate officers or directors.

d. Federal Employer Identification Number (Optional)
An Employer Identification Number (EIN) is a unique number assigned to a business so that it can easily be identified by the IRS. A business needs an EIN in order to pay employees and to file business tax returns. Financial institutions such as banks, credit unions, and brokerage houses will not open an account for a corporation without EIN. EINs are unique to the businesses to which they are assigned. The same number set is never reissued to another business, even if the original employer goes out of business. The numbers never expire, and the same number is assigned to the same business every time. Eins are commonly used by employers for the purpose of reporting taxes and are commonly referred to as a Tax Identification Numbers (TIN)

e. Apostille or Certificate of Authentication (Optional)
Company formation documents may need to be certified with an “Apostille” or “Certificate of Authentication” Apostille is an agreement between countries to accept each other’s documents. Only available if your country is a member of the Hague Convention. If not, your home country may require a Certificate of Authentication from either the state where the company is formed or the US State Department (or both) NOT required if you are simply opening a bank account or physical office in the US.

What are my annual requirements for owning a US business?
Most states require an annual report, though some only require filings ever another year. Corporations have the strictest annual requirements, LLCs are less complicated. Some states also hit LLCs and corporations with franchise taxes, excise taxes, and extra fees. If you’ve made important structural changes to your company, you’ll want to report them with your annual report.

What is a Mail Forwarding Service?
Mail forwarding is a quick and confidential way to obtain your personal and business mail. Mail forwarding is used for receiving and forwarding of business and personal correspondence. The company’s Registered Agent Service is used to handle legal and state correspondence.

USA Incorporation – Post Formation Checklist

a. Arrange a US Physical Business Address or Virtual Office
States have different rules and requirements when it comes to having a physical address for your business. Some states allow you to use a mailbox service’s physical address including a P.O. Box. Some may also require that your physical address is different from that of your registered agent. It is also necessary in order to receive service of process should your company be involved in any legal action, because a lawsuit cannot move forward without proper notice.

Virtual offices or virtual business addresses offer you a professional-looking mailing address. Many of these virtual offices offer other services as well, such as an office phone number and receptionist service. These are great options for getting a physical US address if you’re living outside the country.

b. Open a US Bank Account
Banks in the United States will ask you to visit a local branch to open a new bank account. Corporations must be registered in the USA to open a non-resident business bank. Specialist banks and agencies can help you to open an account overseas. Some banks might be able to allow you to open a bank account online, but you need to make an appointment to submit your documents.

Select a bank that has both a presence in your US state of formation and your home country. Most banks will require you have some type of physical address based in the United States. Some banks may accept your Registered Agent address for opening the bank account, but you will need to arrange to have your bank statements, etc. routed through either a mail forwarding service or have them delivered electronically. If you do not intend to have a physical address or have somebody representing the company in the US that can physically walk into a branch, many times you can simply walk into the local branch in your country.

c. Get a US Phone Number
Cloud-based technology like virtual USA phone numbers can help businesses expand their target market across the world. We look at the different options and review requirements for securing virtual USA numbers. There are many service providers available online which provide US phone numbers from your location. You can get these numbers @ $6 with features like call recording, call forwarding, call analytics, and voicemail.

d. Get a merchant account
A merchant account is a relationship with a bank that allows your business to accept credit cards. You can accept payments for your products or services via credit card. The bank debits the funds from the customer and deposits them into your bank account.

Maintaining a USA company for foreign entrepreneurs

  1. File an Annual Report.
    Annual Report is a mandatory yearly filing with the state in which the business was formed. Filling annual reports is NOT mandatory for all the states. States typically send reminders (physical mail, and in some cases email) when the report is due. Most states set the deadline for the anniversary of the business entity’s formation date. Other states (e.g. Florida, Delaware) have a predetermined due date for all annual reports and similar filings. It is important to research the rules pertaining to your particular entity in your specific state in order to make sure your company always files its reports on time.
  2. Maintain a Registered Agent.
    A registered agent is a responsible third-party located in the same state in which a business entity was established. Your state officials need to have a contact person for your business in the state during business hours. If you don’t have a physical location in that state, the requirement is especially urgent that you have a registered agent.
  3. Meet Your Home Country Requirements.
    Determine and comply with your home country reporting, disclosure and filing requirements
  4. Pay US Taxes (if required).
    Your company or individual owners may have to pay taxes on any US-based income. The USA has tax treaties with many countries and you might want to check those details that are applicable in ones individual cases. You should engage the services of a US tax advisor in addition to your home country advisor.

Frequently asked questions about foreign entrepreneurs starting company in USA

  1. How can I register a company in the USA from India?
    Any Indian resident or non-resident to the USA can incorporate a company even without visiting there. There are a lot of online service providers that would be available to help you with this. You would require an expert who can guide you to have proper constitution i.e LLC or INC along with the state you should go for. Even after incorporation, they should able to help to run your company with regular business requirements such as paying taxes, Bookkeeping, fulfilling compliances, bank account opening, Change of directors, Required registration, etc. Rather than relying on online consultants for all these you should choose an expert from India itself as it is always easy to deal face to face rather than communicating virtually.
  2. Can I start a business in the USA while I am on a tourist visa?
    There is no particular limitations to start your business while on a tourist visa. You can incorporate, open bank accounts, hire people, and hire people. But you cannot use your business to sponsor you immigrating there.
  3. Can I start a company in the US without being a citizen of the US?
    Absolutely. You can start a company and serve on the board of directors. The default type of company is Corporation C. Other types are Corporation S and an LLC, which generally wouldn’t be available to you. You do not need to be a citizen or a resident to be a shareholder or an officer of a company registered in any US state.
  4. Is it hard for a non-resident to start a company in the USA?
    If you are a non-resident you can start your own company in the U.S. The biggest factor you must consider before forming your US corporation is your ability to obtain visas to travel to the US from your country to open a bank account for your US corporation. Forming a corporation in the US does not grant you any visas to work in the USA. Choosing your company’s state, forming the corporation, getting an Employee Identification Number (EIN), and having a physical US mailing address are other important factors.
  5. How can I start a tech company in the USA as a non-resident?
    It is easy to register your tech company and open a business in the United States. Most foreign nationals choose C-corporations, as these expand through the unlimited stock. You can access US payment processing accounts like Stripe, Amazon FA, and others. You’ll enter the profitable US market and brand your startup on a global scale.

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