Many businesses, seeking an international presence, go to the United States. As a country built on entrepreneurial success, the US is quite a welcoming place for foreign businesses, however, that is not to say it is easy. In this article, we will be going over all the steps you will need to take before establishing a business in the US.
It takes about 4 minutes to read the article.
Decide On a Company Structure
As a foreign business, the first thing you will need to establish after deciding to start doing business in the US is a company structure. Many larger companies opt to become C corporations. This lets them offer unlimited stocks, in addition to being taxed separately from their owners (which becomes increasingly more important as your business grows).C corporations are generally seen as more favorable by investors. Take note, however, that if you choose this approach, you will be taxed twice, first as the corporation, then as a shareholder.
The advantage corporate shareholders have in this case is that as long as your company does not deal with real estate, you will not need to pay for any capital gains. This sort of taxation shields you from the IRS’s influence, and as many foreign business owners are reluctant to be put on US tax rolls, this is an excellent choice.
It is worth keeping in mind that you can “cut” the double tax using salaries, pension costs and various other expenses a company naturally accrues. In case you do not think a C corporation is for you, do not worry, the US has a variety of other business structures to suit your needs.
Settle in a State
To have a business in the US, you will need to select a state where it is based. You should choose this by seeing which state is the most dominant in your niche, as that usually means it is best to register there. The ideal place for most incorporations to settle is Delaware.
This is because Delaware is quite a low-burden state for most foreign businesses. Its flexible corporate laws allow you to protect yourself and your shareholders much more than a state like, say, California would. Delaware also does not require you to have a physical address or bank account based in the US.
You Will Have to Register
While the requirements you will need to fulfill are different ranging from state to state, broadly, they should be as follows:
- Choose a company name.
- Pick a registered agent who will be tasked with receiving legal documents for your business (this can be you).
- You will need to fill out the certificate of incorporation, which will contain the company name, as well as information about the agent. The fee to fill this out starts at $89, however, be prepared for larger amounts as it increases with company grossing.
- You will have to file a report, as well as pay the franchise tax every year. This works out to about $225 a year. In case you are willing to pay an extra premium, you can do this online.
Get an EIN
An EIN or Employer Identification Number is a 9-digit number assigned to your company for the purposes of identification. You will have to have one in order to do most business activities (such as hiring workers or paying taxes). The IRS will let you apply for free, when you are asked for your Taxpayer Identification Number (TIN) you will answer with “foreign/none.”
If you need any help with transitioning your business to the US, you can contact us here and our team of trained professionals will make it a seamless experience.