27 Mar
You can manage an LLC from another country, but it may not be allowed in the United States without a valid work visa. Non-citizens are allowed to be a shareholder and/or director of a company within the US but to be an officer and perform any duties in the country, you would generally need a visa. If you plan to open a small business in the United States, you do not need citizenship or residency in order to open it either.
Having a company registered in the USA allows you to do a number of things including:
- Open a United States bank account so you can sell to domestic clients
- Gain access to a new market that can enhance the reputation of your business, both in your home country and in the US
- Open online accounts with businesses like Amazon FA
There are many situations where you don’t need to set up a company in USA (if you’re a sole proprietor, for example). However, if you don’t register your company, you will forego personal liability protection, legal benefits, and tax benefits.
How to Register a Company in USA?
Although specific elements may depend on your situation, these are the general steps to take when you want to register a US company:
- Decide what type of business organization is right for you.
- Decide in which state you will form your LLC (Limited Liability Company).
- Find a local registered agent.
- If applicable, register your LLC or S-corporation.
- Apply for an EIN (Employer Identification Number).
- If necessary, get a US mailing address.
- Open a bank account in the US.
- Open a merchant account, so you can accept payments from customers.
- Purchase business insurance.
- Get a local US phone number for your new business.
- Research what your tax liability is going to be.
- Be sure you are keeping your business and personal accounts separate.
- Pay annual fees and any other required fees.
- Make sure you’re in compliance with any city, county, state, and federal requirements.
- Consult a US business lawyer licensed to practice in the state where your business is located in the US.
Registering with State Agencies vs. Registering with Federal Agencies
Most small businesses don’t have to register with federal agencies, but some choose to for trademark protection or tax-exempt status. To trademark your business name, you should file with the US Patent and Trademark Office. To apply for tax-exempt status, you should register with the IRS. And if you want to become an S Corp, file form 2553 with the IRS.
Businesses such as LLCs, corporations, partnerships, and nonprofit corporations usually have to register with the state where they conduct business activities. This applies if the business has a physical presence, frequent in-person meetings, a significant portion of revenue, or employees in the state.
The registration process varies by state, with some allowing online registration and others requiring paper filings in-person or by mail. The registration is typically done with the Secretary of State’s office, a Business Bureau, or a Business Agency.
If a business such as an LLC, corporation, partnership, or nonprofit corporation operates in multiple states, it may need to form in one state and file for foreign qualification in other states where it conducts business activities. The state of formation will view the business as domestic, while other states will view it as foreign.
Foreign qualification involves filing a Certificate of Authority and possibly a Certificate of Good Standing with the state, and paying taxes and annual report fees in both the state of formation and foreign states. The requirements and fees for foreign qualification vary by state and should be verified with state offices.
LLC vs. S-Corp: An Overview
A limited liability company, often referred to as LLC, is a business entity ideal for business owners who are looking for more protection from personal liability. LLC is the least complicated and restrictive type of business structure to establish and operate, as you can act as your own registered agent to complete the operating agreement. This particular business structure also guarantees no double taxation.
An S Corporation is a tax classification, which lets the International Revenue Service (the IRS) know that your business will use a partnership taxation system. Launching a corporation is more complicated than launching an LLC, as you will need to register as a C-corp first, and then adhere to more specific guidelines to be eligible to switch to an S-corporation. This particular business structure provides limited liability protection but allows any corporation with 100 shareholders or less to be taxed as a partnership.
What Is a C-Corp?
A C Corporation (C- Corp) is a legal entity that is separate and distinct from its owners. It is the most common type of corporation recognized by the federal government. A C-Corp is formed when the articles of incorporation are filed with the state, and the IRS issues the company an employer identification number (EIN).
The main difference between a C-Corp and an S-Corp is that C-Corps have to pay corporate taxes while S-Corps do not. C-Corps also have more flexibility regarding ownership structure, capitalization, and allocation of profits and losses. Additionally, C-Corps can issue equity (e.g., stocks) to raise capital, while S-Corps are not.
How to Apply for an EIN?
An Employer Identification Number (EIN) is a 9-digit sequence that helps identify your business for tax purposes. An EIN is required before registering a company in the USA (whether an LLC or a corporation). The IRS provides a free registration service for all applicants and can be completed online.
Should I Open a Separate Business Bank Account?
It is highly recommended to have separate bank accounts for personal use and your business. Sometimes, this can even be a state requirement. Most of the time, in the USA, a business bank account is needed when you register a company, depending on what type of company you want.
As a business owner, having separate bank accounts to track financial transactions is one of the most essential parts of building a sustainable business, especially for small businesses. This information helps document the financial health of your company and aid in future business decisions in our business’ best interest. Having separate bank accounts also allows you to pay less in taxes.
How Long Does It Take to Register a Company in the USA?
Companies in the USA need to register with the Secretary of State office of the business location. After submitting your registration requirements, the government will process the document and review all the information before approving. This process may vary in time, depending on the state.
In most states in the USA, it can take 4 to 6 weeks for the Secretary of State to approve an application for an LLC or S-corporation, sometimes longer. Rush processing is available in certain states, such as New York. If your business plan is time-dependent, it is advisable to pay the extra fee as this service cuts the processing time to 2 – 3 business days. This fee can vary between states, so inquire about it where you want to register your company.
Where to Base Your Business in the USA?
Choosing your company’s location is one of the most important decisions you will make, so consider the following:
- Demographics
- Understand your local competition
- Find your supply chain
- Compare state laws and tax regulations
- Ensure you stay on budget
Your decision should meet all your business objectives for your company in the most cost-effective manner (without sacrificing quality.)
For example, big cities in the USA can bring more business to your company, but there is more competition. Each business is different, so you have to decide which factors weigh more for your business. Is it the location? Transportation? Accessibility to skilled labor?
Can Non-Residents Own an LLC in the USA?
The simple answer is yes. You do not have to be a US resident to own an LLC in the United States. The business structure of an LLC allows anyone to apply regardless of their citizenship status. However, registering a business as a non-resident involves a more tedious process than if you were a resident.
Other business structures, such as an S corporation, do not allow non-residents to own a company within the USA.
Can a Foreign Business Own the US Company?
If you opt to set up an LLC, then yes, your foreign business can own the US company. This is done by appointing your foreign company as the managing member instead of an individual person.
If you decide on a corporation, you must name a director, which must be an individual, at the time of registration. Directors are not necessarily company owners. Shareholders own corporations, and in that regard, your foreign business can be the 100 percent owner of a corporation in the US.
If you are interested in tax benefits, like pass-through profit distributions, a foreign citizen should consider an LLC. With a regular C corporation, the business is subject to double taxation. And, S corporations are off limits for non-citizens as they are not allowed to own any shares. This is why many foreign businesses opt to set up LLCs.
Can a Foreign Resident Work in the US If They Own an LLC or Corporation?
Foreign citizens cannot receive a salary or compensation for services provided in the United States, unless they obtain work permits issued in the country. Some work permits will allow a foreign citizen to work for a sponsoring employer only. These will not allow you to work for a different and new company that was formed by a foreign citizen. That would require a separate permit.
How Long Does Incorporation Take?
Processing times will vary between states based on their work backlog. Foreign citizens have to wait for at least 30 days to obtain an EIN in most cases. When you need to obtain a Tax ID, and the directors or owners are non-citizens, it must be filed with a special IRS unit.
If you need help registering a company in the United States, FlutuxBusiness simplifies the process of registering a company in the United States by eliminating the need for lengthy paperwork, legal intricacies, and multiple fees. Our services encompass company formation, business bank account setup, tax filing, accounting, compliance, and more, all backed by Stripe, to make starting a new business easier than ever.
Register a Company in USA: FAQs
How to open a company
If you want to open a company, you will first have to decide which type of business you want: an LLC (Limited Liability Company), an S-Corp, or a C-Corp. Once decided, you will have to go through a series of steps, including setting up a bank account for your business, getting an EIN, and getting a US mailing address and phone number.
How to setup a company in
To set up a company in the USA, first determine if you want an LLC, an S-Corp, or a C-corp. Then, determine in which state you want to open your business, register it, get an EIN, and establish all your business details: mailing address, phone number, and so on.
