Forming a company in the United States as a non-resident foreigner can provide many benefits, but also involves navigating complex regulations. Having a US bank account makes the process smoother, as it allows you to receive funds and make payments for your new business. Here is an overview of how non-residents can form a company in the US along with a bank account.
Choosing a Business Structure
The first step is deciding on the right business structure for your needs. The most common options for foreign owners are a Corporation (C corp) or a Limited Liability Company (LLC). C corps require more formalities but limit personal liability, while LLCs provide more flexibility but fewer liability protections. If you expect outside investment, a C corp may be preferable. Consult with an attorney to pick the best structure.
Registering Your Company
To formally create your company, you must register it with the state where you want to incorporate. Filing the Articles of Incorporation (for a C corp) or the Articles of Organization (for an LLC) establishes the business as a legal entity. The articles of incorporation must include key details like the business name, address, purpose, and ownership structure. Most states allow you to submit the registration online for a fee of $100-200 USD.
Obtaining an EIN
You will also need to obtain a US Federal Employer Identification Number (EIN) for your company, which serves like a social security number. As a foreign owner, you can apply online through the IRS website or fill out Form SS-4. The EIN is free and only takes a few minutes to acquire. This ID number will be important for opening a bank account, applying for business licenses, and filing taxes.
Setting Up a Business Bank Account
A key step for non-residents forming a US company is establishing a business bank account. This provides a way to receive payments from US customers and pay any expenses. With an EIN, you can open an account online with banks like HSBC, Citibank, and Wells Fargo. However, you may need to visit a branch in person to present identification documents as a foreigner.
Choosing the right bank that offers international services and multi-currency accounts is important. You can open a US dollar account to keep funds within the US. But having the flexibility to hold other currencies can be useful for transferring funds abroad.
Obtaining Licenses and Permits
Depending on your industry, you may need to apply for specific business licenses and permits. For example, transportation companies need DOT numbers, food businesses need health permits, and financial firms need securities licenses. Research what licenses are required for your field of work in the state where you register your business. Allow plenty of time to complete all applications.
If you plan to hire US employees, be aware this triggers additional requirements. You must obtain an Employer Identification Number (EIN) from the IRS even if you have no plans to withhold taxes. As the employer, you are responsible for withholding federal income tax, Social Security, and Medicare from employee wages. You must also obtain worker’s compensation insurance and meet state unemployment insurance requirements. Consider hiring a payroll processing service to handle these responsibilities.
One major consideration for foreign owners of US companies is navigating business taxes. Even if you reside abroad, your company’s US revenue is subject to federal corporate income tax. You must file an annual US tax return regardless of where your business is based. Most states will also require filing state corporate tax returns as well.
You may qualify for reduced tax rates or exemptions through a tax treaty between the US and your home country. Consulting a cross-border tax specialist can help you take advantage of available credits, deductions, and incentives. Keep detailed records to document your tax status.
Maintaining compliance with various legal obligations is key for non-resident owners of US companies. In addition to taxes, you must file the required annual reports and statements of information with the state where your business is registered. Keeping up with regulatory, immigration, and employment regulations is also essential to avoid potential penalties. Consider hiring a registered agent to handle compliance filings on your behalf.
Forming a company in the US as a foreign investor involves navigating complex regulations but can provide great opportunities. Having a US bank account makes the process much simpler for receiving funds and paying expenses. Working with advisors like attorneys, bankers, tax professionals, and registered agents can help you successfully set up your US business while ensuring full legal compliance. With the right guidance, expanding to the US market through a new company entity is an achievable goal for non-resident entrepreneurs.