Incorporation of a Business in USA - How to start a Company is the USA?
Businesses that are seeking expansion or has a foreign client base in the USA have a great opportunity to expand their business by opening a business in the USA that can enjoy reap of many benefits of a global venture.
As the USA is dominant as the world’s superpower with an economy that is fourteen times larger than India, it gives one the most accommodating turfs for Indian businesses to easily flourish and due to this incorporating company in the USA becomes easier.
In USA it is allowed to establish a business by a foreign national.
In order to register a Business in USA by a foreigner you need first to decide the type of business in which you are going to operate over there.
In the USA there is mainly three forms of business:
A. Corporation
In a U.S. corporation type of entity, the shareholders are the owners of the said corporation. The directors are elected by the Corporation's governing shareholders and are responsible for setting objectives and policies. Those directors are called officers who are elected by people. It is only the appointed officers who are responsible for signing the company contracts. There are two types of corporation exist in the USA:
i. S Corp
​The type of corporate entity (S corporation) that comes with a special advantage: it has limited liability, & without the "double taxation" of profits which gets transferred to shareholders. The S corporation was the best vehicle to shield the owners while avoiding double taxation prior to the introduction of the LLC.The "S corporation benefit" enables a company owner to use as deductions the business losses – such as those incurred during the start-up process – on their personal returns. Along with the FICA (Federal Insurance Contributions Act) levy, S corporations can also provide savings for their owners on self-employment or social security/medicare taxes.
ii. C Corp
The most growing form of company is C Corporations. They offer more flexibility in relation to the number of owners (shareholders) they can have and who can be an owner than the S corporations. Instead of a pronounced ability to subtract payroll benefits, developing corporations often favor C corporations.
B. LLC
This ensures that members of the corporation are only responsible for the amount of what they have invested in the corporation, personal assets such as bank accounts and real estate are protected- but illegal activity leaves an individual or business vulnerable to legal action.
C. Partnership
It is an association of two or more people (persons being people, corporations, other associations, LLCs, trusts, or others) to carry on, as co-owners, a profitable business. Such entities are responsible for the business, including all liabilities and any loss or profit.
The persons intending to enter into a partnership make a profit and loss-sharing arrangement. The partnership is required to file an information return to the government to report what the partnership's gains and expenses were and how they have been distributed to the partners.
There are three forms of partnership in practice in the USA:
i. General Partnership
ii. Limited liability partnership
iii. Joint Venture
Among all form of business “corporation” and “LLC” is the most common practice in the USA remotely.
Benefits of getting a Business registered in the USA
A. Tax Benefits:
Although the companies' primary characteristics are similar from state to state, the applicable tax rate is not the same. Some states have tax rates that are as high as 10%. On the other hand, Nevada has no franchise tax and no state income tax. However, income tax considerations generally may not apply to an entity not taxed at the business level, such as an LLC or S Corporation.
âž² A US Based Company can accept credit cards (online and offline)
âž² Nil tax on US and/or internationally-sourced income (subject to certain rules stated below).
âž² Nil tax on exported products / services by a Company registered in the USA.
B. Cost Consideration
Although retaining an attorney is not required to incorporate your business, the complexities of the process make it advisable to seek legal counsel. Subsequently, if you are considering incorporating out of side the state, working with licensed legal counsel and practicing in the incorporation state can be an extra expense if you already get legal advice in your home state.
C. Jurisdictional Consideration
If a company that has its headquarters in one state is incorporated elsewhere, it would be subject to the jurisdiction and process operation in the international incorporation state. This could prove inconvenient for a variety of reasons.
D. Attracts investors
Many investors and banks have clear expectations for businesses in the USA. If you're looking for venture capital or going public, then USA incorporation might give you an advantage.
E. Business Expansion
Incorporating business in the USA will lead to an expansion of the business. The expansion means an increase in customer base, serving in one of the biggest economies of the world.
F. Bank Account: A USA based Company can open a U.S Government insured business bank account for accepting payments in USD.
G. Other Benefits:
âž² A US based company can separate its expenses and liabilities for international divisions.
âž² Incorporating a Company in the USA ensures increased visibility and credibility in the U.S. and North American markets.
âž² Access to the capital markets, venture capital, angel investors and public markets in the USA.
âž² Preferential offers on new technologies and products based out of the USA.
âž² A USA based Company may bid on / tender for government projects (e.g. www.sam.gov - https://www.usa.gov/become-government-contractor)
âž² USA based Company has access to the schemes, loans and grants offered by the US Government (e.g. https://www.sba.gov/funding-programs/loans)
âž² Having a company in the USA entails easier to get a visa to work in the US (though acceptance is NOT guaranteed!).
âž² Higher degree of Privacy as the Delaware Government does not show a list of shareholders anywhere (It is not Public information!).
USA Remote Business Incorporation Package
âž² Name Availability Check
âž² Drafting of Operating Agreement for USA LLC
âž² Filing of Certificate of Formation
âž² Incorporation within 30 days
âž² Name check and approval
âž² Drafting and filing of an article of Organisation
âž² Registered agent service (as per requirement)
âž² Certificate of association issuance
âž² Issuance of (EIN) Federal employer identification number (as per requirement)
âž² Remotely opening of Bank account opening in the USA with the following features:
- Open Bank Account Remotely
- Online Banking
- Zero Balance Account
- Zero Opening Fees​
âž² Application to Open Merchant Credit Card Processing Account (Applicant needs to have a website for this)
âž² Listing in the International Trade Directory for your US business for 5 years
Brading Services
âž² Mailing Services
Process for USA Business Incorporation
The minimum requirement for incorporation
Minimum 2 directors or partners must be needed to incorporate the business.
Step1. Chose the type of Business
Corporations and LLC which is the only option for not US citizen shareholders, generally not US citizens go for this type of form of business in the USA. After selecting type to choose you're in which you won't incorporate. Next step is to
Step2. Choose a company name
We will guide you while choosing the name and will assure you that the chosen name is available in your choose state of the USA.
Step3. Provide a Registered Agent
Registered Agent is a person or company which has existed in the state of incorporation, and will be available during business hours and will accept and sign the legal, official documents for the company. If you don’t have the Registered Agent then we’ll provide that to you at a reasonable fee.
Step4. Provide Address and Name of people/companies who will be the part of the proposed company
Id and address proof of involved members
- Passport of member/director
- One local id proof of foreign director
Step5. Provide US business address and proof of address
- Address detail along with the address proof was corporation is going to be established in the USA’s state
Step6. Apply for Incorporation in the required form:
File the application for incorporation and after granting of application United state internal revenue services (IRS) will issue Federal Employer Identification Number (FEIN) commonly known as “EIN” to the proposed corporation.
Incorporate LLC or C-Corp along with bank account in USA without visting the USA
Types Of Business suitable for Foreigners
Following are the forms of business preferable for remotely incorporating and operating your business in the USA:
C-Corp (Subject to double taxation - both taxed in the USA and when it distributes profits to it's shareholders)
LLC (Not subject to double taxation - also if wholly foreign owned and owned by a single member (a company or a person) then it's considered a 'disregarded entity' by the IRS (US Tax office) and not subject to tax itself.
Timelines for USA Incorproation
Name availability check: 1 day
Certificate of Formation Filing: 7-14 working days approval by Delaware Government
EIN Number Registration: 7-14 days from IRS
Bank Account Opening: 7 working days (typically)
Credit Card Processing Account Opening: 7 working days (typically) - It is mandatory to have a website prior to applying for Credit Card Processing to avoid rejection of the application