Company Registration in USA

Company Registration in USA

Expanding the business globally can be a dream for any entrepreneur, but do you know the complex procedure and formalities that one has to endure before a company is registered anywhere in the world. This stands true for registering your company in the United States of America as well. We at Enterslice are your one stop service provider to secure company registration in USA.

Package inclusions:
  • Drafting Articles of association and memorandum of associations.
  • Opening a bank account in the USA
  • Registered Agent Service
  • Opening a Merchant account (for credit card payments)
  • Obtaining FEIN/EIN after incorporation
  • Drafting of required documents
  • Preparation of forms to be filed
  • Online filing of Incorporation application
  • Physical submission of application with department
  • Hold the organizational meeting, appointing the officers and directors, issuing shares to the shareholders and taking such other actions as necessary
  • End to end assistance from deciding on the name of the organisation to incorporation.
Company Registration in USA

Overview of Company Registration in USA

Registering your company in the United States of America can be a great way of expanding your business and you don’t necessarily have to be a US citizen in order to start a Company there. Any foreign national can register or set up a company in USA either as an LLC (Limited Liability Company) or Incorporation (Inc) by following the due procedure. Today entrepreneurs seeking to take their businesses to a global level are eager to set up a company in the United States of America. However, it may not be as simple as one may think. Given the multi-dimensional nature of the registration process, one needs to be aware of the registration process and other related requirements.

Reasons to register your company in the United States of America

United States of America (USA), commonly known as 'States', is one of the most powerful countries in the world, situated in the northern hemisphere in the continent of North America. It is one of the largest economies in the world. A conglomerate of 50 different states coming together as a democracy to form one of the largest federations in the world. Being the global hub of the digital revolution, every big Corporation wants to register its business in the States. This gold rush is due to the corporate-friendly schemes and large consumer markets spread across 50 states. The federal structure of US politics also helps develop corporate-centric ideologies and gives an independent feel to every State of this great country.

Having said that, entrepreneurs wish to set a company in USA prominently because of the following reasons:

  • Distinguished International Reputation

Registering your Company in USA can help you to gain international reputation in your business. USA being one of the most popular country, can provide your business due recognition, and people would love to partner with you.

  • Business friendly laws and regulations

USA is one of the few countries across the globe that has business friendly laws and regulations. Companies registered there enjoy various incentives and benefits in terms of lower tax rates etc., hence more and more entrepreneurs are attracted to it. Its laws and regulations promote ease of doing business.

  • Easier access to capital

When a business entity registers in the USA as a corporation then such entity can issue shares and raise equity capital which can help the entity financially in the longer run. Further, it is relatively easier to apply and obtain a bank loan for your company. Registered businesses can access different sources of capital hence banks know that these businesses can easily repay their debt from these different sources.

  • Lower corporate tax

One of the most common and fundamental reasons to register your company in the USA is the fact that corporate taxes in this country are lower. A number of the states in the USA offer attractive financial incentives to investors who desire to register a company there. These incentives range from lower corporate tax structure to various other tax related incentives. 

  • Technologically advanced country

USA is known to be one of the most technically advanced and tech friendly nations. Investors who have set up their companies there already have access to some of the most advanced and cutting edge technologies. Having such technologies at their disposal can boost business productivity.

Company Registration in USA: Essential Checklist to consider

Before you go ahead with Company Registration in the United States of America, there are a few points that you must ponder. We have specified a few questions below that must be considered before a business can be launched:

Q- What Kind of a company is being set up- S Corporation, C-Corporation or LLC. (“S” corp. is not available to non-US residents)

Q- In which state the company will be registered?

Q- Where in the US the company will conduct its business?

Q- What kind of activity will it do, and what are its requirements in respect of licenses, registrations, permits etc.?

While pondering over these questions, the registration procedure will require you to decide on the kind of the company that you want to set up. This means whether it will be S-Corp, C-Corp or an LLC. While “S” corp. is not available to non-US residents hence you need to decide between C-Corporation or LLC. Let’s understand both these in detail.

 

 

C-Corp

LLC

Liability

C-corp refers to a tax classification available to corporations and LLCs, it is typically used by corporations. Limited liability is provided to all employees, shareholders, directors.

Like corporate shareholders, LLC owners (called as “members”) enjoy limited liability, which implies that personal liability to the company amounts to only what members have invested.

Tax

Non-resident-owned corporations or resident owned corporations both pay the same tax rate. Having said that foreign-controlled corporations have to file extra information on their tax returns

LLCs are financially transparent by default. An LLC can choose to be taxed as a corporation.

Retention of Earnings

More difficult; distribution shares are taxed whether cash is distributed or not

Easy; dividends are only taxed when distributed

Structure

Shareholders are the owners. They elect the directors, who govern the corporation and decide on policies and goals, and review the activities of the company. Directors have been given the power to appoint officers, who run the corporation.

Members own the LLC, and enjoy control over the affairs of LLC. Operating Agreement sets out all the rules of the company which is drafted by the members of the LLC. Members can also appoint Managers who run the company on a day to day basis. If there are many members, appointing managers may be a go to option in order to control the structure (and spending) of the LLC.

Next question that you need to answer is where in US you want to register your company and where the business shall be conducted.

Different states in the USA have different tax structures, labour charges, and capital requirements. You have to choose according to your business structure and target consumer where you want to set up your business in the US. According to the location of the company, the dynamics differ for officeholders. Different things that you need to consider before incorporating your business in a particular area are:

  1. Demographics of your employees and Target Audience: Any successful business has two essential things: a good customer base and excellent employee satisfaction in the job. Hence these factors are a must to consider while registering your business in the USA. Some common investor-friendly states are Wyoming, South Dakota, Alaska, Florida, Montana, etc.
  2. Requirements of your supply chain: Supply chain management is an essential feature of a business, according to the type and setup of your business. The supply chain management issues include transportations, storage, delivery patterns, etc. These are different for every business set up the investor needs to think about the fact whether his company will suffice according to their business operations.
  3. Local competition: Local competitions are a boon and a bane for any new business setup. Boon because it indirectly indicates that the product or service you are taking to the market has a customer base in the area you are planning to do your business, bane because it might overshadow your presence in the market. Hence, it is advised that the business know about the local competition in the region.
  4. Overhead costs: Overhead costs include Labour, Property, Utilities, Corporate taxes, Incentives, and other day-to-day expenses. It is the responsibility of business to accommodate these charges according to its business structures and select the area which offers all the services in the least possible charge.
  5. State and local laws, regulations, and taxes: Being a federation, the United States offers a variety of cultural ethnicity and variations in legal compliance according to the area. Each state has the power to make laws relating to businesses, land, and other civil matters. Hence it is crucial to know the corporate tax policies, employment rates, and other checklists that may be prescribed by each State for incorporation of your company. Considering all factors, the states of Wyoming, South Dakota, Alaska, Florida, and Montana are offering the best conditions to work in the USA.
  6. Quality considerations: Quality assurance is necessary not objectively per se but for the mental and spiritual growth of the organization that is to be incorporated. The labour orientation their skill set is substantial indicative factor in successfully running a business. The list is not limited to only Connectivity, Infrastructure (Schools and Hospitals), Risk, and Quality of life which indirectly affect the quality of a corporation's business in the longer run.

Documents required for Company Registration in USA

The documents specified below should be kept ready for registration purposes:

  1. Passport Copies of all the desired officeholders.
  2. Pan Card (in case of a Indian national) of all the desired officeholders
  3. Photo Identity Proof (Driving License any other registered photo ID card) of all the desired officeholders.
  4. Utility Bills like electricity, municipal tax receipt or water bills. (If you have a residence in US, not older than 2 months).
  5. Specimen Signatures of all the desired officeholders.
  6. Trade name for your company.

Complete Procedure for registering your company in USA

  • Choose name for the Company

As a business owner you need to decide upon the name of your prospective company to be registered in USA. Such name should be a unique name and must not be similar to any other name of a pre-existing company in USA. Choosing a unique name and registering your IPR according to the repository available at https://www.uspto.gov/ is key to ensuring registration of your company. This requires comprehensive dedicated legal research because the law is strict regarding the protection of Intellectual Property Rights in the USA.

  • Decide the Type of Business entity (Whether an LLC or C corp.)

You should decide whether you want to incorporate your company as an LLC or C-Corp. You can refer to the table made above in order to understand both these terms.

  • Obtain necessary permits and licenses

As per the type of the business entity, LLC or C-Corp, you need to obtain licenses and permits required to carry out your business in a particular state. This is a mandatory requirement which, if left unmet, may lead to imposition of heavy penalties.

  • Appoint Registered Agent

A registered agent is a person/entity that resides in the State of incorporation and takes full responsibility for handling communication and other business-related inquiries. Non-resident incorporation must name a registered agent who is available during working hours and may receive and sign documents and attend queries in the business's name.

  • Submission of proposed shareholders and director’s details

Next, you should submit the details of the proposed shareholders and directors. For this first you need to determine who will be the shareholders and directors. Once it is finalised, you need to submit the details of such persons.

  • Obtaining EIN/FEIN

FEIN stands for Federal Employer Identification Number. It is a number issued by the Internal Revenue Service of the USA. The EIN will be required by the Company's Owner in case where one needs to open a bank account in USA. However, one needs to check with the local banks to see if banks require EIN to open a bank account.

Post Registration Requirements

Once your company has been registered, there are a few more responsibilities that you should undertake. These are called post registration requirements or compliances. We have list down some general post registration requirements, although there may be some other guidelines also that a particular state in the US may prescribe.

  • US Bank account

For handling domestic clients, it is advised to open a US bank account. In the case of foreign ownership, after obtaining EIN/FEIN, a company can open a bank account in the USA. It is also advised to open a bank account in the owner's home country, and it should be as of the same bank as the company account in the States.

  • Physical Address/Virtual Address

Another important requirement is to obtain a physical /virtual address in the State of incorporation of your business; this address will act like the registered address where all important communication can be made in the company's name.

  • Building a Website and Logo

It is essential to open a registered website of the company with a logo as mentioned in the nomenclature. This can be beneficial for your business in the long run.

  • Registered Phone number

Every company must have a registered phone no. which is open to receive calls and communication. It is the responsibility of the management to check that the line is operational and working during the business hours of the company.

Lesser Know important facts for Non-residents: Form BE: 13

For the companies that have Non-Resident partners or are owned by residents, they must fill up the questionnaire, known as Form BE-13, with the Bureau of Economics and Statistics. This is a crucial step as non-adherence invites a heavy penalty of 2500 USD. This is specifically for foreign investors and not for domestic partners or corporations.

Many investors and entrepreneurs are keen on setting up a company in USA as it offers them various advantages ranging from enhanced credibility in the international market to taxation benefits among others. However, one needs to have a complete understanding about the incorporation process in order to register a company in USA on their own. Hence it is advisable to seek the assistance of a professional in this field. Enterslice provides foreign incorporation services to businesses who seek to either set up their home-grown brand into a foreign company or set up a new company in a foreign market.

Frequently Asked Questions

The type of business entity may depend upon the nature of business. Usually, non-residents in USA opt for LLC because of the simple procedure involved.

Every state in USA has a dedicated portal that provides the current status of the entities that are registered there.

It is best to register your company in the state where the business will be active however, if the business will be spread throughout USA, then registering your company in states such as Nevada and Delaware can be a wise decision.

USA is one of the few countries across the globe that has business friendly laws and regulations. Companies registered there enjoy various incentives and benefits in terms of lower tax rates etc.

Visa may not be mandatory to register your company in USA, however, to stay and operate your business in USA you may require a valid visa.

Employer Identification Number is a 9 digit sequence that helps identify your business for tax related purposes. It will be required before starting the company registration process as an LLC or c-corporation.

No, you do not need to travel to the USA for incorporation. It can be completed from India itself.

Registered agent refers to an individual or an entity who resides in the place where your company is registered. A registered agent serves as an official representative of your company in this place. Such an agent forwards any documents or notices obtained from corporate authorities.

Operating agreement refers to a legal agreement that contains the details of ownership and operating procedures of an LLC. Having a comprehensive operating agreement can be useful for businesses which specifies the terms and reduce chances of conflict in the future.

US citizenship is not necessary to incorporate business in USA. As a non-US resident one can still incorporate a company in USA.

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