Overview of Company Incorporation in the USA
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.
Why you should register your company in USA?
Incorporating a company in the USA is very hassle-free and investor-friendly compared to most countries of the world. The first and foremost factor is that it is not essential to be a resident or even acquire a Visa to register your business in the United States.
Other reasons are:-
- Strong economic presence across the globe,
- High-end infrastructure,
- Social stability amongst the residents.
Things to keep in mind before incorporating a company in the USA
Following is a checklist for the investors who seek to incorporate a business in the USA. It is essential to know that a non-resident can be a partner or director in the company. He does not require a Visa, but if he wishes to take control and manage a business in the USA, a working Visa or green card is mandatory.
Where do you want to open a business?
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:
- 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.
- 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.
- 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.
- 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.
- 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 important 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.
- 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.
Name and Nature of the Business
Naming your Company
The next step in incorporating business in the United States is choosing a unique name and registering your IPR according to the repository available at https://www.uspto.gov/. This requires comprehensive dedicated legal research because the law is strict regarding the protection of Intellectual Property Rights in the USA.
Nature of business
In the USA, it's important to choose between different types of companies before incorporating your establishment. The Major Types of the establishment are as follows:
- Corporation: In the USA, the Corporation is defined as the body in which shareholders are the actual owners. They have absolute power to elect board members and is one of the oldest forms of incorporations. Corporations, according to their taxation, can be segregated into S-Corp and C-Corp. The former is a tax status saving taxes for home-grown small businesses, the latter is more or less a simple corporation. The liability of the shareholders is limited and depends upon the no. of shares they own in a business.
- Limited Liability Corporation: A Limited Liability Corporation is another form of business in which members are the business owners. They can offer shares to raise their business capital via IPO (Initial Public offerings). The shareholders, though, do not get the company's ownership; still, the major decisions and other matters are decided by the members, including secretaries and other officeholders.
Other Important Instruments
- 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.
- EIN/FEIN- Federal Employer Identification no. is provided to the business by the IRS (Internal Revenue Services). It is an essential pin that is to be obtained for carrying out business in the choice of your State. This is an important document for opening a bank account in the USA.
- Physical Address/Virtual Address: another important aspect of incorporating a business in the US 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.
- 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.
- Building a Website and Logo: It is required to open a registered website of the company with a logo as mentioned in the nomenclature and how one should avoid IPR in case of a corporation already registered in the same name with the same symbol.
- 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.
- Passport Copies of all the desired officeholders.
- Pan Card (in case of a Indian national) of all the desired officeholders
- Photo Identity Proof (Driving License any other registered photo ID card) of all the desired officeholders.
- Utility Bills like electricity, municipal tax receipt or water bills. (If you have a residence in US, not older than 2 months).
- Specimen Signatures of all the desired officeholders.
- Trade name for your company
Benefits of Company Incorporation in USA
The benefits are as follows:
- Digital and cost efficient process;
- Good reach in global market;
- Easy disposal;
- Relaxed commercial laws;
- Lower taxation rates.
Process for Incorporation
The process is as follows:
- Choose the name of business ( Availability Check Via search Tool)
- Type of Business entity (Whether an LLC or C corp.)
- Choosing a state for registration (Delaware or Wyoming)
- Details of proposed shareholders and directors
- Online Application
- Certificate of Incorporation
- Obtaining EIN/FEIN.
- Opening a USA bank account.
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.
From drafting to filing of all the necessary documents, we are a team of specialised Chartered Accountants, Company Secretaries and Advocates that will assist you in every step in the Company Incorporation Process in USA.