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A new business is establishing in the USA, every day, from market giants to small-scale industries. Company Registration in USA is the first and the essential requirement for setting up a new business or enterprise. USA is the largest market in the world, hence, this is the reason for having the lowest tax rate as compared to others. The process of US Company Registration is an online procedure and is also very easy.
There is no need to be a citizen of the USA for setting up a new business in there. A foreign national can incorporate or set up a company through online mode either as an LLC (Limited Liability Company) or Incorporation (Inc) by following certain simple procedures. In this article, we discuss the step by step procedure of Company Registration in USA.
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A specific procedure as prescribed by the authority for Company Registration in the USA is required to be followed by the owner of the Company. The primary step is to choose the type or category of incorporation.
The entities can be formed in two ways in the USA, which are as follows:
The Subsidiary Entity is a type of entity which is a subsidiary or wholly-owned Company of an already existing Company which is situated and registered outside the USA.
The Standalone entity is a type of entity which is majorly owned by a group of stakeholders, investors, founders, and sometimes other employees of the Company. This Standalone entity is different and separate from the existing company.
Furthermore, there are usually two primary options available for nationals of India, an LLC (Limited Liability Company) or a US Corporation (Inc). Mostly, the Indians opt for registering a Limited Liability Company (LLC) due to its easiness and adaptability towards taxation.
Below an LLC and a Corporation are discussed in detail:
LLC is a type of entity has the features of both a Partnership and a Corporation. In case of the owners of the LLC are provided with limited liability protection in case of a bankruptcy or a lawsuit. The operationality of LLC is flexible. The compliance requirements for an LLC are also very simple. The taxes from the profits of the LLC are filed on the owners’ tax returns.
For example, a Corporation require shareholders meetings and resolutions, and the filing and recording of forms which shows that the meetings were held and the majority in voting made the decisions. On the other hand, an LLC don’t require any kind of annual shareholder’s meeting.
A C-Corporation is a commonly opted business structure in USA. The liability of the members of the Corporation are limited. No restriction on the maximum numbers of shareholders in this entity. The procedure compliance for C-Corporation is more complex as compared to the LLC. No choice is given on how the C-Corporation will get taxed. The tax will be as a Corporation only.
If the goal of a person is to seek funding from angel investors and venture capitalists, incorporating a C-Corporation in the USA is the best choice. C-Corporations are considered to be much more preferred by Customers, Bankers, Investors, Suppliers, and Employees – making a C-Corporation a perfect choice for most businesses in the USA.
The pre-requisites for Company Registration in the USA are as follows:
If any of the owners of the new Company (called as Shareholders in case of Corporations and on the other hand, Members in case of LLC’s) are not the citizens of USA, then the person incorporating a new Company have the option of either forming an LLC (Limited Liability Company) or a Corporation (also called a Regular Corporation or C-Corporation).
There are no restrictions on the total number of owners for an LLC or a Corporation in USA, which country the proprietors of the new entity belong or whether the owners are individuals or some other companies (domestic or foreign Corporations, LLC’s, etc.). Though, the home country of the owner can have certain restrictions on which type of Company in the USA the owner can operate in that country. So, it is very important to consult the local laws of the country from which the owner belongs. Apart from this, the owner can also consult with an attorney familiar with the corporate laws.
In the USA, the owner is authorised to form an LLC or a Corporation in any of the 50 States or Washington DC. The type of state one chooses will depend on the reason why the owner is forming the Company in USA. Some of the states in the USA are more international-friendly or business-friendly than other states, especially Nevada, Delaware, and Wyoming.
Once the owner of the Company decides on the form of company to be formed, then the owner must start registering the company.
The procedure of Company Registration in USA is as follows:
The owner of the Company is required to choose the name of the Company. The name chosen by the owner should be unique and should not be matching any pre-existing Company in USA. The Registered Agent appointed by the owner will start the search of the availability of the name and subsequently applies for the approval of the application for the name by the authority.
For Company Registration in USA an online procedure is available. However, only an official person or an agent can only apply for Registration Company in USA. Hence, it is always suggested to appoint a competent person or agent to start the new business in the USA and for getting the Registration of such a Company in the USA.
The authorised agent or person is responsible for documentation, collection, and any further submission of necessary documents with the authority. Furthermore, the authorised person or agent is responsible for receiving any reports or communication from the respective authority in the regard of Company Registration.
The owner is required to provide all the names and address of necessary people or companies associated with the Company. The owner provides such documents to the authorised agent and the agent is required to submit all the required details to the authority in the prescribed time period.
The FEIN or Federal Employer Identification Number, that is also known as an EIN or simply Tax ID Number. This is a number that is issued by the Internal Revenue Service (IRS) of the USA. This number is somewhat like an identification number for the different companies in the USA.
The EIN will be needed by the owner of the Company in the instances, like, opening a bank account in USA (and maybe, in the home country of the owner. The owner is required to check with the local banks of his/her country to see if banks there require this EIN to open a bank account).
If the owner of the company intends to open a bank account in his/her home country, the government of the home country would require specific proof of formation of the company in USA. The owner is required to produce documents of company formation. Such documents have to be certified with a Certificate of Authentication or an Apostille.
An Apostille is an agreement between different countries to accept the documents of each other’s. This agreement is only available if the country of the owner is a member country of the Hague Convention. If the country of the owner is not a member country, then the home country of the owner can require a “Certificate of Authentication” from either the state where the formation of the company was done or the State Department of USA (or both).
The owner of the Company in the USA is required to take an authorization to start a new business by doing the registration of a vendor’s license or tax permit for a particular state.
As there is variation in the laws from state to state, there are also certain changes in the taxation rate. It is relevant to Register the new company with the authority of state tax and take all the tax permits necessary. Furthermore, a Corporation should take and report employment-related and income taxes with the jurisdiction in respect of a particular state after the Company Registration in USA.
As per the setup, whether it is LLC or Corporation, every set up is required to take specific prescribed licenses and permits as prescribed by a particular state. In case of failure to comply with the same, heavy penalties can be imposed.
Our Recommendation: Membership in a Company: How to Addition or Removal of a Member from Limited Liability Company in Delaware
There are some post compliances which are required to be followed by the companies after the Registration of Company in the USA. The compliances are general in nature, but some of the states have prescribed some specific guidelines that the companies are required to follow.
The list of directions given by the government post Registration of Company in USA:
It is relevant to have an address on records of a registered office. The newly registered Company in USA is required to submit certain documents with respect to the registered office of the Company with the authority. The registered address of the Company needs to be different from the residential address. This helps in gaining clientele but also a place of contact for any official purpose. The owner of the Company is required to get a USA based official contact number and get created an official email ID for contact purpose.
It is essential to open a bank account in the USA to accept the payments which are USA based. Nowadays it has become difficult to open corporate bank accounts in USA. The opening of a bank account also depends on the laws related to the home country as well as the state laws. It is always worthwhile to take the assistance or help of an agent or an authorised person to open a bank account in the USA.
It is also advisable to open a bank account with a bank which has some branches in India also. The Company should submit a Certificate of Authentication or Apostille certificate to open an account in local bank for a Company incorporated in USA.
The owner is required to get in touch with an authorised person or agent to generate an official website of the Company, which not only makes the Company of owner more consistent but also be beneficial for the business. It is always advisable for the owner of the Company to get a trademark for future purposes.
As per state laws in USA, newly registered companies should maintain their financial records with the official address of the company of the owner. The government can also impose certain penalties in case the owner of the company fails to comply with the prescribed provisions by the authority.
The documents required for Company Registration in USA are as follows:
The benefits of Company Registration in USA are as follows:
Any foreigner has the right to register a Company in USA. The procedure of Company Registration is online and easy. The applicant for Company Registration in USA is required to provide all the necessary documents and should comply with all the necessary requirements for Registration of Company in the USA.
We at Enterslice, have experienced professionals to provide assistance with the process of Company Registration in USA. Our professionals will help and assist you throughout the process of Company Registration in USA. Our professionals will ensure the successful and timely completion of your work.
Also, read: How to Start a Tech Company in USA As A Non Resident
Sakshi Sharda has done BBA LLB(HONS) and holds a strong knowledge on the matters pertaining to finance and law. From the past one year she is working as a legal advisor and in her leisure time she works on improvising her knowledge. Sakshi is spreading her knowledge by writing for Enterslice.
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