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WTC Dublin Newsletter
by wtcdublin
MARKET ENTRY
A GUIDE TO REGISTERING YOUR BUSINESS IN THE UNITED STATES
The United States, the largest consumer market globally, is a market that most businesses strive to enter. This article outlines guidelines for reviewing if you are considering a new business venture into the US market. As a foreign company in the US, the risk potentials are significant; however, with the proper guidelines and steps, the opportunity for reward is also extremely high, making the US the most sought consumer market in the world.
The good news is that the steps to incorporating a business as a non-citizen are relatively simple, and there are plenty of resources available to help you along the way. This guide will help break down the complexities of registering your business in the US.
Corporate Entities in the US for Non- Resident
There are two types of corporate entities non-citizens can open in the US:
• Limited Liability Company (LLC)
• Corporation (C-Corp)
There is an additional option, S-Corporations often recommended to foreigners. However, though quite attractive, it’s important to note that they are exclusive to citizens and permanent residents.
It is most often recommended to form a C-Corp. There are some distinct advantages to incorporating as an LLC. The most obvious of these is a limited liabilitymeaning members are protected from personal liability for business decisions or actions, and personal assets are safe if the company incurs debt or finds itself
in a lawsuit. LLCs are also free from the strict recordkeeping necessary for C and S-Corps and have almost no restrictions on profit sharing between members. Therefore, the business structure to use when forming a business in the USA is an LLC.
Will I Need a Business Visa for the US?
If you plan to move to the US and start or expand your business, the type of visa you’ll need will depend on your business’s current state.
• L-1A Visa: If you have an existing business outside of the US that has been trading for at least 12-months and have four or more employees, you’ll need to get an L-1A visa.
• E-2 Visa: An E-2 Visa is for a business operating for less than 12-months and has fewer than four employees. The e-2 visa is also suggested if you don’t have a business outside of the US and want to move to the US to start one. It is also the most popular for entrepreneurs (the closest thing the US offers to a “start-up visa”).
Key Requirements for your Visa Application
• You should be a national of a country with which the United States maintains a treaty of commerce and navigation
• A detailed business plan
• A successful visa applicant must be acting under a 8584supervisory or executive capacity whilst undertaking their business in the US.
• For an L-1A visa, capital investment in the US is not a requirement; however, there must be an operating US entity for the applicant to transfer to
• For an E-2 visa, the applicant should be prepared to invest capital in the US at a minimum of USD 100,000.
The E-2 visa is valid for an initial two years. The business activities will be reviewed after this period, and if the visa conditions are continually met, the status can be extended in additional two-year stages.
In what US state should I register my business?
The best state to register in is where you will be conducting business the most. Two states that are notoriously inexpensive for entrepreneurs are Nevada and Delaware. However, if you’re an online company or do business across various regions, you may want to consider registering in a state with lower tax burdens.
Delaware is a popular state due to corporate law that provides significant protections to shareholders and directors. Incorporating in Delaware also does not require a physical address or bank account.
How to Register an LLC in the US?
The process for registration varies slightly from State to State and is somewhat dependent on whether you’re forming an LLC.
Here are some of the basic steps and requirements:
1. Name Your LLC
Every state has its own rules about what kind of names are allowed for LLCs. In general, you will need to observe these guidelines:
• Your name must include “limited liability company” or one of its abbreviations (LLC or LLC).
• Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
• Restricted words (e.g., Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
• Is the URL available? We recommend checking to see if your business name is available as a web domain. Even if you don’t plan to create a business website today, you may want to purchase the URL to prevent others from acquiring it.
2. Hire a Registered Agent
What is a Registered Agent? A registered agent is a person or business that sends and receives legal papers on your behalf.
Most states require every LLC to nominate a registered agent. Your registered agent must be a resident of the state you’re doing business in or a corporation authorized to conduct business in that state.
It is typically best to hire a registered agent service for your non-residentowned business. The service you select will have a physical address in your business’s state and operate during all required hours to accept service of process and other compliance notices.
3. File your LLC with the state
You will need to file your documents with the state to file an LLC officially. Your LLC formation document outlines the organizational structure of your business. The most common name for this document is Articles of Organization. It is also known as the Certificate of Formation or Certificate of Organization.
4. Create an LLC Operating Agreement
An operating agreement is not required in most states, but it’s good to have one.
What is an operating agreement?
An operating agreement is a legal document outlining the ownership and operating procedures.
Why are operating agreements important?
• Clarifies verbal agreements: The LLC operating agreement puts all understandings between the managing members in writing. Members can then refer back to the operating agreement in the event of conflicts in the future.
• Protects members from personal liability: The operating agreement is a formality that protects the managing members from being personally liable.
• Ensures you aren’t subject to default State rules: When a business doesn’t have an operating agreement in place, the default rules set by the state will apply. For example, States have default rules that require the company to divide profits and losses equally.
5. Get an Employer IdentificationNumber (EIN)
What is an EIN?
EIN stands for Employer Identification Number. EIN is a nine-digit number assigned by the Internal Revenue Service (IRS) to help identify businesses for tax purposes. It is essentially a Social Security number for a business.
An EIN is sometimes referred to as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN).
Why do I need an EIN?
An EIN is required to:
• Open a business bank account
• File and manage Federal and State Taxes
• Hire employees
What if I already have an EIN for my sole proprietorship?
The IRS requires that sole proprietorships get a new EIN when converting to an LLC.
Where do I get an EIN?
Getting an EIN is an easy process that can be done online or by mail or fax. You can get an EIN for free from the IRS.
6. Get a Physical US Mailing Address
In the state you choose, a physical address is necessary to open a bank account.
One way to get a mailing address in the US is to establish a physical office in your state. However, if you do not need to open a physical office in the US, you will still need a US mailing address in your LLC’s State.
7. Open a US Bank Account
Opening a US Bank account for your LLC will be the most complicated part.
Why is it complicated?
You will need to visit the bank.
• Due to US money laundering laws, banks must know their clients.
• You will need to travel to the US and obtain a visa.
Opening a Business Banking account for your company can be done once you’ve formed the LLC and received your EIN.
If you choose this route, you’ll need to call the bank ahead of time to make sure you’re bringing all of the required documents.
Different banks may have additional requirements, so contacting them first is necessary.
There are some other options, though. If you have ever opened a personal bank account in the US, you may be able to open a business account remotely. Additionally, depending on the nature of your business, you may be able to get by with a service like PayPal.
Does my bank account need to be opened in the same state as my LLC?
No, your LLC’s bank account does not need to be in the State your LLC is formed in; however, the bank must have a presence in that state. Allowing you to fly into an easy-to-access international airport, like New York, visit a national bank branch to open a bank account with a bank present in your LLC’s State.
What if I already have an account with a bank in the US?
Some banks, such as the one with which you have a personal statement, may allow you to prove your identity through an affiliated bank in your country. However, you will need to speak with a bank branch in the US and set this process up yourself. It is up to the discretion of the bank to allow this.
Need additional assistance and guidance?
Contact us at the World Trade Center Dublin.
References
• Wise.com
• HowToStartAnLLC.com
• StartingYourBusiness.com
