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    Starting a Company in the USA 

    Offshore Legal Service Provider EST. 1996

06December

How to Start a Company in the USA as a Non Resident

Starting a company in the USA

Starting a company in the USA is a great way to expand your business and take advantage of the opportunities that a US-based corporate structure provides.

Many want to know: Can a foreigner start a company in the US?

The answer is ‘yes’. You do not need to be a US-resident or citizen to form a company in the USA. Both foreign persons and foreign companies can form a US company, and get access to the even greater benefits that owning an offshore company provides.

What Type of Company Should You Form in the USA?

The best type of business structure to use when starting a US business is a Limited Liability Company (LLC). LLCs provide the most benefits in terms of liability protection and tax advantages, whilst being simpler and more affordable to form than a corporation.

Specifically, a Delaware LLC is by far the most popular and beneficial offshore corporate entity to own in the US. It offers the following advantages:

  • 0% corporate taxation
  • Privacy and confidentiality
  • Strong asset protection measures
  • Fast and easy incorporation process
  • Great flexibility and convenience
  • Few requirements related to minimum capital, ownership restrictions, accounting etc.
  • Stable and reputable jurisdiction

A Wyoming LLC is another good choice which offers many of the same advantages.

How Do You Form a US LLC?

Forming a foreign-owned Limited Liability Company in the USA is a relatively simple process which can be undertaken by anyone. The exact process might vary slightly in each state, but the steps are generally as follows:

  1.  Select the Best Jurisdiction

Choosing the State in which to incorporate your LLC is a critical decision. The first thing you should consider is whether your business has any requirements to be physically present in a particular state for its business operations. If that is the case, then you should most probably incorporate there. 

On the other hand, if you do not have any physical requirements, then choosing the best state comes down to identifying which will give you the greatest benefits in terms of taxes, low incorporation costs, and friendly regulations. As mentioned, Delaware and Wyoming are the two best options to consider.

  1. Choose an Appropriate Name

Once you have chosen your jurisdiction, you will need to select an appropriate name for your LLC. Each state has its own specific rules and conventions about naming, but the following guidelines will generally apply:

  • The name should be unique and not overly similar to any other existing companies registered in the state,
  • The name must include the words “Limited Liability Company”, “LLC” or “L.L.C.”,
  • The name can not include certain restricted words such as “Bank”, “University”, “Insurance”, “Attorney” etc. without special permission.

 
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Before selecting a name, you should do a proper search on existing business names in your state to ensure that the name you would like is available before filing the associated paperwork. It is also worth considering whether an associated internet domain is available which matches your business’ name. 

In addition, it is usually possible to reserve an available name if you will not immediately be filing your LLC incorporation documents. This involves filling out a name reservation form and paying a small fee.

  1. Choose a Registered Local Agent

Most states require hiring a local registered agent in the locality. The registered agent is responsible for receiving official documents and court summons on behalf of the LLC, and forwarding them to the appropriate person. 

The registered agent must be a resident of the state or a corporate entity which is licensed to conduct business in that state. It is usually possible to make use of a registered LLC service, which will already have a physical address in the state and be able to accept documents during the required office hours.

  1. Draft an LLC Operating Agreement (Optional)

An LLC operating agreement is an incredibly useful document which outlines how the LLC will managed. It clarifies matters relating to ownership shares and interests, member voting rights and responsibilities, profit and loss distributions, annual meetings, the daily management of the business, and what happens in the case of dissolution of the business.

The LLC operating agreement is generally optional and does not usually need to be filed with the state. However, it is highly recommended to have a sound operating agreement in place in order to clearly define how the business will be run and reduce the risk of future disagreements.

  1. File the Paperwork with the State along with the Filing Fee

The next step is to officially file your LLC with the state. This involves submitting the “Articles of Organization” (sometimes referred to as the “Certificate of Formation” or “Certificate of Organization”). The Articles of Organization includes the following:

  • The name and address of the LLC,
  • The LLCs primary purpose,
  • The intended duration of its existence if it is not perpetual,
  • The name and address of the registered local agent.

This document must be signed and submitted to the secretary of state or other relevant governing authority. There will be an associated filing fee which varies in each state.

  1. Obtain an LLC Certificate from the State Upon Approval

If all documentation is in order and the name is approved, the state will proceed to approve the formation of the LLC. At this point, it is important to obtain an official certificate or other document from the state which certifies the existence of the LLC. This will enable you to proceed with the final necessary business matters.

  1. Complete any Other Important Business Matters

Upon approval and acquisition of an LLC certificate, you should take care of all other preliminary business matters. These include:

  • Obtaining an Employer Identification Number (EIN) which acts as a Tax ID for the LLC.
  • Obtaining any necessary business licenses which are required for your operations.
  • Opening a company bank account in the state. This is often be the most complicated part of the process for foreigners as it usually requires visiting the bank in person to obtain approval.
  • Getting a physical US mailing address. This is also required for opening a bank account.

How Much Does It Cost to Register a Company in the USA?

The cost of registering a company in the USA varies according to the state in which you decide to incorporate. It also depends on the type of business structure you choose. There are generally three main costs you will incur:

  1. The cost of registering and/or reserving a business name. This can cost anything from $5 to $100 depending on the state. In the case of registering a new LLC business, the cost of registering a name is usually included in the filing fee.
  2. Filing the LLC incorporation documents. This can cost a few hundred dollars, but varies widely across the different states. Two of the most affordable states are Delaware (approximately $90) and Wyoming (approximately $100).
  3. In many cases, you will want to register your business name as a trademark at the national level to prevent others from using it. This provides greater protection than only registering your name with the state. There is a fee of $375 associated with this.

How Long Does It Take to Register a USA Business?

The length of time it takes to register an LLC depends on how quickly the state processes the application documents. Therefore, it varies across different states. The most common length of time taken for the whole procedure is roughly 7 to 10 days. However, some states complete the filing process in as little as 3 days. There can, of course, be unexpected delays which you should take into account when planning to form your business.

 

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