MEDIA & NEWSBe informed, follow our news
How hard is it to incorporate a business in the USA from abroad?
The book titled Startup Nation, by Dan Senor and Saul Singer, states that “more Israeli companies are listed on the NASDAQ exchange than all companies from the entire European continent", and it happens for different reasons, mainly because of the reasons mentioned above.
But, how hard is it to incorporate a US company from outside the USA?
There are many ways to incorporate a company in the United States, and in general it is very easy.
In most projects I’ve managed, as a non-American lawyer working outside the US, the primary matters to be addressed are the following:
1. It’s not necessary to be a resident or even hold a working visa.
A foreign natural person or a company can incorporate an American company without even physically being in the USA, and most of the time, you will only need a copy of your passport.
2. Limited Liability Corporation (LLC) vs. C Corporation.
Even though these two business structures provide owners with liability protection , they differ in several significant ways.
To become a C corporation, the company must have management and a board of directors and must file required documents yearly. From what my American partners, lawyers in the US, have told me the company is taxed twice in C corporation, once for corporation revenue and then again when that income passes through to the C corporation members.
A limited liability company, or LLC, can be a sole proprietorship or a partnership. It is easy to incorporate an LLC, and there are tax benefits for doing so (single taxation at the individual level. Profit or loss are passed directly to members, but the LLC can elect to be taxed as a corporation). LLCs also offer limited liability protection, which is often superior to the protection for corporations because it is harder to "pierce the veil" and attach personal property of the owners to that of an LLC.
3. Registered agent fees
A registered agent service is mandatory to incorporate a corporation in the US if you live abroad. The registered agent receives all important legal and tax documents on behalf of a business.
4. Employer ID Number (EIN – TAX Number)
Every business in the US needs an EIN number (also known as Tax ID number) and most companies that provide services for incorporating businesses in the US also apply for this tax number on your behalf.
5. Physical address in the US
Your company will need a physical address in the US for receiving business documents, but don’t worry, there are several mail service providers that will forward your mail to you, even by email.
6. US bank account
After 9/11, most banks will require your physical presence to open a business bank account. However, there might be some banks that will have different requirements, and your physical presence will not be needed.
I have been working with two middle-size banks. One is a Floridian local bank called Ocean Bank, which is very accessible to foreigners. The other one, Silicon Valley Bank, is totally focused on startups, and therefore is considered very startup friendly.
5. US phone numbers
You can find many American companies that can give you a local US number, which allows people to call you and leave messages for your business, as if you were located in the US.
The call or messages can easily be forwarded to you.
Even though incorporating a business in the US involves many details, as explained in this article, the good news is that an American lawyer can easily help you to incorporate an LLC or a C corporation (e.g. preparing all the papers, and even getting you an EIN), and there are many companies in the US, such as a register agent, that will provide you with an address, a phone number, and even help you to open abank account.
In the projects I have worked on, as a non-US lawyer, the total cost for all these services did not go over USD $5,000.
Disclaimer: This article should not be used as a substitute for obtaining legal advice from an attorney licensed or authorized to practice in the US. You should always consult a suitably qualified attorney regarding any specific legal problem or matter, as the ones I have worked with in my projects
Lawyer and professor. Partner (foreign legal consultant – outside the US) at CyberlawStudio PLLC, an American law firm based in New York City and Managing Partner of COTS Advogados, a Brazilian law firm based in Sao Paulo. Both law firms specializing in the digital economy (boutique law firm) – focused on startups, e-commerce and IT companies.
Marcio holds various qualifications and has attended executive programs across the United States and Brazil including the Leadership in Corporate Counsel Program, at Harvard Business School - Harvard University and Cyberlaw Program, at Harvard Law School - Harvard University. Marcio is specialized in cyberlaw and is currently focused on providing legal expert advice for e-business and technology companies internationally. He is an expert in matters related to law and new technologies, and is consulted by many companies on issues such as privacy, information security, startups, e-commerce and international digital projects.