How to Do Business in the U.S.A.We’re Just Not Annoying®
How to Establish a Company in the U.S.
U.S. businesses get created at the state level by filing paperwork with the state’s business registration division, typically called a Secretary of State or a Corporations Division. Since the U.S. is divided into 51 jurisdictions (states), and since there is no way to register a business nationwide, nationwide businesses in the U.S. must register to do business in every state.
Luckily, most states have vague and often beneficial rules for when you need to register your business. Making sales online, for example, rarely requires registration in every state, and very few U.S. businesses actually need to register in more than one state.
Where Should I Incorporate?
There are 3 major states where most non-U.S. residents incorporate a business or form an LLC: Delaware, Wyoming, and Florida. Non-U.S. residents sometimes choose Nevada or Washington State, but these are not as popular.
We own large buildings in Delaware, Wyoming, and Florida, so we can provide non-U.S. residents with stable locations and office leases, and you can even establish utilities with a local utility company if you wish. You would need to deal directly with the utility company to arrange this, but most people do not need a local utility bill to conduct business in the United States.
You can form your USA company in any state, but most non-U.S. residents choose Delaware, Wyoming, or Florida because these states are known internationally and easier to use in your home country. It is also easy to submit corporate filings in these states.
What are the benefits?
Delaware: Delaware is just the most known state in America to form a company in. The only benefit is prestige. Why Incorporate in Delaware? If you want the most well known type of U.S. company.
Wyoming: Wyoming is cheap, private, and very easy to conduct business out of. There’s no income tax, and only a $50 annual fee to the state. In America, Wyoming is as prestigious as Delaware. Why incorporate in Wyoming? If you want the easiest to operate type of U.S. company.
Florida: Many foreigners want to vacation in Florida, making it convenient to do a family vacation and come to America to get a bank account or have any company meetings you need to make. Many vendors or clients would love to come meet you in Florida because it’s warm and has ocean beaches. Why incorporate in Florida? If you’re going to be coming to America to meet people and do business, Florida is an easy place to fly into and meet people.
Nevada: Nevada is well known, but not as well known as Delaware. Nevada is expensive and going downhill. Meaning the state is broke and actively creating more and more rules to squeeze its businesses for more fees and taxes. Why incorporate in Nevada? You want to fly into Las Vegas to transact business in the U.S.
Washington State: Many Asian, Chinese, Indian, and Middle Eastern business people do business out of Washington State because it’s easy to fly into Seattle. There’s lots of business to transact in Seattle. Washington state has no personal income tax, but does have a gross income tax of 1.8% on gross income, but no NET income tax. Many non-U.S. residents have the unfortunate problem of looking illegitimate. Washington State is easy to transact business with the government online and provides a lot of legitimacy for non-U.S. residents doing business in America. Why incorporate in Washington State? You want to easily fly into Seattle to do business and want a jurisdiction where you can do all your government correspondence online and in real time.
Should I Form a Corporation, an LLC, or Some Other Kind of Business?
Our website contains loads of information about the pros and cons of the different types of legal structures available to your U.S. business. To learn more, visit our Service Offerings page and look under “Starting a Business,” or check out our detailed guide to Forming a New LLC or Corporation.
What Will It Cost to Maintain My U.S. Business?
Your company will have an annual report due each year with the state (though some states require reports every other year or every several years), and different states charge different fees. You’ll also have to maintain a registered agent to receive service of process (legal notices) on your company’s behalf. When you hire Northwest, you can renew our registered agent service each year for $125.
Will My U.S. Business Need a Federal EIN Tax ID?
Yes, your U.S. business will need to get a federal employer identification number (FEIN or EIN) from the IRS to file your business’s yearly federal tax returns. If your business signs up for one of Northwest’s USA Company Packages, we will get your federal EIN for you as soon as the state has approved the formation of your business. The cost of the EIN service is $100 if you have a social security number and $200 if you don’t.
Is the EIN Number Application Public?
The information we put on the EIN application with the IRS is private between you and the IRS. It is not public, and even after we submit your information to the IRS, we do not have the authority to talk to the IRS on your behalf. The IRS is one of the most private government agencies we have in the US.
Why do I need an EIN number?
If you’re going to operate a legitimate U.S. company, you’ll owe corporate income tax. Our corporate income tax rate is 21% of your net income ( meaning the money you have after expenses). America has one of the lowest corporate tax rates in the world. Our corporate income tax rates are lower than our personal tax rates. As a non-U.S. resident, you cannot pay personal income tax, thus if you have a business, you have to pay corporate tax rates. You need an EIN number to pay your taxes and track your business with the IRS (Our federal government) Also just about any vendor, client, bank, or government agency will want to know your EIN number of your business.
How Does the Law Work in the U.S.?
When conducting business in America, there are many sets of laws. There are federal laws, state laws, and if you actually open up a physical operation with employees and assets onsite, the local county and city will have applicable laws. There are many agencies that govern business in the U.S. NONE or very few of them actually talk to each other. None of them care about your status with the other. So if you’re good federally, the state doesn’t care. If you’re bad with a city, but good with the state, the city won’t care. If you are operating locally, you’ll be stuck dealing with every law and agency from the local city level, all the way to the federal level. If you are just forming a holding company to take advantage of our low corporate income tax rates, you’ll likely only deal with the Federal laws.
What Are My Legal Obligations When Doing Business in the U.S.?
The concept of an American Company is that it’s an alternate identity of the people who run it. So while you can limit your liability personally by transacting business under your new company, if you do business fraudulently and are purposefully hurting people, the government and everyone you do business with will try to break through your corporate protections and come after you personally for anything and everything you owe. In general, if people transact business with good moral intent and keep their personal assets and personal business separate from work assets and work business, there is a LOT of protection with having a U.S. company. But no court system or government likes someone trying to hide behind a company to do bad deeds.
The basic concept of a U.S. company, is that some living breathing person owns it. That same person or employees may run it. And if you’re good to the general public, you can have separation between your personal and business dealings.
How Do I Close Down My U.S. Business?
If or when you decide to shut down your U.S. business, you will need to file Articles of Dissolution at the state level and a dissolution tax return with the IRS (Form 966). The price for filing Articles of Dissolution is typically around $100 to $200 in most states.
Can Northwest Open a Bank Account For My U.S. Business?
Definitely not. Because of the Patriot Act, you will need to visit the United States personally to set up a bank account for your business. To make things easier, we recommend contacting a potential bank before making the trip, sending them any documents they may require (such as your articles of incorporation), and confirming that the bank will actually approve and open your business’s bank account when you arrive. Almost all U.S. banks offer a free checking account, debit card, and online account.
How Will I Get My Corporate Documents?
When you sign up with Northwest, we upload your business’s documents into your online account immediately. If you ever need something physically mailed to another country, the cost usually floats between $50 and $200 depending on where you live and the destination you have in mind.
How Long Will It Take to Start My U.S. Business?
Unfortunately, processing times vary from state to state (sometimes in a big way), so you will need to do a little research to be sure about the filing times in your state. Numerous states will speed up (or “expedite”) the process for additional fees on top of the basic state fee. In Nevada, for instance, you can add $125 to the state filing fee to get your formation documents processed within 24 hours.
Will Information About My U.S. Business Get Disclosed Publicly?
When you form a U.S. business at the state level, your business’s formation document (an LLC’s articles of organization or a corporation’s articles of incorporation) is always public, but that doesn’t mean every piece of information about your business gets disclosed to the public. Your business’s federal tax returns, for instance, won’t be publicly available, and corporations do not record information about shareholders with the states.
If privacy is an issue for you, keep the following in mind. Even though pretty much anyone can get your company’s information if they are persistent enough, you can help protect your privacy by hiring a commercial registered agent service (like Northwest) that allows you to put down its street address in place of yours on your business’s formation document.
What If I Want to Expand My Canadian Business to the United States?
If you would like to expand your Canadian business to the United States, you’ll need to register in the specific state or states where you intend to do business. Learn more at Northwest’s guide to Canadian business registration.
How do I get started?
You can sign up for incorporation service here.
We’ll get started on your order immediately.