Frequently Asked Questions of Non U.S. Residents Wanting to Incorporate Their Business in the U.S.A.
Non U.S. Citizens wanting to incorporate their business or setup a branch in our country face different challenges than local entrepreneurs. The following is a compilation of the most frequently asked question about starting and running a company in the United States of America.
- Can I own / participate in the ownership of a corporation if I am not a US citizen?
- Which is the most convenient entity type for a foreign person?
- Can I work in the US if I own a Corporation or LLC?
- How long is the incorporation process?
- Can Active Filings help me open a checking account?
- Can I use the Registered Agent address as my company address?
- Do I need an US address to incorporate a business in the US?
- Can my foreign company be the owner of our US LLC or Corporation?
- We want to create a branch of our company. Is that possible?
- What documents do I need to submit to incorporate my business in the US?
- What do I have to do on an Annual basis?
- Can you take care of the publication of the notice about the company registration when required?
- Will you provide a copy of the registration documents prior to file them?
- How do I get the company Tax ID (EIN)?
- Do you file Initial Reports where required?
- Will I receive “originals” of my documents?
- Can you prepare annual reports, tax returns and hand over all official procedures with IRS and the authorities of the state as my official agents?
- If we don’t have a physical office in the USA, do we need a business license?
- What is a Certificate of Incumbency?
Can I own / participate in the ownership of a corporation if I am not a US citizen?
Generally, there are no restrictions on foreign ownership of a company formed in the United States. The procedure for a foreign citizen to form a company in the United States is the same as for a US resident. It is not necessary to be a US citizen or to have a green card to own a corporation or limited liability company formed in the United States.
Which is the most convenient entity type for a foreign person?
To receive pass-through profit distributions, a foreign citizen may form a limited liability company. In contrast, all profit distributions (called dividends) made by a C corporation are subject to double taxation. (Under US tax law, a nonresident alien may own shares in a C corporation, but may not own any shares in an S corporation.) For this reason, many foreign citizens form a limited liability company (LLC) instead of a corporation.
Can I work in the US if I own a Corporation or LLC?
A foreign citizen may be a corporate officer and/or director, but may not work in the United States or receive a salary or compensation for services provided in the United States unless the foreign citizen has a work permit (either a green card or a special visa) issued by the United States. Some work permits allow a foreign citizen to work only for a sponsoring employer. Such work permits generally do not enable a foreign citizen to also work for a new, unrelated company formed by the foreign citizen. The foreign citizen would need to obtain a separate work permit to work for the new company. You can own a business but unless you have a work visa, you are not allowed to work for your company in the US (You can work for your company in your country).
How long is the incorporation process?
Processing times for incorporating a company vary among the different states and change constantly depending on the workload at the state office. You can check state processing times to have an estimation of how long is going to take your business incorporation. Foreign persons will have to wait 30 days in order for us to obtain their EIN (if you order this service from us). The procedure to obtain a Tax ID, when directors or owners are not US Citizens (non Social Security Number or ITIN applicants) has to be filed with an special IRS unit and that’s the reason of the extra delay. This process has to be started once the documents has been approved by the state.
Can Active Filings help me open a checking account?
No, Active Filings cannot assist you with the opening of a checking accounts or other banking related issues. In order to open a checking account you will be required to walk in to the bank of your choice and provide proof of ID (your drivers license or passport), a copy of your articles of incorporation or organization and the company’s tax ID (EIN).
If you don’t live in the US, but you want to start a business here, you will have to plan a trip after we have incorporated your business and obtained the EIN. Be careful: nobody can do this for you and if you find a company offering this service, be aware that you could be victim of fraud.
Can I use the Registered Agent address as my company address?
No, you cannot use the RA address as your legal address or the mailing address of the company. The RA address (and service) is just to receive official documents, generally related to taxes and lawsuits. The legal address of your company has to be the real one (i.e. your home or office in your country or a mail forwarding service that authorizes you to use their address as yours).
Do I need an US address to incorporate a business in the US?
No you don’t. We provide Registered Agent services that is the only state requirement related to physical address. Our Registered Agents service allow you to incorporate or form a LLC in the US. However, in order to open a bank account or to obtain an EIN (Tax ID), you are going to need an US mailing address (not necessarily in the state of formation). In this case we recommend you to look for a “mail forwarding” service provider.
Can my foreign company be the owner of our US LLC or Corporation?
If you form a LLC, yes. Instead of appointing an individual as “managing member” you can appoint your own foreign company. If you chose to form a Corporation, at the time of registration we only appoint “Directors” and they have to be individuals. Please note that Directors does not own a corporation. A corporation is owned by its shareholders, and from this point of view, your foreign company can own 100% of any US corporation.
We want to create a branch of our company. Is that possible?
We don’t have an entity type called “Branch”. In order to do so, you need to incorporate a business here (or form a LLC) and then establish the relationship through internal resolutions and ownership. No filing is involved with this action.
What documents do I need to submit to incorporate my business in the US?
None. You just need to complete our online form. We will take care of the rest. You will have to sign and return a form that will allow us to obtain a Tax ID for your US business. In this case, we will prepare and provide you the form and returning instructions (mail, pdf or fax).
What do I have to do on an Annual basis?
Your corporation will have to file an annual tax return (IRS Form 1120 or 1120S). Your State of Incorporation will also probably request that you renew your incorporation via a form which updates the address of the corporation, its officers and directors, and its registered agent for service of process.
Annual tax returns are also filed by sole proprietorships (Schedule C to IRS Form 1040), limited liability companies (IRS Form 1065) and general partnerships (IRS Form 1065).
Finally, Active Filings suggests that you consult your accountant for any additional information required for filling out corporate tax returns, quarterly tax payments, employment payroll records, etc.
Can you take care of the publication of the notice about the company registration when required?
Active Filings supports publishing services in Georgia, Arizona, Nebraska and Pennsylvania and New York. Prices vary state by state and they can range from $ 100.00 to $2000.00. The above mentioned states are the only jurisdictions that impose publishing requirements to new companies.
Will you provide a copy of the registration documents prior to file them?
No, we do not provide this service. Our filings fulfill the minimum state requirements (with exception of nonprofit corporations where we prepare articles in compliance with the 501(c)(3) regulation).
How do I get the company Tax ID (EIN)?
As with any other company, you apply for an EIN (this is a service we provide for you if ordered) by preparing and filing a form called “SS4”. The EIN application form has to be signed by what the IRS calls a “Responsible Party”. If this individual doesn’t have a SSN or ITIN, the SS4 has to be filed with an special IRS unit that will handle the request and issue an EIN withing 30 days. The official IRS notice will be sent directly to the address stated at the SS4 form, which has to be an US based street address (please notice that you will need a mailing address for this purpose only). The EIN for Foreign Residents‘ service is now available to any International Customer, regardless of if he or she used our incorporation services to register the entity.
Do you file Initial Reports where required?
Some states will require that you file an initial report (Statement of Information in California or Initial List of Officers in Nevada), but this service is not part of the incorporation services we provide. However, upon request, we can assist you with your initial reports too.
Will I receive “originals” of my documents?
Each state has its own way to return proof of filing. Some states will return the information by fax, others by email and some of them by mail. Documents returned as proof of filing can include a nice certificate or just an electronic stamp with the company number and filing date. They can return an stamped copy of the original (they always keep the original) and payment receipt. If you order the service, we can obtain a certified copy of the formation documents and also Apostille certification. Both services are listed as optional services at our International Plan.
Can you prepare annual reports, tax returns and hand over all official procedures with IRS and the authorities of the state as my official agents?
As Registered Agents of your company our service consists in providing our name and physical address to receive service of process and other important official documents on behalf of your company and forward them immediately to your corporate address. However, for an affordable fee, we can assist you with Annual Reports filings. We can help you with certificates of status, apostille certification, articles of amendments, reinstatements and entity dissolutions.
Since we do not prepare tax returns we recommend you to contact a CPA (accountant).
If we don’t have a physical office in the USA, do we need a business license?
Some business licenses are related to the county and city where your office is located. In this case, since you will not have a local (US) office, you may not be required to hold a license. However, there are other kind of licenses, called specific licenses, that are related to the activity that you perform. These kind of permits are very difficult to obtain and may impose requirements hard to reach when you are not a permanent resident of the USA.
What is a Certificate of Incumbency?
A Certificate of Incumbency is a corporate document confirming the authorities of the officers, directors or members (in case of an LLC) . A Certificate of Incumbency is also known as “Incumbency Certificate”, “Certificate of Officers”, “Officer Certificate”, or “Register of Directors”. This document is usually required by receiving organizations in foreign countries to make sure that the person who signed the documents on behalf of the company is actually authorized to do so.
What is included in your International Plan?
Our International Plan includes not only the registration of a business entity (LLC, nonprofit or corporation) but also 1 year of Registered Agent services, unlimited support, access to templates of corporate resolutions, and more. We also allow our international clients to add other services not included with the basic package, such as Corporate Kits or EIN for non residents.
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HOW MUCH DOES IT COST?
The cost of incorporating a business entity has two main components: State filing fee and ActiveFilings’ fees. State filing fees are also based on the type of entity, processing speed and other services offered by the states. ActiveFilings.com offers 3 different incorporation packages at very competitive prices. Additionally, we can prepare your bylaws or operating agreement, obtain a Tax ID (EIN), prepare your organizational resolutions or provide you Registered Agent services in all US main jurisdictions. All this information is available here. Select your State and Type of entity from the following list to have instant information: