How To Register A Company In Usa From India

How To Incorporate In Usa From India

by Robert Kowalski

Cursory Introduction

For the final several years our company was specializing in helping international clients to register their businesses in the The states. As such, nosotros helped thousands of entrepreneurs from Bharat to annals their US companies and guiding them on how to further develop and aggrandize their business into American and international markets.

This article reflects our experience accumulated over years of assisting Indian clients, and we update it periodically to present the almost relevant information.

What we encompass here:

What kind of money are we talking nearly?
What does it take to form a US company?
What nearly cyberbanking?
What about accepting credit cards?
What about revenue enhancement?
What state should I register my company in?
Should I annals LLC or Corporation?
What about licensing?
If I have a US company, can I move to the US?
If I take a US visitor, can I go Social Security Number?

What kind of money are we talking about?

We affect this question first, because many of the prospects looking for US company registration are vaguely aware of the costs involved in launching a US business.

Initial Investment

Information technology is crucial to understand that formal visitor registration is simply a small part of the upkeep needed for launching your U.s.a. business. Depending on the state of registration, entity type, and specific business needs, registration costs can run from as little equally $300 to as high as $thou and over. On average our Indian clients spend betwixt $600 and $700 on registration formalities.

Then in that location is a question of banking, and for many entrepreneurs also the question of merchant account (what many confusingly refer to as "payment gateway"). We discuss both further in this commodity, but if nosotros consider the option of traveling to the US in order to open the bank account, or using a managed service , you should ready an additional budget of $2000 minimum, with about half or it to be spent on the fees, and the remainder to be kept every bit balance in the account.

To summarize, for proper company registration only, without opening a US bank account, prepare a budget of $600-$700. With cyberbanking your budget needs to be betwixt $2,600 and $3,000. Keep in mind - this is but the initial investment needed to properly set the company. Your business would demand more than money for the actual business organisation activity, and so make certain to have that into consideration when preparing your startup upkeep.

Running Costs

Abreast initial investment, you would have monthly and annual costs, related specifically to maintaining your company. If you plan to lease a US accost await to pay between $20 and $99 each month (we offer our ain professional solution chosen MyUSAOffice that offers addresses for as low as $299/year). Another recurring cost is the cost of Registered Agent service (nosotros provide it for a competitive $99 a year). Banking would cost you another $20-$100 a month in bank fees and management fees if you lot opt for managed bank business relationship services.

Most states have recurring maintenance fees, taxes and reports. For example, Wyoming has Annual Report of $52, while Delaware has franchise tax for LLCs ($300 a twelvemonth) and both almanac written report and franchise tax for corporations, calculated based on some formula. Some states have no annual fees, but its rare.

And finally, depending on your company structure and activity, you might be required to file annual revenue enhancement return (and in some cases - pay taxes), which ways you need to hire the services of CPA (certified public accountant) and perchance even a bookkeeper. Filing simple tax returns should non cost more than $300-$500, yet more circuitous cases would result in college costs. Keep in mind, in some cases you as the possessor would need to obtain Private Revenue enhancement ID Number (ITIN), adding another $300-$400 per partner, merely information technology's a ane time cost.

Conclusion

Earlier launching your business you should plan your budget carefully. Many clients make the mistake of hoping that some of the initial and running costs will exist first by the showtime clients they are counting on acquiring, only yous should never build your business concern on hope - cold blooded calculations bear witness to be a more reliable tool in business.

Nosotros recommend preparing a setting aside a specific sum that would keep your business organization running for a year without any income whatsoever. In case of US business organisation setting bated $iv,000-$8,000 would go a long way to ensure your business organization is properly set and funded for a year, giving y'all the necessary peace of mind to develop your product and client base.

What does it take to grade a US company?

The actual procedure of registering a U.South. company is rather simple, and involves filing certain applications with various government authorities and drafting some internal company documents. Our visitor provides full service in company registration for a very competitive toll, so we arrive easier on our clients to get this part of the program done with.

Before registering your visitor two decisions demand to be fabricated: kickoff you need to choose what state you want your company registered in, and second you need to determine on what type of legal entity this company will exist organized equally (typically a choice between a corporation and an LLC - limited liability company). We discuss both questions later in this commodity.

What about banking?

Cyberbanking is crucial for running your business. Most of our Indian clients are looking to form a U.S. company and have a U.South. depository financial institution business relationship opened, amid other things. After nine/xi U.S. government made it harder for banks to offering remote account opening for non-U.S. individuals, all the same it is still possible to open such accounts when visiting the bank in person. We have an entire commodity defended to banking in the U.South., including various alternatives, which we invite you lot to read.

In brief, if yous can visit the U.S. in person, or have a U.S.-based partner or just someone (friend/family) willing to help you by interim as the "Signer" on the account, you might want to explore these options. Those who desire to apply a managed service tin can opt for ane remotely, however such service comes with both initial and monthly cost, and includes sure restrictions.

Why not start with bank account in India?

It might be a good idea to consider opening a bank account in India for your U.S.-based business organization, until such time other options would get available to you. All you lot would demand in that instance is to order Apostille for your company'southward certified copy of articles of incorporation (or organization), a service you tin can guild form us at the aforementioned time when you are ordering your visitor registration.

Once y'all establish your first U.S. clients who are willing to make overseas payments via wire transfers to your Indian banking concern account, you lot will exist in a position to expand farther by using those funds to open a U.S. bank business relationship, either past traveling to the U.S. or by hiring a direction company to deed equally the local signer.

What about accepting credit cards?

Another challenge is to adjust a payment processing facility for your business organization. Technically, there are many ways your clients can pay you for your services or the products you lot sell that does non involve the utilise of credit cards - recollect of such solutions as:

wire transfers,
ACH payment services,
Western Wedlock and similar services,
PayPal and its equivalents,
Bitcoin and other virtual currencies,
due east-checks,
checks (which can be deposited online), and
money orders & cash.

Depending on what y'all sell yous might want to explore all those and other payment methods while looking for credit card processing solutions.

That beingness said, credit and debit card processing capabilities are crucial for the growth of your U.Southward. business. Showtime, allow's sympathize how credit menu processing works.

Payment Gateway

A payment gateway is an due east-commerce service that authorizes payments for e-businesses and online retailers. Payment gateways are provided past payment processors, such every bit Authorize.net. You tin acquire more almost payment gateways here, and near payment processors here.

It's not difficult to create an account with a payment processor, notwithstanding the real claiming is to open up a merchant account.

Merchant Business relationship

A merchant account is a type of banking concern account that allows businesses to have payments past payment cards, typically debit or credit cards. Those accounts are provided by merchant account providers. Funds processed through payment gateways are deposited in merchant accounts, which in turn deposit them in your company checking account, minus fees.

The challenge with opening a merchant business relationship lies in the fact that merchant business relationship providers are exposed to the financial run a risk equally a result of their clients' business activity, and this adventure is mitigated by rigorous underwriting process and elimination of certain countries and specific types of businesses considered "high-take a chance" businesses. You can larn more most merchant accounts here.

U.S. businesses owned by Indian clients, who don't accept Social Security number or any merchant history in the U.Southward, would fall under "loftier-risk" category. There are merchant account providers that serve the high-hazard niche, and they are called loftier-take chances merchant business relationship providers. Typically a U.Southward. bank business relationship is required, merely some of those providers would even offer services to clients with a bank business relationship in India or other countries. Also, to offset the risk, those providers charge higher fees and take longer settlement times.

Proceed IN MIND: certain types of business activity, popular among our clients from India, fall under "loftier-risk" profile. Typical examples are remote IT services, staffing, etc.

We suggest clients falling in this category to consider expanding their business services to include less risky categories, such as software development and IT services, and to utilize every precaution and best client service practices in order to create solid merchant history with the merchant business relationship provider.

Skillful merchant history is key to opening a low-adventure account in the future, which would effect in reduced merchant fees and settlement times.

Online Payment Service Providers

Payment service providers (PSP) offering online services for accepting electronic payments past a variety of payment methods such credit cards, direct debit, and more. Past using the services of a PSP you tin can circumvent the need to open a merchant business relationship and sign up for payment gateway, since you get all those services under one roof.

There are over 900 PSPs in the world, with more 300 offer services in the U.S. Nearly of those PSPs don't offering services in India, however since you are establishing a U.S. company, preferably with U.Southward. business organisation accost and U.Due south. depository financial institution account, your business might qualify. Click here to encounter a list of notable on-line payment service providers.

So how exercise I establish credit card processing facilities for my U.S. business organisation?

Take it i pace at a time. Each step brings you closer to accepting credit cards, but you must invest time and money offset to prepare the foundation of your merchant application regardless of what service you will use:

Step 1: Register your U.S. company;
Stride ii: Charter a U.Southward. address with mail forwarding;
Footstep iii: Open a U.S. bank business relationship (unless y'all tin can't, in which example you lot would be limited to sure high-run a risk merchant account providers);
STEP four: Build a professional person website for your business, conspicuously showcasing your business;
STEP five: Research the list of Online Payment Service Providers, and try applying for an account with each one in turn, until you find one that will accept your application.
Footstep half dozen: If that fails or you are non interested in this kind of service then run a search for "high-risk merchant account providers" and try applying for an business relationship with them. You lot will exist required to provide additional documentation, in which case work on providing whatever is necessary to be accepted every bit a client.
STEP 7: If all fails, wait to partner with a U.Southward. denizen or permanent resident with adept credit history, in club to open a regular (non-high-risk) merchant account with i of the large domestic providers.

What about tax?

U.South. taxation is a disruptive topic, and so allow's endeavor to simplify information technology every bit much as possible. You should be concerned about the following types of taxes:

Income taxation,
Sales taxation,
Payroll tax,
Franchise tax,
Gross receipt tax,
Various specialty taxes.

Income and Sales Taxes:

We comprehend the questions of income and sales taxes in detailed manner in our article U.Southward. Taxation for Strange Entrepreneurs. The short version is, sales revenue enhancement is charged on specific products, and its rate depends on the state where your business is registered or has significant presence. Income taxation depends on your company type (LLC or corporation), state(s) of registration, number and domicile of partners, etc.

Make sure to read the full article for a improve understanding of how sales and income taxes work. It is recommended to hire CPA to handle the question of revenue enhancement.

Payroll Taxes:

Payroll taxes get relevant if your visitor starts hiring regular employees in the U.S. Proceed in mind, contractors are a different kind of employees, who file their own income and self employment taxes. Then unless y'all plan to open a concrete part and hire employees who will exist working regular hours in that role, you will not need to worry near payroll taxes.

Franchise Tax:

Franchise tax is another way for the state to greenbacks in on the fact that your visitor is registered there. Only few states accept franchise taxes, and in a way they are just some other way y'all maintain your company in skillful continuing, similar to annual reports and such.

2 near notable states that levy franchise tax are Delaware (as of this writing it's $300 a yr for LLC, for corporations it'south calculated based on number of shares and par value) and California (equally of this writing it's minimum $800 a yr for LLC and corporations). Typically, the land and/or your Registered Agent volition remind y'all when this tax is due.

Gross Receipts Taxation:

Gross receipts tax is levied in a few states and on some entity types. For example, Texas has annual gross receipts tax. Your CPA will be able to assist you with the calculation of this tax, if your entity is required to file ane.

Diverse Specialty Taxes:

For most part you wouldn't worry about those, equally they are specific to certain activities, and oftentimes are related to companies with physical presence in the state. Some taxes you should be aware of are taxes levied on products containing tobacco or alcohol, in which example they require licensing and compliance.

What land should I annals my company in?

U.S. companies are registered by states and territories, non by the federal government. That means theoretically you take 50 states, DC and several U.South. territories to choose from.

Each land is different - different laws, registration fees, processing times, and renewal rules and costs. When making the choice of land y'all need to answer a few questions first.

Are y'all launching a technology startup with the goal of raising investment from angels/VCs?

If the answer to this question is "yes" and so y'all probably should consider registering a Delaware C-Corporation specifically, since this is the most popular tool for companies with this contour.

Volition y'all have a real office/store/warehouse in a specific state?

If the answer to this question is "yes" then you lot should consider registering your visitor in this state, even if it's not the friendliest or cheapest of all states.

The reason is simple - having real presence in a given land creates what is called "strong nexus", requiring your company to be registered in that country. That ways if you register in ane state just have existent physical presence in another you would be forced to register a foreign entity in that state, which means the whole thing will cost you double or more than.

Incorporation-friendly states

If your business concern is conducted online and/or run remotely from India, without whatever concrete presence in the U.S. (having clients doesn't make your business concern U.S.-based) then you should consider registering in 1 of the incorporation-friendly states.

There are three states that are traditionally considered to exist incorporation-friendly: Delaware, Wyoming and Nevada. Of the three nosotros typically recommend Wyoming, considering Nevada is quite expensive to register and to maintain your company in, while Delaware comes with high franchise revenue enhancement, steep penalties for late fees and relatively high maintenance fees. Wyoming hands compares to the other ii states, while being relatively inexpensive and like shooting fish in a barrel to piece of work with.

You can larn more about the difference between the 3 and see why nosotros recommend Wyoming for nearly concern types past checking the comparison between Delaware, Wyoming and Nevada.

If I annals in i state, tin can I do business concern in another?

Per U.Southward. constitution, company registered in any U.Southward. country or territory is immediately recognized by all other states and territories, and so for instance you tin can take your Wyoming company germination documents and go to New York to open a bank business relationship. Likewise, your clients tin be anywhere in the U.S. or the world for that matter.

That being said, there are at least two cases in which additional registration might exist required:

1. If your business organization sells tangible goods that are typically taxed (sales taxation) and it uses distributors in states other than the land of registration, then it might be creating "soft nexus", meaning you would need to register for sales revenue enhancement collection in those states.

two. If your business establishes physical presence in some other state, such as opening an function, hiring total fourth dimension employees, opening a store, or leasing a warehouse, among other activities, y'all might be creating "difficult nexus", which would crave you to register your company in that state as "foreign entity".

Consulting an attorney

If yous are yet non sure where to register your company information technology's e'er a good thought to consult a corporate chaser. Though it might be a bit expensive, there are plenty of online resources allowing y'all to enquire for a costless consultation, or free answering service that y'all could use for that purpose.

Should I register LLC or Corporation?

Question of "LLC vs. Corp" is one dealing primarily with taxation and with germination and maintenance costs. Nosotros will consider several points on interest and bear witness you how those 2 entity types compare to each other.

Express Liability Protection

Both entities provide express liability protection to the owners, so in that regard at that place is probably not much meaningful difference betwixt the entities.

Formalities

As far every bit formalities go, corporations require somewhat more than formalities, while LLCs become easier on formalities.

Corporations accept three levels of buying and management - shareholders own the corporation through belongings of shares, and they elect directors who manage the affairs and make up one's mind on the general business strategy of the corporation. Board of directors in plow appoints officers, who run the day to solar day operations of the corporation. All that is governed past the corporate bylaws, and the ownership and direction of the corporation is defined through series of meetings, for which minutes must be created and maintained in visitor records.

LLC has two levels of buying/management - members of the LLC are the owners, and managers manage the LLC. LLCs can be memeber-managed, which means all managers are as well members (only not necessarily all members are likewise managers), and manager-managed, meaning some or all managers are Not members of the LLC. LLC typically would need an Operating Agreement to govern its structure and functioning, and in which membership and direction are defined, amid other things. LLCs as well need to have meetings of members, which should be recorded via minutes, nevertheless this requirement is less strict for LLCs compared to corporations.

Toll of Registration and Maintenance.

For many clients costs or registration and consistent maintenance of an entity plays disquisitional function in choice of state and entity. In that sense most states have similar costs for LLCs and corporations, with a few notable exceptions:

New York LLC: though the cost of NY corporation is relatively depression, cost of LLC is unproportionally loftier, due to bigger land fees and especially due to the publication requirement, which only applies to LLCs and some other entity types, but non corporations.

Illinois LLC: another state where cost of LLC is significantly college than the cost of corporation, primarily due to state fee differences.

Tax Related Differences

The most crucial difference between LLC and Corporation are tax related. Outset, its important to sympathise that the only type of corporation available for foreigners who are not U.Due south. citizens or permanent residents is C-Corporation. Perhaps you heard about S-Corporation, but this is irrelevant for non-U.S. persons so we will skip discussing it.

LLC is a pass-through entity, which ways the turn a profit and loss passes through the company to the owners, who pay their personal taxes on that turn a profit. C-Corporation is a double taxation entity, which means internet corporate profit is taxed showtime (both on federal level and on state level, if the state has income tax), and and so dividends are distributed to shareholders, who in turn pay their income tax on those dividends.

Does that mean corporation is necessarily bad, and LLC is necessarily expert? Nope, information technology only means that corporation permits some jerk room for artistic tax planning, while LLCs are pretty much directly forrad entities. Curious fact, ane of the reasons nosotros honey LLCs so much is the fact an LLC is a flexible entity, that can elect to be taxed equally C-Corporation, if the management deems it more beneficial from revenue enhancement point of view.

We have the entire section of this article defended to tax, besides as an entire commodity dedicated to taxation of foreign-endemic U.S. companies, and so nosotros recommend you to written report those. Also, information technology is always a practiced idea to consult with a CPA (accountant) before making your final decision on what type of entity to register. Remember, LLCs are flexible, then chances are you won't go as well wrong by choosing an LLC as your entity blazon.

Decision

We often suggest LLC as the entity of choice, due to it being a less formal entity to maintain, and due to its flexible revenue enhancement. Some cases would justify going with corporation, then earlier making this decision make certain yous fully empathise what having a corporation in the detail state of your choice would hateful and cost. And of course - consult a CPA and an attorney if you are non confident enough with your choice.

What about licensing?

Get-go of all, information technology's of import to empathise that "getting a license" is not the same as "registering a company". Companies such as LLCs or corporations are legal entities, formed by the state, and essentially are separate from their owners. License is a let allowing a business to carry sure concern activity, while at the same time requiring the concern to comply with laws and rules that the license is governed by, and in some cases pay related taxes.

Near U.S. businesses formed by our Indian clients don't crave any licensing whatsoever. Yet we do offer a license inquiry service to make sure your business either doesn't need any licensing, or needs some specific licensing, in which case we will let you know what information technology is and how to obtain it.

General Business concern License

A few states require all businesses formed in that state to obtain general business license (like Nevada, which is one of the reasons nosotros don't recommend this state). This is just another mode for the state to cash in on the fact that companies want to or have to be registered there. Also in some states local authorities crave businesses domiciled within the borders of the local jurisdiction (eastward.k. California cities and towns) to obtain local general business license.

Typically this license is obtained at the same fourth dimension or correct later on the company is registered, and it is renewed together with company renewal.

Specialty Licenses

Sure activities require specific license. The most common type of licensing we handle on steady basis is tobacco-related licensing. Other examples are alcohol licenses, professional licenses, gambling licenses, firearms licenses, dealerships etc.

Unless your business trades in regulated merchandise, products containing ane of the regulated substances, or deals in regulated action, it will non need any specialty license.

If I have a Usa company, can I motion to the United states?

Perhaps, merely not right away. Typically, the more successful your business becomes, the better is your run a risk to obtain legal condition in the U.S., even, eventually, obtain permanent resident condition ("green card").

U.South. immigration laws are changing constantly, so you lot should be on summit of the near recent updates, which can be done by periodically reviewing news on USCIS website and similar sites dedicated to immigration to the U.Southward. In full general, sure visas exist today that allow foreign businessmen entry to the U.S. for such purposes as business trips, visas for investors, and visas for company executives.

Following numerous requests by our clients to provide assist with U.South. concern visas nosotros take partnered with VisaPlace.com, a leading U.S. & Canada immigration service to provide gratuitous Clearing Assessment for potential visa applicants. Nosotros invite you lot to use this class to assess your visa eligibility.

If I accept a US company, tin can I go Social Security Number?

No. Social Security number is given to individuals who satisfy certain clearing requirements, and about non-immigrant visas that justify obtaining Social Security number volition restrict it to specific uses and activities. Having a U.S. visitor could be the first step in obtaining a legal status in the U.S., as explained above, nevertheless by itself if gives no right to Social Security number.

That being said, having a U.Southward. visitor in some cases requires you as the owner to file a personal tax return with the IRS. For that purpose yous will be required to obtain an ITIN (private tax identification number) from the IRS, which can exist done with the assist of your CPA (we besides provide this service through our CPA). ITIN is a number that resembles SSN (9 digits), withal it is only used for payment of taxes (though you might exist able to use information technology for additional purposes, such as opening a bank account).

Ready To First?

We hope this non-then-short article gave you plenty of information to chew on and would go far easier for y'all to take the next step in registering your U.S. business organization. If you have some questions that we oasis't covered in this article you lot are welcome to get out them in a annotate below, and we volition consider expanding this article to include those questions and answers. Otherwise we will reply to yous in private.

Remember, just equally we already helped thousands of Indian clients with their U.S. company registration, nosotros are here to help you as well. You are welcome to contact usa via chat, call us (our number is +1 877-330-2677), email us, or schedule skype consultations with 1 of our incorporation specialists.

If you are ready to get-go you are welcome to click one of the buttons beneath to see what it would cost you to get your own U.S. company:

DISCLAIMER REGARDING LEGAL Advice: This article is not intended to provide any taxation communication or direction. None of information contained on this web site is intended to plant legal or other professional communication, and you should not rely solely on the data contained on the site for making legal decisions. When necessary, you should consult with an attorney for specific advice tailored to your situation.

About The Author

Robert Kowalski is a seasoned incorporator and business filing specialist with over ten years experience consulting emerging companies with their business filing needs. Robert served as the chief editor and one of the tiptop contributors to Answers @ MyUSACorporation.com.

Comments: