You can register your startup in the US from anywhere. Here's how to do it.
Chances are that if you are reading this article, you are wondering if a foreigner can register a company in the United States. Generally, there are no restrictions on foreign citizens owning or incorporating a company formed in the United States. The procedure for a foreign citizen to form a company in the US is the same process as for a US resident. You do not need to be a US citizen, permanent resident or visa holder to own a corporation or LLC registered in the US. Contrary to common misconceptions, you do not need to have a mailing address in the US either.
In this article, we cover important topics for foreign founders who are wondering how to register a company in the US as a non-resident, including:
💰 Benefits of registering your company in the US, like access to capital from US-based venture funds
📝 The process to incorporate a company in the US as a foreign founder
📍 How to establish a business address in the US for your company
🔄 How to move your company’s registration to the US if you already incorporated in your home country using the so-called “Delaware flip”
🏦 Tax residency: do you have to pay personal taxes in the US if you register a company there?
🛂 Work visa requirements for startup entrepreneurs who want to move to the US
Advantages of registering your company in the US
For startups, the main advantage to registering in the US is access to capital markets, namely venture capital firms and startup investors. Many US investors will not invest in overseas entities, especially in civil law jurisdictions. Registering a company in the US may also make it easier to obtain a work visa to move to the US to work on building your startup.
To give you an idea of the differences in scale between US venture capital markets and other markets: VC funds deployed over $130 billion into startups in each of the last 3 years. By comparison, across all of Europe, around 40 billion Euros was invested into startups in 2020, with a quarter of all funding going to London-based startups. For European founders based anywhere outside of London, access to capital is extremely limited unless they go across the pond and seek funding from US-based venture funds. This is especially true for startup founders seeking to raise a Series A or later round . While there is plenty of seed capital in many European tech hubs, most European founders raise money from US-based venture funds when it comes time to seek growth capital to scale their startups.
Some overseas businesses may want to become American companies to gain easier access to capital. Banks in the United States are more willing to lend money to small businesses than many foreign banks. Once an overseas business has been operating in the US for at least two years, then this business will have the same access to capital through US banks as any wholly domestic companies.
Here are some other benefits to registering your startup business in the US:
- Open online accounts to sell on marketplaces like Amazon
- Open a US bank account to more easily complete transactions with US clients
- Enhance the reputation of your business, both in your home country and in the US
- Easier to sell on the US market, from the perspective of both customs and taxes
- It may be possible to reduce business taxes on US-sourced income
What is the process to incorporate a company in the US?
As a foreign founder unfamiliar with the US legal and tax systems, it may be challenging to get started. Let’s break down the steps to registering a company in the US and getting your startup up ready to do business!
- Decide what type of entity is right for you. Most startups register as a C Corporation, largely because VC investors strongly prefer to invest in C Corporations over LLCs and other corporate entities in the US. Learn more about why investors may not invest in your startup unless you register as a C Corporation.
- Decide which US state to register your company. Many companies choose to register in the US state of Delaware. The vast majority of US technology companies are registered as Delaware corporations, along with around 70% of Fortune 1000 firms. Learn more about why startups incorporate in Delaware.
- File to incorporate your company. To make it official, you will need to register your company with the secretary of state in whichever state you are registering your new business. Capbase makes it super simple to incorporate your startup as a Delaware C Corporation. The annual Capbase subscription fee includes your state filing fees and registered agent fees.
- Get an Employer Identification Number (EIN) for your company from the Internal Revenue Service (IRS). After your company is incorporated, you will need to register with the IRS to pay federal taxes. Obtaining an EIN is a necessary step that you will need to take before setting up a bank account. When you incorporate your startup using Capbase, we obtain an EIN on behalf of your company immediately after your incorporation paperwork is accepted by the Delaware Division of Corporations.
- Open a US bank account. Once you have an EIN from the IRS, you can set up a bank account with a US-based bank. Opening a bank account will allow your business to easily accept payments from US clients, make tax payments and do business in the US. Capbase partners with Mercury to make it fast and simple to set up your bank account. Learn more about what factors to consider when choosing a bank account for your startup.
- Keep your company in good standing by filing annual reports, franchise taxes and federal income taxes. When you register a corporation in a US state, you will typically be required to file an annual report with information about the directors and capitalization of your corporation. In Delaware, annual reports and franchise tax payments are due on March 1 every year. We built a compliance calendar inside the Capbase product to keep you aware of any state compliance requirements and make it easy for you to keep your corporation in good standing with state and federal officials.
Do you need a US address to incorporate a business in the US?
You do not need to have a US mailing address to incorporate a business in the United States. However, you will need to name a registered agent in the state you incorporate your company, and the registered agent will have a physical address in that state to receive mail on behalf of your company. Your registered agent will receive legal and tax documents sent to your company, such as:
- Compliance notices about annual reports, franchise taxes and other required state filings
- Tax documents sent from the state’s tax or revenue department
- Service of process - a notice that a lawsuit has been initiated against your company
You cannot use the registered agent’s address as your company’s legal address. The registered agent address is intended exclusively for the receipt of official documents, such as taxes and lawsuits. The legal address of your company has to be your home or office in your home country.
When you incorporate your startup as a Delaware corporation using Capbase, Capbase serves as your registered agent in the state of Delaware. The registered agent and state incorporation fees are included with your Capbase subscription fee.
Already incorporated in your home country? Here’s how to change your company’s registration to the US by doing the “Delaware Flip"
If you already incorporated your company in your home country, you can move the company registration to the United States by completing a Delaware flip. This process registers a new Delaware corporation and then makes the entity registered in your home country a wholly-owned subsidiary of the new Delaware corporation. The Delaware flip can be super simple to do if your company has only a few shareholders and no outside investors.
Here’s how the Delaware flip works:
- Incorporate a new Delaware C Corporation. You will need to name directors and officers in the corporation and allocate equity from the common shares in the new corporation to your leadership team. Capbase makes it easy to register your startup as a Delaware corporation for foreign founders.
- Work with lawyers and accountants in your home country to get any needed regulatory approval for completing the conversion. You will also want to address any debts or warrants for equity in the old entity.
- Shareholders in the entity registered in your home country agree to give up their equity in exchange for equity in the new Delaware corporation.
US Personal Taxes for Foreign Entrepreneurs
Simply incorporating a company in the US does not affect your tax residency. You will not be obligated to pay taxes in the US unless you become a tax resident in the US.
If you spend a substantial amount of time traveling to the US to conduct business, or plan on moving to the US, you should consult with an accountant and tax specialists to determine what the consequences will be for your personal tax obligations.
Can Foreign Citizens Work in the US If They Own an LLC or Corporation Registered in the US?
Unfortunately, registering a company in the US does not automatically entitle you to the right to work in the United States. Foreign citizens cannot receive salary or compensation for work completed while residing in the US unless they first obtain a work visa granting them authorization to work there. Fortunately, registering your company in the US may make it easier for you to successfully apply for certain classes of visas specific to entrepreneurs.
US Work Visas for Foreign Entrepreneurs
There are many visas that you can apply for as a startup founder looking to build a business in the US. Learn more about the various visa types available to entrepreneurs who want to move to the US to build a company, including the E-1, E-2, EB-5, L-1 and O-1 visas.
- You don’t need to live in the US to register a company in a US state. You don’t need to have a mailing address in the US either.
- As an overseas founder, there are many advantages to registering your startup in the US. The biggest advantage is access to US-based venture capital funds.
- The process to register your company in the US can be challenging if you are unfamiliar with the US legal and tax codes. Capbase simplifies incorporating a US company for foreign founders.
- If you already incorporated your startup in your home country, you can move the registration to the US by completing the so-called “Delaware flip”
- Simply registering your company does not give you the right to live or work in the US. You will have to apply for a visa to move to the US. Fortunately, there are several visa categories that apply to startup founders looking to build a business in the US.
Startup investors strongly prefer to invest in C Corporations over LLCs for tax and diligence reasons. The proceeds from selling stock in startups registered as C Corporations can be tax exempt due to Qualified Small Business Stock exemption.
Written by Greg Miaskiewicz
Security expert, product designer & serial entrepreneur. Sold previous startup to Integral Ad Science in 2016, where he led a fraud R&D team leading up to a $850M+ purchase by Vista in 2018.
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