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USA Company Formation for Foreigners

Starting a business in the UK can offer a gateway for expats and international entrepreneurs to establish or grow their business presence. PathVisas can guide you through each step of registering your company, tax compliance, and fulfilling all legal requirements.

Company Formation Types and Costs

  1. Limited Liability Company (LLC)

  • Description: The most popular type of business entity in the USA, especially for small businesses. It offers limited liability protection and flexibility in terms of tax options.

  • Minimum Share Capital: No minimum required.

  • Cost: Registration fees typically range from $250 to $2500 depending on the state. Additional fees for services like a registered agent, virtual office, or bank account set up.

  • Time to Register: 1–2 weeks (varies by state and processing time).

2. Corporation (Inc.)

  • Description: Ideal for larger businesses or those planning to raise capital by issuing shares. Corporations offer the advantage of stock issuance, but they are more complex to manage than LLCs.

  • Minimum Share Capital: No minimum required by most states; some states may have a minimum of $1 or more.

  • Cost: $100–$10000 for filing articles of incorporation, depending on the state.

  • Time to Register: 1–3 weeks.

3. S Corporation (S Corp)

  • Description: A tax status that allows income to be passed through to shareholders to avoid double taxation. Only available to small businesses with fewer than 100 shareholders, and all shareholders must be U.S. citizens or residents.

  • Minimum Share Capital: No minimum required.

  • Cost: Filing fees range from $100 to $5000.

  • Time to Register: 1–3 weeks.

Documents Required for Foreigners to Register a USA Company

  • To register a company in the USA, foreigners must provide the following:

  • Passport or Government-Issued ID: Proof of identity.

  • Proof of Address: Utility bill, bank statement, or rental agreement.

  • Employer Identification Number (EIN): This is required for tax purposes. Foreigners can obtain an EIN online via the IRS.

  • Company Name: Must be unique and compliant with state laws.

  • Registered Agent: An official U.S. address is needed for service of legal documents.

  • Operating Agreement (for LLCs): Not mandatory in all states but highly recommended.

Name Selection

  • Uniqueness: The company name must be distinct and cannot be similar to any registered entity within your state.

  • Naming Requirements: If forming an LLC, the name must include "LLC" or "Limited Liability Company." If forming a corporation, it must include "Inc." or "Incorporated."

  • Check Availability: You can check name availability by searching the state’s business entity database online.

Timeline to Receive Company Documents

  • LLC or Corporation Registration: Typically, you will receive your official registration documents (e.g., Articles of Organization or Incorporation) within 1–2 weeks after filing, depending on state processing times.

  • EIN (Employer Identification Number): Obtaining an EIN takes 1–3 days if applied online.

Taxation on Income

  • Corporate Tax Rate: The federal corporate tax rate in the USA is 21% on profits. However, each state may have additional state taxes ranging from 0% to 12%.

  • Self-Employment Taxes: LLC members and S Corp shareholders may be subject to self-employment taxes for income derived from the business.

  • Filing Taxes: You must file annual tax returns with the IRS and state tax authorities (if applicable).

Local Bank Account

  • Bank Account Requirements: To open a business bank account in the USA, you will need the following:

    • Employer Identification Number (EIN).

    • Proof of company registration (Articles of Incorporation or Articles of Organization).

    • Personal identification (passport for foreigners).

    • Proof of address for the business (could be your registered agent’s address).

  • Cost: Bank accounts may have no monthly fees or fees ranging from $5 to $30 per month depending on the bank and type of account.

  • Opening an Account: You may need to visit the bank in person, although some banks may offer online account opening for foreigners.

VAT (Sales Tax) Enrollment

  • Sales Tax: The USA does not have a federal VAT system. Instead, sales tax is imposed by individual states, and the rates vary by state (ranging from 0% to 10%).

  • When to Register: If your business sells goods or services, you must register for sales tax in the state(s) where you operate.

  • How to Register: Each state has its own sales tax registration system. You can register online via the state’s Department of Revenue website.

Tax Filing Requirements

  • Federal Taxes: Corporate tax returns must be filed annually with the IRS. LLCs, S Corps, and Corporations must file depending on their structure and income.

  • State Taxes: Each state has its own tax filing requirements, which may include state income tax, sales tax, and franchise taxes. Consult with an accountant to ensure compliance.

Virtual Address & Phone Number

  • Virtual Address: You may use a virtual address for your business registration. This can serve as your official registered address and is essential for foreigners who do not have a physical presence in the USA.

  • Business Phone Number: A business phone number allows you to receive calls and make calls to clients or suppliers in the USA.

Accountant for Tax Filing

  • It is highly recommended to have an accountant to ensure accurate tax filings and compliance with both federal and state tax laws.

  • Cost: $400–$4000 per year depending on the complexity of your business.

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