When you’re on the verge of registering and launching a company in the USA from India, you might feel like you’re embarking on a complex and challenging journey. We get it, and we’re here to help.
This guide is tailored for Indian entrepreneurs looking to learn how to register and start a company in the USA from India. Together, we’ll navigate the complexities of the legal, financial, and operational aspects to pave the way for your success.
Register and Start your business in the USA
Step 1: Choose between LLC and C-Corp
When individuals or businesses from India consider registering a company in the U.S., deciding between an LLC (Limited Liability Company) and a C-Corp (C-Corporation) becomes a crucial step. Each entity type offers distinct features, advantages, and limitations; making them suitable for different business scenarios and goals.
Register LLC in the USA from India:
- Taxation: In most cases, foreign-owned LLCs don’t qualify for pass-through taxation, but there’s a better way: register the LLC as being taxed as a corporation and then invoice it (personally or from your local business, or a lower tax jurisdiction) for management fees until there is zero profit and therefore zero taxes owed in the USA.
- Ownership: There are no restrictions on ownership in an LLC. Members can be non-US citizens, non-resident aliens, or domestic or foreign companies, making it a flexible option for foreign individuals or entities from India.
- Management: LLCs offer a flexible management structure, allowing owners to define their roles and operations without the need for formal structures. An LLC is designed to be a limited liability Sole Proprietorship (one owner) or Partnership (multiple owners) and is managed/owned with that in mind. This flexibility means less complexity and more direct control over business operations.
- Compliance: With generally fewer compliance requirements and formalities, LLCs can lead to reduced legal and accounting costs. This is particularly advantageous for smaller businesses that may not have the resources for extensive record-keeping and frequent reporting.
Register C-Corp in the USA from India:
While LLCs offer many advantages, there are circumstances where a C-Corp may be more appropriate:
- Raising Capital: If the primary goal is to attract venture capital or go public in the future, C-Corp is typically preferred by investors. They allow for issuing various types of stocks, which can be enticing to investors looking for equity positions.
- Desire for Structure: Some businesses may prefer the formal structure of a C-Corp, which includes a board of directors and defined officer roles. This can enhance credibility and establish a clear hierarchy within larger organizations.
- Employee Benefits: C-Corps are favorable for businesses planning to offer a variety of benefits to a large workforce. They’re structured to easily handle such offerings, making them suitable for companies looking to attract and retain talented and skilled employees, such as:
- Stock Options: C-Corps can give employees the option to buy company stock at a specific price, making them part of the company’s growth and success. This is particularly appealing in startup or rapidly growing environments.
- Tax Advantages: C-Corps can enjoy certain tax advantages with employee benefits, like being able to deduct the cost of these benefits. This can be financially beneficial for both the company and its workforce.
In summary, while LLCs often suit foreign entrepreneurs from India with their tax, ownership, and compliance benefits, C-Corps are valuable for fundraising and structured growth. Deciding between an LLC and a C-Corp in the U.S. requires careful consideration.
Step 2: Pick a Name and a Corporate Ending
Here are the key steps and considerations for choosing a name:
- Choose a unique business name: The name should be unique and not already in use in the state where you plan to register your company. You can check the availability of the name on the state’s Secretary of State website.
- Check for name availability: The registered agent (who must have a physical address in the state where you plan to register your company) will verify that the name is available if you ask.
- Consider the type of business entity: The type of business entity you choose, such as a C-Corporation, LLC, or S-Corporation, will also influence the name of the company. For example, an S-Corporation can only have U.S. residents as owners, so it isn’t suitable for foreign business owners.
- Comply with state regulations: Each state has specific regulations regarding business names, and you must ensure that your chosen name complies with these requirements. This may include checking for reservations, filings, and other procedures as required by the state.
Step 3: Select Your Registration State
Selecting the right state for your business registration is crucial as it impacts taxes, legal matters, and operations. Delaware, known for its business-friendly environment, is an option worth considering among others like Wyoming and Nevada.
| State | Advantages | Disadvantages |
|---|---|---|
| Delaware | Favorable Tax Environment | Franchise tax may lead to slightly higher costs for businesses |
| No state corporate income tax for out-of-state business | ||
| No State Sales Tax | ||
| Ease of Business Formation | ||
| Flexible Business Structures | ||
| Wyoming | No corporate or personal income tax | Less recognized compared to other states |
| Cheaper franchise taxes | ||
| Nevada | No state corporate income tax | Higher annual reporting fees |
| Mandatory state tax return filing | ||
| Public listing of all officers and directors |
Step 4: Choose A Registered Agent For Legal Compliance
To choose a registered agent for a business in the USA, there are several factors to consider. The registered agent is responsible for receiving legal and official documents on behalf of the business, so it is essential to choose a reliable and trustworthy agent.
Here are some key considerations when choosing a registered agent:
- Physical Address: The registered agent must have a physical street address within the state where the business is registered. A P.O. box is not acceptable.
- Availability: The registered agent must be available during normal business hours to receive legal and official documents.
- Compliance Expertise: The registered agent should be an expert in the state’s business compliance rules and regulations.
- National Presence: If the business operates in multiple states or plans to expand into other states, having a national registered agent service is a great option.
- Reputation: Choose a reputable registered agent with a track record of providing reliable and efficient services.
- Additional Services: Some registered agents may offer additional services, such as assistance with business formation and filing required formation documents.
7. Fees: Consider the fees charged by the registered agent and ensure that they offer a flat-fee model without any hidden charges.
Step 5: Provide details for the Owner, Director, and Manager (Who May Be A Single Individual)
You must provide the following:
- A passport
- Address
Step 6: Get A US Office (Virtual Or ExecutiveCenter)
A virtual office allows you to register your business with a premium address while saving on the expense of a physical office.
When registering a company in the USA from India, you have the option to obtain a virtual office, which can provide a professional business address and other services.
Want Help Setting Up Your Serviced Office?
With our registered agent services, we also offer serviced offices.
Step 7: Get an EIN From the IRS
Obtaining a Federal Employer Identification Number is an essential step. It legitimizes your business in the United States. The Internal Revenue Service (IRS) assigns this nine-digit number for tax-related purposes and several other business operations.
To secure an EIN outside the US for your company, there are two main methods available
- Apply for an EIN: After incorporating your company, you can apply for an EIN from the Internal Revenue Service (IRS). An EIN is a unique nine-digit number assigned by the IRS to identify your business for tax purposes.
- Use a Registered Agent: When registering your company, some registered agents can assist in the process of obtaining an EIN. The registered agent is responsible for receiving legal and official documents on behalf of the business, and they can also sometimes help with the EIN application process.
Once you’ve successfully applied for your EIN, the next crucial step is to register your company with FinCEN BOI in accordance with the latest legislation and regulations.
Register the company and beneficial owners with FinCEN BOI
When registering a company in the USA, it’s important to comply with the Beneficial Ownership Information (BOI) reporting rules set by the Financial Crimes Enforcement Network (FinCEN). These regulations, part of the Corporate Transparency Act, require reporting companies to provide details about the individuals who ultimately own or control them.
Here are the key points for registering your company and beneficial owners with FinCEN BOI:
Reporting Deadlines and Requirements
- Companies created or registered for business before January 1, 2024, have until January 1, 2025, to file their first BOI report.
- Existing companies have one year to file, while new ones must do so within 90 days of creation or registration.
- Companies must provide four pieces of information about each beneficial owner: name, birthdate, address, and passport number.
Reporting Process and Frequency
- Companies should have processes in place for collecting, reporting, and safeguarding BOI data for FinCEN.
- Reporting is not an annual task; you only need to submit a report once, unless you need to update or correct information.
- FinCEN started accepting reports on January 1, 2024.
Compliance and Fraud Protection
- Be vigilant about potential fraud. FinCEN never sends unsolicited requests, so don’t respond to fraudulent messages or click on any links in them.
Step 8: Open a US Bank Account Remotely
After successfully forming your company, the next critical step is opening a US bank account.
Documents needed for opening a US bank account:
| Required documents | Description |
|---|---|
| Director's Identification | Valid photo ID, such as a passport and driver's license, or tax card with a photo. |
| Director's Address Proof | Proof of the director's residential address, e.g., utility bills or bank statements. |
| Incorporation/Organization Papers | Articles detailing the company's structure, management, and membership. |
| EIN Confirmation | Verification letter issued by the Internal Revenue Service (IRS) for taxation purposes. |
| Business Location Verification | Evidence confirming that the business address is located in the United States. |
| Company Documents | May include the company's certificate of incorporation, articles of organization, or other relevant documents. |
We work alongside four different US banks and are able to help you open an account in under 5 days, which is significantly faster than the typical turnaround period. You can find out more on this page or simply book us in for a free consultation.
Step 9: Open A Merchant Account To Accept Credit Cards
When registering a company in the USA from India, opening a merchant account to accept credit card payments is a crucial step. A merchant account is a business account that allows the acceptance and processing of credit card transactions.
Requirements for opening a Merchant Account:
- Completing a detailed application with relevant business information (i.e. Business license, proof of business bank account, and EIN)
- Business and personal credit history
- Certificate of incorporation
- Articles/memorandum of association
- Shareholder registry
In addition to business details, you might be required to provide personal information about yourself as a business owner. This includes:
- Your full name
- Your residential address
- Your ITIN (optional)
This is necessary because the merchant account provider conducts a credit check as a standard component of the underwriting process. Not all providers require a credit check anymore.
Step 10: Transfer Profits Home Or To A Lower Tax Jurisdiction
When establishing a company in the US from India, there are significant considerations and regulations to understand regarding repatriating profits and transferring them to lower tax jurisdictions. Here are key points to keep in mind:
Getting Your Money from India:
- Indian Regulations: India has strict regulations governing the remittance of funds abroad. These regulations are overseen by laws such as the Companies Act, the Foreign Exchange Management Act, income tax laws, Double Tax Avoidance Agreements, and transfer pricing guidelines.
- Ways to Bring Money from India: Money can be brought back from India in different ways, like paying dividends, closing the business, buying back shares, reducing share capital, paying for services (management fees), or receiving royalties.
- Taxation: Every repatriation from India is subject to applicable taxes. Current income earned in any year is permitted to be repatriated in the same year or cumulatively in subsequent years. Funds held in a Non-Resident External (NRE) account are freely repatriable without limits.
Transferring Profits to a Lower Tax Jurisdiction:
- Tax Implications: When transferring profits to a lower tax jurisdiction, consider tax implications in both the source and destination countries. Countries such as the Bahamas, Bermuda, and the Cayman Islands with 0% corporate tax rates are popular for offshore investments.
- US Tax System: Understand how the US tax system may incentivize offshoring profits to low-tax jurisdictions within the context of international tax laws and agreements.
Limitations and Regulations
- Repatriation Limits: Limits apply to repatriating money from India to foreign countries, particularly for non-resident Indians (NRIs) selling property in India. Permanent relocation to a foreign country can affect the amount that can be repatriated.
- Tax Implications: Be aware of tax implications related to significant money transfers in both source and destination countries. India and the US both have regulations and taxes on remittances and large money transfers.
Setting Up Transfers
Payment Methods: Various options exist for paying a business in India from the US, such as ACH transfers, money orders, online money transfer services, and international payment platforms. Consider factors like exchange rates, fees, and transfer times when choosing a payment method.
Step 11: Get an ITIN from IRS for Banking and Credit (optional step)
An ITIN is a special tax number from the IRS for people who need a US taxpayer ID but can’t get a Social Security number.
When registering a U.S. company from India, getting an Individual Taxpayer Identification Number (ITIN) from the IRS can help with smoother banking and building a credit history for you and the business.
However, it’s important to know that you don’t need an ITIN to start a business in the U.S.
What are the Costs and Registration Fees for Incorporating a Company in the USA?
The choice of state for incorporating a company in the USA often hinges on several factors, including costs, regulatory environment, and specific advantages offered to businesses.
Here’s a breakdown of the different taxes imposed by the top 5 states:
| State | Cost to Incorporate | Annual Franchise Tax |
|---|---|---|
| Delaware | $90 | $225 |
| Wyoming | $100 | $60 |
| New Mexico | $50 | $0 |
| Nevada | $75 | $0 |
| California | $70 | $800 |
Requirements to Register a Company in the USA for Indian Citizens
These are the critical initial steps you must take when registering a company in the United States. Remember, they’re extremely important and should be your top priority.
- Directors must be at least 18 years old (or have a parent representative) and have valid passports.
Frequently Asked Questions
Do I need to travel to the US for Company Registration?
You do not need to travel to the US for company registration. The process of registering a company in the US has shifted entirely online. The physical presence of any of the business stakeholders is not required. Instead, you can submit the necessary scanned and self-attested documents for registration via a portal.
What is a Certificate of Authentication and when is it required?
A Certificate of Authentication is an optional document that may be necessary for specific business activities, like opening a bank account in India or providing proof of a US company. It’s not a mandatory requirement for registering a company in the USA from India.
How can I obtain an Apostille for my US documents?
To obtain an Apostille, which is a form of attestation accepted under the Hague Convention, you can apply through your Registered Agent, the Secretary of State’s office or other officials such as U.S. federal court clerks or the U.S. Department of State Office of Authentications. This step is useful if you need to open a bank account in India or submit proof of your US company.
What should I do to authenticate Indian documents for use in the United States?
For authenticating Indian documents, you can obtain an Apostille sticker from the Ministry of External Affairs (MEA) or the Consular-Passport-Visa Division in New Delhi. Once apostilled by the MEA, these documents do not require further authentication at the U.S. Embassy or Consulate General and are ready for use in the United States.
Is the Certificate of Authentication always necessary?
No, the Certificate of Authentication is not always necessary. It’s important to consider your specific business needs to determine if this step is essential for your circumstances.
Final Steps to U.S. Business Success for Indian Entrepreneurs
Registering and starting a company in the USA from India is a multifaceted journey. This 2024 guide provides a comprehensive outline that covers essential steps from selecting an appropriate business structure to establishing bank accounts.
As an Indian entrepreneur, you can navigate this process with strategic planning and the right registered agent at your side, to help you through the legal steps and the state registration process.
Feel free to reach out to us at Valis for a free, no-obligation consultation where we can answer any questions regarding the information above and how you can get registered in just a matter of days.
