How to register a company in USA in 2023
Since 2003, Healy Consultants Group PLC efficiently and effectively completes business set up in the USA, including helping multinational Clients i) choose the optimum corporate structure ii) register for government licenses iii) open a US or international multicurrency bank account iv) recruit staff v) secure visas for foreign staff and vi) find suitable office premises.
Popular business entities in USA
|Summary||C-Corp||Multi-Member LLC||Single Member LLC||Fast business solution||Free zone LLC||LLP||Representative office|
|Best use of company?||All purposes||Trading/holding||All purposes||Close a deal now||Manufacturing and export trading||Professional services||Marketing & research|
|How soon can you invoice Clients/sign sales contracts?||1 week||1 week||1 week||2 days||1 week||1 week||No|
|How soon can you hire staff?||1 week||1 week||1 week||2 days||1 week||1 week||1 week|
|How soon can you sign a lease agreement?||1 week||1 week||1 week||2 days||1 week||1 week||1 week|
|How long to supply corporate bank account numbers?||5 weeks||1 month||1 month||2 days||1 month||1 month||1 month|
|How long to supply company registration numbers?||1 week||1 week||1 week||2 days||1 week||1 week||1 week|
|How long to complete EIN Registration||6 weeks||6 weeks||5 weeks||N/A||6 weeks||6 weeks||5 weeks|
|Corporate tax rate on annual net profits?||15% - 40%||0%||0%||0%||0%||0%||0%|
|Limited liability entity?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Government grants available?||Yes||No||No||No||No||No||No|
|Government approval required for foreign owners?||No||No||No||No||No||No||No|
|Resident director/manager/ legal representative required?||No||No||No||No||No||No||Yes|
|Minimum paid up share capital?||US$1||US$1||US$1||US$1||US$1||US$1||None|
|Can bid for Government contracts?||Yes||No||No||No||Yes||No||No|
|Corporate bank account location?||Illinois||Singapore||Hong Kong||Illinois||North Carolina||Flordia||California|
|Can secure trade finance?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|VAT payable on sales to local customers?||0% - 7.5%||No sales in the US||No sales in the US||No sales in the US||0% - 7.5%||No sales in the US||No sales in the US|
|Average total business set up engagement costs?||US$8,860||US$9,000||US$9,000||US$11,340||US$10,020||US$6,500||US$6,750|
|Average total engagement period?||6 weeks||5 weeks||5 weeks||3 months||1 year||5 weeks||5 weeks|
|Accounting and tax considerations||C-Corp||Multi-Member LLC||Single Member LLC||Fast business solution||Free zone LLC||LLP||Representative office|
|Statutory corporate tax payable?||15% - 40%||0%||0%||0%||0%||0%||0%|
|Legally tax exempt if properly structured?||No||Yes||Yes||Yes||No||Yes||Yes|
|Must file an annual company tax return?||Yes||Yes||No||No||Yes||Yes||Yes|
|Shareholders must file an annual personal tax return?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Must file annual financial statements?||No||No||No||No||No||No||Yes|
|Must appoint an auditor?||No||No||No||No||No||No||No|
|Access to double taxation treaties?||Yes||No||No||No||Yes||No||No|
|Withholding tax on payments to foreign shareholders?||35%||0% (if services rendered abroad)||0% (if services rendered abroad)||0% (if services rendered abroad)||35%||0% (if services rendered abroad)||None|
|How long to complete state tax registration||2 weeks||2 weeks||2 weeks||2 weeks||2 weeks||2 weeks||2 weeks|
|Company Registration||C-Corp||Multi-Member LLC||Single Member LLC||Fast business solution||Free zone LLC||LLP||Representative office|
|Resident director/manager/ legal representative required?||No||No||No||No||No||No||Yes|
|Minimum number of shareholders/partners?||1||1||1||1||1||1||Parent company|
|Maximum shareholding for foreigners?||100%||100%||100%||100%||100%||100%||100%|
|Minimum statutory paid up share capital?||US$1||US$1||US$1||US$1||US$1||US$1||None|
|Shelf companies available?||Yes||Yes||Yes||Yes||No||No||No|
|Time to incorporate a new entity?||1 week||1 week||1 week||None||1 week||1 week||1 week|
|Can easily convert to a PLC?||Yes||Yes||Yes||Yes||Yes||No||No|
|Public registrar including directors and shareholders?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Can have preference shareholders?||Yes||Yes||No||Yes||Yes||No||No|
|Business Considerations||C-Corp||Multi-Member LLC||Single Member LLC||Fast business solution||Free zone LLC||LLP||Representative office|
|Good entity for trademark registration?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Can secure an import and export license?||Yes||No sales in the US||No sales in the US||No sales in the US||Yes||Yes||No|
|Sponsorship by a local citizen required?||No|
|Our Client needs to travel to US for business set up?||No|
|Temporary physical office solutions available?||Yes|
|You need a local resident as bank signatory?||No|
|Can be wholly foreign owned?||Yes|
|The entity will likely be regulated by?||"Secretary of State" in state of incorporation|
|Security deposit to be kept with Government?||No|
|Minimum number of directors/managers?||1|
|Monthly VAT reporting to the Government?||Depends on the State of registration|
|Must sign an office lease agreement during incorporation?||No|
|Shareholders & directors documents to be attested/translated?||Yes|
|Each foreign director needs a personal income tax number?||No|
|Foreign non resident director needs a work permit?||No|
|Maximum number of staff allowed?||None|
|Expatriate to local staff ratio?||None|
|Can secure residence visa for business owner?||Yes|
|Group HQ tax incentives available?||No|
|Other useful information|
|What will be included in my customer sales invoice?||Click here|
|This country has signed free trade agreements?||Yes|
|This country is a member of WIPO/TRIPS?||Yes|
|This country is a member of the ICSID?||Yes|
|Average custom duties suffered?||2%|
|Government foreign investment approval required?||No|
|Average monthly office rental? (US$ per sq m)||US$45|
|Minimum statutory monthly salary? (federal minimum wage)||US$1,257|
|Average monthly US$ salary for local skilled employees?||US$3,700|
|US$ deposit interest rate? (1 year average)||1%|
|Overseas remittance currency controls?||None|
|Multi-currency bank accounts available?||Yes|
|Corporate visa debit cards available?||Yes|
|Quality of e-banking platform?||Excellent|
|Crowd funding available in this country?||Yes|
Advantages and disadvantages of doing business in USA
- Doing business in the USA is straightforward because:
- An American LLC can, in many states, be incorporated in one day.
- Only one shareholder and one director are needed, and they can be any nationality.
- There is no minimum paid up share capital requirement.
- Our multinational Clients need not travel to complete company set up.
- A foreign-owned USA company can legally purchase property, assets, and securities.
- A USA company can access multiple tax advantages and incentives. For example:
- A business owner i) who is neither a US citizen, permanent resident or tax-resident) ii) who lives outside the USA iii) who only has a company number in the USA iv) whose staff and directors are based outside the US and v) whose company provides services or manufactures goods outside the USA, is legally exempt from USA corporate and personal income tax.
- While the above applies for the majority of cases, it should be confirmed on case-by-case basis.
- Foreign corporate shareholders need to register for Employer Identification Number (EIN) tax at all times. IRS will not share tax information with the Client’s home country.
- USA LLCs are, by default, taxed as partnerships at federal level, where the company’s profits and losses are imputed onto the owners’ personal tax returns. Corporations can make an ‘S-Corp’ election under certain circumstances to be tax transparent like a partnership. This tax treatment removes the intermediate layer of tax imposed by most countries’ corporate tax laws, saving our Clients money.
- The USA has almost 300 free zones where investors enjoy i) 100% exemption on re-export duty ii) deferred import duties and iii) exemptions from state inventory taxes for exports.
- Many multinational Clients choose to incorporate a company in a low-tax state such as Delaware, Texas or Nevada to do business in a large, profitable USA market like California. A Delaware LLC, for example, pays zero state taxes if it does not operate within Delaware.
- A USA company can be transferred to successors indefinitely without suffering capital tax or estate taxes. This is an efficient way to transfer family assets while avoiding inheritance taxes.
- A USA company can access 68 double taxation agreements with countries around the world. These agreements materially reduce the withholding taxes of payments to and from the US and allow for preferential access to overseas markets.
- The US government offers several business start-up and investment incentives. For example:
- The Small Business Administration grants subsidised loans up to US$5 million and guarantees a minimum 25% of government contracts to companies deemed economically beneficial.
- Grants and tax incentives prioritise companies/projects that create jobs, or are strategically important (e g green energy, education, health, technology, real estate etc). On average, every year more than $500 billion is granted to businesses.
- Multiple deductions are available which, on average, lower effective corporate tax from 35% to 15%. More than US$1 trillion dollars’ worth of deductions are granted in the USA every year.
- The USA is the world’s largest economy with a GDP of US$21 trillion, and accounts for about one quarter of total global trade. The country is also the world’s biggest consumer market, with average annual spending on goods and services at US$11.9 trillion. In 2020, per capita USA income stands at US$53,750.
- The USA is considered the world’s second most competitive economy, ranking particularly well in terms of i) business dynamism ii) innovation capability iii) market size and iv) financial system.
- The shale gas revolution is propelling the USA towards energy independence. In practical terms, reducing dependence on, for example, oil and gas imports will i) reduce national debt ii) raise GDP and iii) create upwards of one million jobs in the American shale gas industry.
- The USA is the world’s largest corporate finance market because:
- It boasts the world’s deepest, most liquid financial markets. Most business loans above US$100,000 are available at 6-7% interest rates and are guaranteed up to 85% by the Small Business Administration.
- The US is home to the world’s largest IPO listings, based on flexible exchange regulation and massive investment banks.
- As a result, having a presence in the USA is a way to secure public equity.
- The USA is also one of the world’s easiest paces to obtain credit.
- The USA is the world’s 2nd largest manufacturing and distribution hub (after China), focusing on high-value output, for example i) aircraft ii) turbines iii) computers and iv) robotics. Manufacturing accounts for 19% of USA GDP (valued at US$3 trillion). We recommend the USA as a manufacturing base because:
- Energy costs are low and will continue to become cheaper. For example, the electricity tariff is 10.3 cents per kilowatt hour (30-40 cents in Europe).
- The workforce is the world’s 3rd most productive in terms of output per hour (US$67).
- An extensive national road, rail, airport and port network facilitates easy and low-cost import, exports and trade. Furthermore, Washington has signed free trade agreements with more than 20 countries. Through the NAFTA agreement, US firms can access the entire North America (plus Mexico) market.
- The government is also currently negotiating two massive free trade agreements with EU and Pacific nations. The Trans-Pacific Partnership is being negotiated between the US, Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. These countries would eliminate tariffs, quotas and lower customs regulations for 11% of the world’s population and nearly 40% of global GDP. Meanwhile, talks continue with the EU on the Transatlantic Trade and Investment Partnership.
- The USA has a culture of entrepreneurship and innovation, especially in areas such as science and technology. For example:
- It is a melting pot of startups, financiers and innovation-led entrepreneurs. There is no better place in the world to set up a tech firm than Silicon Valley, surrounded by the likes of Google, Facebook, Apple, Intel, and Yahoo and the colleges of Stanford and UC Berkeley. To learn more about what makes Silicon Valley special, read this comparison of Silicon Valley and Singapore for launching a startup.
- Several major American cities with developed industries witness a spillover in technology, collaboration, employees and culture, and this will help a start-up. This includes i) Silicon Valley (technology) ii) Houston (energy) iii) Detroit (automobiles) iv) New York City (finance) v) Seattle (aerospace) vi) Los Angeles (Entertainment) and vii) Chicago (Agriculture).
- The US ranks highly in terms of investor protection, backed up by a robust regulatory environment.
- Although the USA economy has been hit hard by the COVID-19 pandemic, we predict USA business confidence will rebound in 2021 and over the next few years. This will be a great opportunity for our Clients to expand their operations in the USA.
- Since 2018, the USA is engaged in a damaging trade war with China. The fallout from the ‘war’ as the USA and China vie to be the global economic superpower includes i) higher tariffs on imported raw materials for US companies and ii) restricted, high cost access to the Chinese market for US exporters.
- The COVID-19 pandemic has caused the USA economic to shrink by 9.5% in the second quarter of 2020. The unemployment rate is 7.9%. While high unemployment may benefit some businesses, retraining costs may be a deterrent for investors.
- Hiring workers in the USA is expensive for start-ups and embryonic businesses because:
- The average monthly wage for high-skilled workers is US$6,000, including health care and retirement benefits.
- There are also strict legal rules regarding hiring and firing of workers. As a result, countries like China and Mexico have completely replaced the USA for low-end manufacturing.
- Setting up operations across multiple states is complex because:
- Incorporation is handled at state level, meaning that your company needs to make new registrations in each state it enters.
- Setting up operations in a new state requires either the incorporation of a new company or registering a branch of your company from another state.
- Managing taxes for a USA company is difficult and time-consuming because:
- Taxes apply at federal, state and municipal levels, requiring knowledge of, and compliance with, many tax regulations.
- The federal tax code is huge, complex and constantly changing, making it extremely difficult to know how to file for what income and when.
- Companies with income from multiple states have a higher tax compliance burden due to a requirement to file tax returns in each state from which they derived income.
- USA tax law has a huge number of deductible items, meaning that companies must spend time planning their expenditure in a tax-efficient way, then reporting that in their tax filings.
- There is no participation exemption for income from foreign subsidiaries, meaning that dividends are taxed at 35% when paid to the USA parent company (with deductions for tax already paid on that foreign income). Because the 35% rate is high globally, this can mean an additional 15-20% tax on foreign income for USA-headquartered businesses.
- A USA company setup can suffer high litigation fees. For example:
- Every year, 15 million civil lawsuits valued at US$251 billion are filed in the USA, by far the world’s highest.
- Even if our Client successfully defends a lawsuit, legal bills are likely to be high and unrecoverable, as the USA legal system does not pass on litigation costs to the losing party.
- Consequently, we encourage our Clients to plan for the cost of liability insurance, potential lawsuits as well as precautionary measures.
- USA companies incur high costs due to inefficient Congressional laws. For example:
- Calculating tariffs and import duties is complex because almost every product has its own rate, which varies by country of origin. In addition, clearing goods through USA customs is cumbersome.
- The federal-state system leads to extremely complex and irregular regulations. There are essentially 50 unique jurisdictions within the USA, each with their own licensing laws.
- The US market is highly competitive, and roughly half of all companies fail within the first five years. Sectors such as agriculture and manufacturing, which require huge initial capital, are dominated by large corporations.
- The US has an opportunistic culture where companies, and investors are focused on short-term results than long-term strategic goals.
- The USA scores poorly on the Corruption Perceptions Index (CPI). The World Bank ranks the country 17th globally in terms of contract enforcement, while the quality of the judicial process is 15 in New York City, below the 11.7 average in OECD High Income economies.
- If our Client would like to register a branch office in certain state and employ staff there, state tax registration is required, and an additional fee will apply. Thereafter, nil forms for Employer’s Federal Tax need to be submitted even if the company doesn’t have staff at the moment.
- Doing business in the USA is straightforward because:
Typical USA engagement steps and timeline
Typical USA engagement steps
- Our Client i) settles Healy Consultants Group PLC’s US engagement fee ii) signs and returns our official engagement letter along with iii) the requisite due diligence documents from each stakeholder.
- Our experts set out the available options and Healy Consultants Group PLC’s recommendations for a structure for doing business in the US, taking into account tax optimisation, company law and our Client’s business plan.
- Healy Consultants Group PLC prepares a detailed project plan, mapping out a step-by-step plan towards engagement completion, optimising transparency and setting Client expectations.
- After the corporate structure is determined, Healy Consultants Group PLC prepares the company incorporation forms for Client signature and courier return.
- Healy Consultants Group PLC checks which of our Client’s preferred company names are available for registration and accordingly proceeds to reserve the most preferred name with the respective Secretary of State.
- Healy Consultants legally incorporates the company in the Client’s chosen US jurisdiction (we usually recommend Delaware, Texas, Nevada and Wyoming) and immediately emails to our Client i) the company’s public profile and ii) the certificate of incorporation or filing receipt. We also register for a federal EIN for tax purposes.
- Healy Consultants Group PLC’s incorporation team receives the Certificate of Incorporation from the Department of State, which our team immediately, forwards to our Client.
- If necessary, Healy Consultants publishes a six-week formation announcement in the local newspapers (this applies in New York).
- After company set up, Healy Consultants’ banking team completes corporate bank account opening for our Client, including world class multi-currency internet banking facilities.
- Where possible, Healy Consultants will arrange with the bank to prevent our Client having to travel for the account opening interview. Immediately afterwards, our Client is required to deposit the proposed share capital of the company.
- If necessary, under state law Healy Consultants registers the company for unemployment insurance division of each state in which our Client conducts US business and arranges workers’ compensation and disability insurance.
- Following engagement completion, Healy Consultants couriers a company kit folder to our Client’s preferred international address, containing the company’s corporate documents including original corporate documents, unopened bank correspondence and a Client feedback survey.
Typical USA engagement timelineStartEngagement Planning
1 weekCompany incorporation
1 weekCorporate bank account approval
3 weeksCorporate internet banking approval
3 weeksEngagement completion
1 week9 weeks
Additional support services
Opening a corporate bank account in the USA
The USA is home to top tier international banks. It is usually necessary for our Clients to travel to the USA to open a local multi-currency bank account to meet the bank officer and submit the account opening application in person. The law is very strict on this requirement and stringent checks apply.
Healy Consultants Group PLC can accompany you to the bank meeting.
Before opening a new corporate bank account in the USA, our Clients will need to submit i) photo ID of the director opening the account ii) proof of address of the named director iii) articles of incorporation of the business iv) Federal Employer Identification Number (EIN) and v) proof of business address.
US accounting & tax considerations21%
Personal income tax15 July
Filing date for corporate tax returns
- Permanent residence visa, for Clients incorporating a new company and investing either US$500,000 (in a rural or high unemployment area) or US$1 million, a creating 10 full-time jobs in the first two years after receiving the conditional visa.
- Temporary residence visa, for multinational Clients wishing to engage in trading activities or incorporate a new company (and hold at least 50% of the shares). This visa is available for Clients from so-called treaty countries.
- Employment visa, for example Clients in specialist occupations, or an employee being transferred from an office outside the USA to a USA-affiliated office.
Frequently asked questions
How to register an offshore company in the USA?
Registering an offshore company is like registering a local USA entity. Delaware and Nevada are the best states in the USA to incorporate offshore businesses. Non-US citizens and non-green card holders benefit the most from setting up offshore companies in these states as there are no requirements to file & pay taxes if the business income is derived outside the United States.
What are the types of business entities suitable for a non-resident in the USA?
The most suitable corporate entity for a business depends upon several factors including the i) profession of an entrepreneur; ii) nature of the business and iii) number of business owners.
Generally, non-US residents incorporate a limited liability company (LLC) because of its straightforward setup procedure, no capital restrictions or limits on receiving pass-through profit distributions.
Is visa required for foreigners to register business in the USA?
While visa is not compulsory for foreigners to register their business in the USA, a valid residence permit is required by foreigners to stay and operate their business in the country.
What are the document requirements to register an LLC in the U.S?
The following documents are required to register an LLC in the USA i) business name reservation form; ii) articles of organisation; iii) operating agreement; iv) minutes of the meeting and v) board resolutions.
Do foreign companies that are not incorporated in the USA need an EIN to do business within the U.S.?
All foreign companies that are required to pay taxes using tax treaties and require to claim deductions from the USA’s Internal Revenue Service (IRS) should obtain an EIN.
What is the tax on an LLC in the USA?
For federal income tax purposes, LLC taxation depends on the tax class opted by the company and on the number of members or shareholders of the company.
An LLC opting as a Corporation for tax purposes may have an average tax rate of 27.1%.
Can US companies do business with Iran?
USA has imposed sanctions against Iran. Therefore, no businesses in the USA can do business with entities based in Iran.
How to find USA company registration number?
Every state in the USA has an online portal to provide the current status of the entities registered within their jurisdiction.
Can a US company do business in Canada?
Yes, a US company can do business in Canada. The company is subject to taxation in Canada unless a treaty exemption is applicable.
Can any US company sponsor H1B (non-immigrant employment US visa)?
Any USA company with a valid IRS tax number can sponsor a H1B visa for a foreign national to work in the United States for a temporary period.
Does the US use GAAP or IFRS as its accounting standards?
Domestic public companies in the USA must follow GAAP standards while foreign companies are permitted to follow IFRS standards.
How to decide upon the State for incorporating a company in the USA?
If the business is going to serve the entire USA, it is best to incorporate your company in a low-tax state like Delaware or Nevada. Otherwise, it is better to incorporate the company in the state where the business will be active.
How much does it cost to register a company in USA?
Healy Consultants Group PLC’s estimated fees to setup an LLC is US$9,000. This fee includes i) company formation services; ii) registered agent services; iii) EIN & Government registration and iv) corporate bank account opening fee.
Do businesses get tax incentives for doing business in America?
At the State and local government levels, USA provides various tax credits and incentives to encourage foreign investments. More information about incentives provided by each State can be found on businessfacilities.com website.
Why did the US impose tariffs on China?
The United States of America has increased import duties on Chinese goods to force China to change its unfair trade practices. This led to the very beginning of the US-China trade war as the latter retaliated with increased duties on imports from USA into their country.
Healy Consultants Group PLC recommends businesses to look for alternative manufacturing locations to avoid increased import tariffs.
Does US have free trade zone?
Yes, USA has more than 290 free trade zones in all 50 states – with major economies like Texas, Louisiana and South Carolina and a free zone in Puerto Rico.
What are the available types of work visas for USA companies willing to hire foreigners?
There are 11 different types of temporary work visas available for foreigners in the USA.
What are the business visas available in USA?
USA issues two types of permanent residence visa for investors, including i) EB-5 visa – Green card for Entrepreneurs and ii) E-1 visa – treaty investor visa for foreigners from treaty countries.
Is USA a good choice to start a crypto-currency business?
Yes, Nevada and Delaware are the best states in the USA to start a cryptocurrency business due to their vibrant crypto-friendly ecosystem, low-tax and being legally receptive to crypto-based start-ups. Read more about our USA crypto-currency solution.