Register a Company in USA

Overview of Company Registration in USA

You will find a new business enterprise[1] being established in the USA. It includes both market giants to small-scale enterprises. United States is a country with the largest market in the world. This can be attributed to the fact that they have the lowest tax rate.

The USA is infamously known for being a great business hub. It can enlarge your business and registering your company there would also be a key factor for the success of you business. You may opt for company registration in USA

Without you being the citizen of that country. The procedure is online and simple.

For starting a business in the USA, the first step is to start with the company registration process. There are a few steps that need to be taken care of for US company registration. USA government has given few relaxations to foreign nationals who want to set up a business over there. A foreigner can set up or incorporate a company via online mode either as Inc or an LLC by following a simple procedure. Most of the foreign nationals are willing to set up a business in the USA, due to its foundational technology, infrastructure and resources available in the country.

Options for US company registration

There is a specific procedure that everyone has to follow for US company registration. One of the foremost steps is to choose the category or type of incorporation. Entities can be formed in two ways in the USA, as mentioned below:

• Standalone entity: The Standalone entity is that entity which is majorly possessed by a group of investors, stakeholders, founders, and sometimes other employees of the company. This entity is separate and different from the existing company.
• Subsidiary entity: The Subsidiary entity is a wholly-owned entity or subsidiary of any existing company which is presently situated and registered outside the USA.

Further, there are generally two options available for Indians, i.e., forming a US Corporation (Inc) or an LLC. Indian nationals mostly go with registering an LLC (Limited Liability Company) due to its adaptability and easiness towards taxation. In contrast, entrepreneurs looking to go public and seeking investment from angel investors or venture capitalists majorly go for US Corporation or Inc. Major attraction of foreign nationals towards this is due to no restriction on shareholding or numbers of owners in this setup. Further free transfer of shares and multiple tax planning options along with legal protection to a corporation is another reason behind.

The Distinction between LLC and C Corp

LLC	C Corp or Inc.
In an LLC owners are called as ‘the members’	In C-Corp or Inc, the owners are ‘the Shareholders’ of the company.
Entities looking for a small investment and limited shareholding set up go for LLC	Entities seeking financing and which aim to establish large business comparatively go for Corp or Inc.
Transfer of shares depends on various factors and comparatively procedural	Transfer of shares is much easy and convenient
Members can finalize LLC structure as per mutual discussion and understanding	The proper procedure is to be followed as per prescribed rules and guidelines. Directors of the company who are responsible for running affairs of the company are to be nominated by shareholders
LLCs are mostly structured to be formed and operated as partnership firms, so large investors do not prefer to invest in LLCs.	Being a legal entity, investors such as venture capitalists and angel investors are much inclined toward investing in C Corp.

Benefits of Company Registration in USA

• International Reputation

Company registration in the USA helps you gain an international reputation. USA, one of the most renowned countries, therefore registering your business would give you more recognition and people would love to partner with you.

• Business friendly laws and regulations

USA is known for its business friendly laws and regulations. It is easier to sell in the US market and tax rates are low as well therefore more entrepreneurs are attracted to this country. The regulations around company incorporation are less taxing and are the one that promotes ease of business.

• Minimize your personal liability

Company registration in USA means that your personal assets are protected against business actions. When you register your business there, your company is then a distinct legal entity and it is responsible and accountable for debts arising out of the business. It means that the creditors can only seek payment from your business assets and not from your personal assets. It allows you to perform your company operations without risking your personal assets like your savings, properties etc.

• Better and easier access to capital

When you register your business entity as a corporation in the USA, you are permitted to issue shares and also raise equity capital. It will serve as a much needed financial boost. To raise money and attract investors is vital for the expansion and for the development of your business. When you think from the point of view of investors, it is more preferable for them to too invest in a registered organization as a formal structure is there in such an organization to make profitable use of their investment.

Moreover, it is reasonably easier for a registered company to obtain a bank loan comparatively in case of a partnership firm or sole partnership. Registered businesses have access to different sources of capital and banks are aware of the fact that these businesses can repay their debts from these sources.

• Enhanced credibility and brand awareness

Another benefit of registering your company in USA is enhanced credibility and brand awareness. Customers and other stakeholders perceive registered businesses to be more stable than unregistered business.

Registering your business in USA will add to your list of benefits in terms of dealings with reputed organizations in the future. Many companies in the USA establish business ties and engagements with only registered companies. A registered business makes itself in better position to obtain discounts and attractive wholesale rates. Various government contracts are also at the disposal of registered businesses.

• New Markets

All states in the United States of America are looking to increase the level of business environment and many cities encourage them to invest in their communities. You may have a number of opportunities in terms of where to set up your business and can choose from locations that suits your choice.

• Low Corporate Tax

Many states in the USA offer financial incentives to investors who are willing to set up a company there. Some of such incentives include tax benefits and the country has known to lower their commercial real estate taxes for foreign investors in the recent times. Also the fact that corporate taxes are lower is one of the significant benefits of registering your Company in USA.

• Techno Friendly Country

USA has access to advanced technology. It increases the desirability among businesses to do business there. Many investors are incorporating companies in USA just to have the access to these cutting edge technologies which will boost their business productivity and global communication.

• Ease of hiring quality manpower

A registered enterprise in USA gets the benefit of hiring full time employee and paying them as per the provisions of the law of the land. When your register your company in USA, you get a State Identification Number that allows you to route the state taxes on part of your employees. It additionally also help you to provide your employees with health benefits and other statutory benefits. These benefits will make your company an attractive proposition for workers in the US and you shall hire and retain them with ease. Therefore register your company in any of the state in US to have quality manpower on board.

• Other benefits

There are other notable benefits that can cause you to consider registering your Company in USA. The fact that USA is considered to be world’s second most competitive economy, when it comes to innovation, market size, business dynamism etc. can motivate one to invest there. Apart from that USA has a culture of innovation and entrepreneurship in areas of science and technology. US ranks high in terms of protection of investors backed up with a robust regulatory environment.

Specific steps need to follow for US company registration, as mentioned below:

• Step 1: Decide the type of entity– The first decision to make is regarding the kind of company. As discussed above, primarily, two models are available for US company registration. One is LLC, and another is Corp or Inc. This depends on the size of entity or type of investment.
• Step-2: Appointing a registered and authorized agent– Although, there is an online procedure available for US company registration. However, only an authorized person or agent can apply for US company registration procedure. So it is always recommended to appoint a qualified agent to start your US company registration procedure. The agent is responsible for collection, documentation and further submission of documents with authority. Further, he is responsible for receiving any communication or reports from the respective authority in this regard and do comply with all provisions as prescribed.
• Step-3: Picking company name– Next step in US company registration is a selection of company name. That name needs to be unique and should not match with any pre-existing company. The agent starts with a name availability search, and after that, he applies for name approval application before the authority.
• Step-4: Collection and submission of documents with authority: The agent is responsible for the collection of records of all the members, proposed directors or shareholders or any other official of the company. The agent is further required to submit an application with authority for their appointment.
• Step-5: Creation of Employer identification number (EIN)- Once the agent makes an application, US internal revenue services generates an Employer identification number (EIN) or a tax ID number. Employer identification number (EIN) is a unique identification number allotted to a company incorporated, which is essential for post-registration procedure or taxation purpose.
• Step-6: Some companies are required to submit an Apostille certificate or a Certification of authentication before the authority in case the company doesn’t belong to a country which is part of the Hague Conventions. Other companies no need to submit the same.
• Step-7: Next step is to take authorization to start a business by registering a vendor’s license or tax permit for a particular state.
• Step-8: Get necessary tax permits from the state– As state laws vary from state to state, so taxation rate also changes. It is pertinent to register the setup with the state tax authority and take all necessary tax permits. Further, a corporation is required to take and report income and employment-related taxes with the respective jurisdiction of the state after US company registration.
• Step-9: Take necessary licenses and permits- As per the setup, whether it is LLC or Corporation, every set up is required to take specific prescribed licenses and permits as prescribed by a particular state. In case of failure to comply with the same, heavy penalties can be imposed.

Essential requirements after completion of US company registration

Once the company is registered, there are certain post compliances that companies have to follow. These compliances are general, but some states have prescribed specific guidelines that companies have to follow. Here is a list of particular directions given by government post-US company registration:

• Opening of registered office: It is pertinent to have a registered office address on records. Companies are required to submit documents w.r.t registered office with the authority that needs to be different from a residential address. It not only helps to gain clientage but also a place to contact for official purpose.
• Get a USA based official contact number and get created an official email ID for contact purpose.
• Opening of a bank account in the USA: It is essential to open a USA based bank account to accept USA based payments. These days it has become little cumbersome to open corporate bank accounts over there. It also depends on state laws as well as laws related to the home country. It is always advisable to take the assistance of an agent to open a bank account in the USA.
• Opening of a bank account in Home country: It is still advisable to open a bank account with a respective bank which has branches in India. It becomes much easier to open a bank account in the same bank in the home country too. Company is required to submit ‘Apostille certificate’ or ‘Certificate of Authentication’ to open a local account for the company incorporated in the USA.
• Forming an official website of the company and company logo: Get in touch with an agent to create an official website of the company, which not only make your company more reliable but also be advantageous for your business. It is always advisable to take the trademark of the company logo for future purpose.
• Filing of annual reports of the company– As per state laws, companies are required to file and further to maintain the financial records of the company with official address. The government can impose penalties in case the company fails to comply with the provisions.
• Meet compliance requirement with the home country to avoid any penalty in future.
• Maintenance of agent for fulfilling any future requirement related to the company.
• Paying of annual taxation or any other taxes to authority. It varies from state to state and from entity to entity as prescribed by state laws.

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