Starting a business in the U.S. while being in another country is quite easy. Every year, a few thousand international businesspeople set up U.S. companies, entering the biggest economy, gaining credibility, and receiving funding.
This guide aims to provide the best practices to incorporate a U.S. business from abroad. Here, we cover all the essentials, ranging from picking the right business structure to understanding ongoing requirements.
Why Incorporate a U.S. Company from Abroad
Before we go into the details, here are the most important benefits:
Access: You get unlimited access to the most lucrative consumer market in the world.
Legitimacy: U.S. companies are perceived as authentic business partners.
Access to Capital: Acquiring U.S. business funding is a lot easier.
Payment Gateways: More favorable rates from companies like Stripe and PayPal.
Legal Protection: Strong liability protection separating personal and business assets.
Tax Protection: Certain U.S. business tax benefits depending on the situation (legal advice recommended).
Choosing Your Business Structure
Limited Liability Company (LLC)
Best for freelancers, e-commerce, and small service businesses not seeking venture capital.
Pros: Easy to set up, no overhead, flexible management, pass-through taxation, and lower taxes.
Cons: Banking and having to raise venture capital may be more challenging to obtain. You also cannot issue stock options.
C Corporations
Best for tech companies, scalable business models, and any company planning to raise venture capital.
Pros: Can issue stock, raise venture capital easily, unlimited number of shareholders, and international business recognition.
Cons: High maintenance costs, compliance, formal record-keeping, and double taxation.
Note: Generally, S Corporations are not available to non-U.S. residents.
Choosing the Ideal State
When selecting a state to incorporate, do not consider physical presence as a factor. The most popular options are:
Delaware
- 60% of Fortune 500 companies are incorporated there.
- Well-established legal system with a Court of Chancery.
- Investor-friendly for venture capital (VC) and private equity.
- Annual franchise tax of $300+.
Best for: Startups looking for venture capital.
Wyoming
- Lowest cost/state fees of ~$60 for LLC.
- No state corporate income tax.
- Strong protection of the business owner’s privacy.
- No franchise tax.
Best for: LLCs, small businesses, and companies that want privacy.
Nevada
- No state corporate income tax.
- Strong protection of the business owner’s privacy.
- Higher initial fees ($400+).
Best for: Revenue-generating businesses that want to save on state taxes.
How to Incorporate a U.S. Company from Abroad
Step 1: Pick Out a Company Name
You can do this at your state’s Secretary of State website. Company names must include LLC, Inc., or Corp. and are required to have these suffixes.
Step 2: Look for a Registered Agent
All U.S. companies must have a registered agent with a physical address in the incorporation state to receive legal documents.
Step 3: File Formation Documents
You must file Articles of Organization (LLC) or Articles of Incorporation (Corporation) with your state’s Secretary of State.
Filing fees:
- Delaware: $89-90
- Wyoming: $100
- Nevada: $400-425
Processing takes 1-7 days online (expedited) or 2-6 weeks by mail.
Step 4: Create Operating Agreement or Bylaws
These internal documents outline ownership, management, and operational structure. They are vital, even if not required legally. Most banks and investors will ask for them, however.
Step 5: Obtain Employer Identification Number (EIN)
This will be your business’s tax ID number. Every business needs one for banking and tax payments. EINs may be obtained abroad in these ways:
- Phone: Call IRS at 1-267-941-6099 (immediate)
- Fax: Form SS-4 to 1-855-641-6935 (1 week)
- Mail: 4-6 weeks processing
- Third-party service: $50-200
Note: Online application is not possible if there is no U.S. SSN or ITIN.
Step 6: Open a U.S. Business Bank Account
This is often the biggest challenge for international founders.
International-friendly options:
- Mercury: Online business bank for startups, no fees
- Relay: Accepts foreign founders with minimal documentation
- Wise Business: Multi-currency account with U.S. details
- Payoneer: Provides U.S. payment receiving capabilities
You need the following to open an account: EIN, formation documents, passport, proof of address, operating agreement, or bylaws.
Pro tip: Apply to multiple banks at the same time since the approval process can be quite unpredictable.
Step 7: Recognize Your Tax Responsibilities
Every business structure is unique, as are the activities the business engages in, and, as a result, the tax obligations every business owes to the IRS, as illustrated by the following:
- Form 5472: For U.S. companies that have 25% or more foreign ownership.
- Form 1120 or 1065: For corporate tax returns and partnership tax returns.
- State tax returns: If there are applicable state tax returns.
Important facts to note:
- Having no U.S. source of income means there is no federal tax liability. However, the U.S. tax return must still be filed.
- Tax treaties that the U.S. government has with other countries may help in reducing tax obligations.
- You still owe tax to your home country.
Consider hiring a CPA who specializes in international tax to help reduce tax obligations to the IRS. The average fee is between $500-$2,000 a year.
Step 8: Make Sure You Stay Compliant and Continuously Available
On an annual basis, the following must be completed:
- File annual/biennial reports. The fee ranges between $50 and $300.
- Pay registered agent fees. This is between $100 and $300.
- File tax returns, even if there is no tax owed.
- Corporate law requires that you document meetings, and you must update ownership changes, or amendments to the articles of incorporation or organization must be made.
Business license and tax law violations, such as not meeting applicable deadlines, will result in the business automatically dissolving, and liability protection will no longer be available.
Common Challenges and Solutions
Banking: Use Mercury, Relay, or Wise Business instead of traditional banks.
Payment Processing: Apply for Stripe with your U.S. bank account, or use PayPal, Paddle, or Gumroad.
Tax Complexity: Budget for professional tax preparation ($500-2,000 annually).
Legal Documents: Use LegalZoom, Rocket Lawyer, or hire attorneys for complex matters.
Building Credit: Open business credit cards with Brex, Ramp, or American Express.
Cost Breakdown
First-year costs: $200-2,500
- Formation fees: $90-425
- Registered agent: $0-300
- EIN: Free-$200
- Operating agreement: $0-500
- Legal consultation: $0-1,000
Annual ongoing costs: $650-3,700+
- Registered agent: $100-300
- Annual reports: $50-300
- Tax preparation: $500-2,000+
- Bank fees: $0-300
- Compliance monitoring: $0-300
Alternative: All-in-One Services
EasyFiling Affordable incorporation services with a registered agent, compliance support, and ongoing maintenance.
These services simplify the process, but you’ll still make strategic decisions about structure and state.
Tips for Success
Plan: Pick a structure based on your goals for the next 5 to 10 years.
Don’t delay: If your business plan is generating income and is feasible, you should incorporate now.
Keep records: Make sure you document everything from day one.
Separate finances: Personal and business finances should never be confused.
Stay compliant: Use reminders for all deadlines and due dates.
Get professional help: Quality legal and tax advice can save you money.
Network: Engage with other global entrepreneurs.
Understand home country implications: Look into how U.S. ownership will affect your local taxes.
Frequently Asked Questions
Do I need to be a U.S. citizen? No, you can be a foreign national and still incorporate U.S. companies.
Can I do everything remotely? Yes, but visiting the U.S. is easier for banking.
How long does it take? 1-7 days for expedited, 2-6 weeks for standard.
Do I need a visa? Not to incorporate. You will need one if you want to live and work in the U.S.
What if I don’t make money? You still have compliance and may file zero returns.
Conclusion
For young entrepreneurs and international students, the ability to incorporate a U.S. business from abroad is a significant advantage. While it may seem daunting, and there will be ongoing compliance and paperwork, it is entirely possible with the right plan and assistance.
Develop the appropriate goals and outlines for the goals, then pursue the goal in steps while fostering connections with important consultants and advisors. Do not let everything that goes into the building of a business stop you from being an entrepreneur in the world’s biggest economy.
No matter if you are building a technological startup, starting an e-commerce business, or providing any kind of professional services, all of the said activities with a registered business in the USA are a starting point for reaching success in everything you do, all around the globe. Your first day is today.