- Choose Your Business Structure: Decide between an LLC (fewer formalities, pass-through taxation) or a C Corporation (ideal for scaling and attracting investors).
- Pick a State: Wyoming (low costs, no state income tax) or Delaware (investor-friendly, strong legal framework) are top choices.
- Understand Tax and Legal Requirements: File federal forms like Form 5472, meet state-specific tax rules, and comply with new Beneficial Ownership Information Report (BOIR) requirements.
- Register Your Company: Secure a unique business name, file formation documents, and appoint a registered agent with a physical address in the state.
- Set Up Banking and Taxes: Obtain an EIN, open a US business bank account, and register for any applicable state or local taxes.
- Maintain Compliance: File annual reports, keep your registered agent active, and meet ongoing tax deadlines.
Quick Comparison: LLC vs. C Corporation
| Factor | LLC | C Corporation |
|---|---|---|
| Ownership | One or more individuals | Unlimited shareholders, including foreigners |
| Taxation | Pass-through or corporate tax | 21% corporate tax + dividend tax |
| Management | Flexible | Formal structure with more rules |
| Best For | Solo entrepreneurs, small businesses | Startups, companies seeking outside investment |
| Compliance | Minimal | Higher formalities and costs |
Starting a US company is feasible for non-residents. Follow these steps to establish your business, access the US market, and maintain compliance.
Step 1: Planning Before You Start
Before diving into the registration process, non-residents need to focus on three critical decisions that will shape their business. These early choices can impact everything from taxes to attracting investors, so getting them right can save you both time and money down the road.
Choose Your Business Structure (LLC vs. Corporation)
When it comes to business structures, most non-residents choose between Limited Liability Companies (LLCs) and C Corporations. Each offers distinct benefits depending on your goals.
LLCs are often the go-to option for their simplicity and flexibility. They allow for pass-through taxation, meaning profits and losses are reported on your personal tax return, which helps avoid the double taxation that C Corporations face. LLCs also have fewer compliance requirements and provide more freedom in management.
On the other hand, C Corporations are ideal for businesses aiming to scale quickly or attract investors. They’re taxed at a flat 21% corporate rate, with additional taxes on dividends. Corporations can have unlimited shareholders, including foreign investors, making this structure appealing for those seeking venture capital or planning for major growth.
| Factor | LLC | C Corporation |
|---|---|---|
| Ownership | One or more non-resident individuals | Unlimited shareholders, including foreigners |
| Taxation | Pass-through (or elect corporate tax) | Flat 21% corporate rate + dividend tax |
| Management | Flexible structure | Formal rules and procedures |
| Best For | Solo entrepreneurs, online businesses | Startups seeking investment, companies with ECI |
| Compliance | Minimal formalities | Detailed internal procedures |
Pick the Right State for Your Company
Choosing the right state to register your business is just as important as selecting a structure. For non-residents, Wyoming and Delaware are two of the most popular options, and each has its own perks.
Wyoming is known for being cost-friendly and offering strong privacy protections. It was the first state to introduce LLCs and continues to rank as one of the most business-friendly states. Wyoming doesn’t impose personal income tax and even provides asset protection for single-member LLCs. Formation costs are budget-friendly too - filing Articles of Organization costs about $100 for paper filings or $102 online, and annual report fees start at $60. In 2024 alone, Wyoming recorded over 28,000 new business filings, showing its appeal among entrepreneurs.
Delaware, on the other hand, is the preferred choice for businesses looking to raise capital or scale. Over two-thirds of Fortune 500 companies are incorporated in Delaware, thanks to its well-established legal system and the specialized Court of Chancery. However, Delaware comes with higher costs: forming a company costs around $110, and the annual franchise tax is approximately $300. Both states require you to appoint a registered agent with a physical address in the state, with fees ranging from $50 to $300 annually.
If you’re looking for affordability and straightforward compliance, Wyoming is a great choice. But if your focus is on scaling and attracting investors, Delaware may be the better option.
Know Your Legal and Tax Requirements
Understanding your tax obligations is crucial to avoid costly penalties later. As a non-resident business owner, you’ll need to meet both federal and state tax requirements, which vary based on your business activities and income sources.
At the federal level, non-residents must file Form 5472 along with a Pro Forma 1120 by March 15 each year - even if your business hasn’t generated income. Missing this deadline can result in a $25,000 penalty, with an additional $25,000 for every 30 days of non-compliance after an IRS notice.
Starting in 2024, there’s a new requirement to file the Beneficial Ownership Information Report (BOIR). LLCs formed or registered on or after March 26, 2025, must submit their initial BOI report within 30 calendar days of state approval. Older entities have until April 25, 2025, to comply. Missing this deadline can lead to fines of $591 per day and additional penalties of up to $10,000 or even two years in jail for intentional violations.
State tax obligations depend on where your business operates. Wyoming doesn’t have a state income tax, making it particularly attractive for non-residents. Delaware, however, does impose a state income tax, though non-residents operating outside the state are typically exempt. Additionally, your home country’s tax treaty with the U.S. might influence your tax responsibilities.
To avoid issues, keep detailed records for tax filings and audits. It’s also wise to consult an international tax expert to ensure you stay compliant. By staying informed and organized, you’ll set your business up for smooth operations within U.S. regulations.
Step 2: Register Your Company
To officially establish your business, you’ll need to register it with the state. This process ensures your company is legally recognized and compliant with state regulations. It involves three key steps: securing your business name, filing formation documents, and appointing a registered agent.
Check and Register Your Business Name
The first step is to ensure your business name is available and meets state requirements. Your name must be unique and distinguishable from other registered entities in the state. It should also include the appropriate suffix, like "LLC" for Limited Liability Companies or "Inc." for Corporations.
Start by searching your state's business registry to confirm that the name isn’t already taken. Most states provide an online database, accessible through the Secretary of State or Division of Corporations websites, to check name availability.
Next, run your chosen name through the USPTO's Trademark Electronic Search System (TESS) to avoid potential trademark conflicts. This step is critical to prevent legal issues down the road.
Don’t forget about your online presence. Check if your desired domain name is available and verify the name’s availability on major social media platforms. If the name is already in use or too similar to an established brand, consider alternatives to avoid confusion or legal complications. If you’re unsure about trademark issues, consulting a trademark attorney can provide clarity.
Once your business name is secured, you’re ready to file the necessary formation documents.
File Your Formation Documents
To formally register your business, you’ll need to file formation documents with the state. For LLCs, this typically means submitting Articles of Organization, while corporations file Articles of Incorporation. Keep in mind that the document names may vary by state. For example, Delaware refers to this as a Certificate of Formation.
These documents generally require basic details, such as your company name, registered agent information, business purpose, and management structure. The individual forming the LLC must sign the documents, and many states allow electronic submissions.
You’ll also need to pay a filing fee, which varies depending on the state and business type. For instance, filing Articles of Organization for an LLC in California costs $70.00. Some states allow you to reserve your business name for a small fee, giving you extra time to finalize your paperwork.
Certain states may have additional requirements after filing. For example, some require you to publish a notice of your company’s formation in a local newspaper.
Appoint a Registered Agent
Every LLC and corporation is required to appoint a registered agent. This individual or entity acts as your company’s official point of contact with the state, receiving legal documents, service of process, and other government communications.
"The state requires the designation of a registered agent so that it has an official contact on file for your business. A registered agent is an individual or a company that will be the LLC's or corporation's official point of contact in the state to receive service of process, other legal documents, and official communications from the state, and forward these documents and communications to the LLC or corporation for which it is acting as registered agent." – Filings Team
A registered agent must meet specific criteria. They can be an individual resident of the state (at least 18 years old) or a domestic or qualified foreign business entity with a physical street address in the state. P.O. Boxes are not acceptable. Additionally, the agent must be available during regular business hours.
If your business operates in multiple states, you’ll need a registered agent in each state where you’re qualified to do business. Non-residents or those unfamiliar with the requirements often benefit from hiring a professional registered agent service. These services handle important documents, ensure compliance with state laws, and charge an annual fee for their reliability.
Failure to maintain a registered agent can result in penalties, including the dissolution of your company. When selecting a registered agent service, prioritize providers that offer features like reliable mail forwarding, digital document delivery, and compliance monitoring to keep your business on track.
Once your company is officially registered, the next step is setting up banking and addressing tax requirements to ensure smooth operations.
Step 3: Set Up Banking and Tax Requirements
Once your company is officially registered, the next step is to lay the groundwork for managing finances and meeting tax obligations. This includes getting tax IDs, addressing state and local tax requirements, and opening a U.S. business bank account.
Get Your Employer Identification Number (EIN)
An EIN is a tax ID issued by the IRS, essential for filing taxes and opening a business bank account. If you're a non-resident, you can still apply for an EIN for your U.S. company, even from abroad. However, since the IRS online application is only available to entities with a U.S. address, international applicants must apply by phone, fax, or mail. Regardless of the method, you'll need to complete Form SS-4 (Application for Employer Identification Number). This form asks for details like your company’s legal name, primary business activities, responsible party information, and the reason for applying.
If you don’t have a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN), simply write "Foreign" on line 7b of the form. Be sure to wait until your LLC is officially approved before applying for your EIN to ensure the number is correctly linked to your business. The EIN application process is free, and processing times vary: phone applications are processed immediately, fax applications typically take about a week, and mail applications can take up to four weeks. Once you receive your EIN, you can move on to registering for any required state and local taxes.
Register for State and Local Taxes
Your tax obligations don’t stop at the federal level. Depending on your business activities and the state where you’re registered, you might need to handle state income tax, sales tax, or other local taxes. Some states impose minimal requirements for businesses without a physical presence, but if you have employees, inventory, or other significant operations in a state, you could face additional tax liabilities - even if your company isn’t formally registered there.
It’s crucial to review the tax laws in every state where your business operates, including remote activities, and register with the appropriate state revenue department when necessary. Non-residents should also check for tax treaties between their home country and the U.S. to address potential double taxation issues. For federal tax filings, nonresident aliens typically use Form 1040-NR.
Open a U.S. Business Bank Account
Opening a U.S. business bank account is a key step for managing your company’s finances and keeping personal and business assets separate. As a non-resident, you can open an account after your business is registered and you’ve obtained your EIN.
Banks generally require several documents, including your formation documents, EIN confirmation, Operating Agreement, government-issued photo ID, and proof of address. Many banks still require you to visit a branch in person, and they may have strict identity verification processes to meet Beneficial Ownership requirements.
To avoid surprises, contact banks beforehand to confirm their requirements for non-residents. Be prepared to provide additional documents, such as a letter from a company attorney or proof of a U.S. business address. While some online banks and fintech platforms may offer more flexible options, they still typically require thorough documentation. Keep an eye on potential minimum deposit requirements or maintenance fees. Since the account setup process can take several weeks, it’s best to start as soon as your formation documents and EIN are ready.
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Step 4: Maintain Your Company After Formation
Once your company is up and running, the next step is ensuring it stays in good standing. This means staying on top of compliance requirements to avoid penalties or, worse, losing your business's legal status.
File Annual Reports and Tax Returns
Most states require businesses to file annual or periodic reports to keep their records updated. These reports typically include details like your business address, registered agent information, and the names of key personnel. For example, corporations in Delaware must file their reports by March 1, while in Wyoming, the deadline is based on your company's formation anniversary. Keep in mind that federal tax filings are separate and depend on your fiscal year.
The name of this filing varies by state - you might see it called a "Statement of Information", "Periodic Report", or "Annual Registration". Missing these deadlines can result in fines, suspension, or even the dissolution of your company. If your business operates in multiple states, you'll need to track and meet each state's filing deadlines. And if you stop conducting business in a particular state, you’re still required to file annual reports until you formally withdraw from that state.
Another critical piece of the puzzle is your registered agent.
Keep Your Registered Agent Service Active
Your registered agent plays a crucial role in receiving legal documents and official notices on behalf of your company. If this service lapses, you could miss important communications, leading to penalties or even the suspension of your business.
For non-residents, professional registered agent services are particularly helpful in ensuring compliance. If you need to change your registered agent, most states require you to file a formal notice with the Secretary of State's office. This usually involves submitting a change form and paying a filing fee, which varies depending on the state.
Lastly, solidify your business's U.S. presence.
Set Up a Virtual Business Address and Phone Number
Having a virtual U.S. address and phone number can make a big difference in how your business is perceived. A U.S. address is often required to open a business bank account, and it also makes interactions with vendors and customers much smoother.
Similarly, virtual phone numbers with U.S. area codes can forward calls to your international line, making it easier for U.S.-based customers to reach you. This is especially useful if you're operating across different time zones. Look for services that provide the necessary documentation to meet compliance and banking requirements.
Conclusion: Key Steps for Non-Residents Forming a US Company
Starting a US company as a non-resident is entirely doable with the right approach and attention to detail. It’s not just about setting up the business - it’s about maintaining it over time with proper compliance and organization.
The process begins with critical decisions: choosing the right business structure and the state that best suits your objectives. This choice lays the groundwork for your company’s operations and growth.
Once you’ve made these decisions, it’s time to focus on the registration process. This includes checking the availability of your business name, filing formation documents, and appointing a registered agent. Each of these steps is essential for establishing your company’s legal foundation. Precision and patience are key during this phase.
After registration, securing the necessary documents and setting up banking arrangements is crucial for seamless operations. But remember, compliance doesn’t end there. Filing required reports on time and maintaining a registered agent are ongoing responsibilities that help you avoid penalties and keep your business in good standing.
The growing number of international entrepreneurs forming US companies highlights the advantages of this process. Access to American clients, investors, and infrastructure can offer a strong edge in today’s competitive market.
With careful planning, professional guidance, and a commitment to staying compliant, your US company can thrive and position itself for global success. By following these steps, you’re not just forming a business - you’re building a foundation for international growth.
FAQs
What’s the difference between forming an LLC and a C Corporation as a non-resident, and how can I choose the right option for my business?
The key distinction between an LLC (Limited Liability Company) and a C Corporation lies in their structure, taxation, and how well they align with different business objectives.
LLCs are easier to manage, offering a straightforward setup and pass-through taxation. This means profits are only taxed at the individual level, avoiding corporate taxes. They’re a great option for small to medium-sized businesses or entrepreneurs who want limited liability protection without the hassle of complex regulations.
In contrast, C Corporations are designed for businesses with big growth ambitions. They’re ideal for companies looking to scale, attract investors, or issue stock. C Corporations can have perpetual existence, multiple stock classes, and the ability to reinvest profits back into the business. However, they come with a downside: double taxation. Profits are taxed at the corporate level and again when distributed as dividends to shareholders.
The choice boils down to your business goals. If you value simplicity and flexibility, an LLC might be the way to go. But if your focus is on raising capital, issuing stock, or long-term growth, a C Corporation could be a better fit.
What are the tax obligations for non-residents with US-based companies, and what penalties can result from non-compliance?
As a non-resident owning a company in the United States, you must adhere to specific tax requirements. For instance, if you earn income from U.S. sources, you’ll likely need to file Form 1040-NR. Additionally, forms like 5471 or 5472 may be required to disclose foreign ownership or certain transactions involving your business. Missing these filings or submitting them incorrectly can result in hefty penalties - starting at $10,000 per violation and climbing to as much as $50,000 for continued non-compliance.
To steer clear of these costly penalties, it’s essential to stay on top of your filing deadlines and ensure that all forms are completed accurately. Non-compliance doesn’t just hit your wallet; it could also lead to more serious legal issues. Seeking advice from a tax professional who understands U.S. regulations is a smart move to keep your business compliant and in good standing.
What steps should I take to keep my US company compliant after formation, including maintaining a registered agent and filing annual reports?
To ensure your U.S. company stays compliant, it's crucial to have a registered agent in the state where your business is incorporated. A registered agent serves as the official point of contact for receiving legal documents and government correspondence on behalf of your company. Most states legally require this, and failing to meet the requirement can result in penalties or even the loss of your company's good standing.
Another key compliance task is filing an annual report. This report updates essential details about your business, such as its name, principal address, registered agent information, and key personnel. States use these filings to keep records accurate, and missing the deadline can lead to late fees, fines, or, in severe cases, the administrative dissolution of your business.
Staying on top of these requirements - keeping your registered agent information up to date and meeting filing deadlines - is essential for safeguarding your business and maintaining compliance.