FAQs on Setting up Business in the US
Q1. I have an Indian passport and live in India. Can I open a company in the US?
Ans. Yes, you can legally open a company in the US. LLC and C-Corp are the two structures for the foreign national non-US residents to choose from.
In general, there are 5 types of company structures that are recognized by the IRS in US. 1. Sole Proprietorship 2. Partnership 3. LLC 4. S Corp 5. C Corp.
Q2. From between C Corp or LLC, which one is better?
Ans: It is hard to say which one is better. Both companies have their pros and cons. C-Corp is taxed as separate entities. But LLC is not taxed as a separate entity and that means that the income from LLC will pass through to the owners.
C-Corp is often the preferred incorporation choice of developing business since owners are not responsible for business debts and liabilities.
But for small businesses LLC is preferred.
Q3. What is the total cost of registering a company in the US?
Ans. Cost depends on whether you have a Partner in the US or not and can vary from $700 to $1200.
Generally speaking, this cost shall include consultation charges, business entity decision, Federal registration, State registration, Tax registration, Labor registration, and all other necessary fees.
Q4. What is be the total investment requirement?
Ans. There is no minimum initial investment needed by Law. But you may need some investment to open the bank account depending on the types of business.
Q5. What documents are needed to start a business in the US?
Ans. The following are the items required:
- Two picture ID for each owner or shareholder
- Owner or shareholder full legal name
- Address for each owner or shareholder
- Percentage of ownership for each owner or shareholder
- Name of business
- Address for the business
- Purpose of the business
Q6. Can an Indian firm buy assets in the US?
Ans: Yes, Indian firms are allowed to buy assets in the US once they are registered with State and Federal government in US. The first step in the process is to register your business in US.
Q7. Do you need to have a local address?
Ans. Yes, you do but you are allowed to use a virtual address.
Q8. How a US address for registering a company can be obtained?
Ans: You can obtain a US address through a virtual address or registered agent.
However, in many states, it is required to have a registered agent living in a State where you open your company.
Q9. Do I need a local registered agent?
Ans. Yes. You must have a registered agent in the State of Incorporation.
Q10. Is local partner Compulsory?
Ans. No, a local partner is not compulsory to form a company in the US. However, having a local partner will streamline a lot of things for you including opening your company's bank account.
Q11. Can I work for my business in the US even if I'm not a US citizen?
Ans: Yes, you can work from India in any capacity in your company but it does not mean you can travel to the US because you have a company here.
However, once your business grows you can apply for L-1 Visa after fulfilling certain requirements. In case you get L-1 visa, you can stay in the US and also apply for your Green-card through your own company.
Q12. Are there any restrictions for transferring profits from your US business to India?
Ans. It depends. Even though there is no restriction on transferring profits, you have to leave some money in the business account.
Q13. Which US State is most preferable to do business?
Ans. Every state has different tax formalities. For example, if you set up a business in Delaware, the cost of running a business is higher than in other states. You need to decide which state you will actually be conducting the business or where you have a partner in the US.
Q14. Do I need a Lawyer for opening a company in the US?
Ans. No, you don't require a lawyer for starting a company in the US.
Q15. Do I have to travel to the US to open the bank account?
Ans. Not necessarily. Even though most big banks require that the owner be physically here, there are certain mini-tier banks that will allow you to open the bank account online.
Q16. Can an Indian national foreign-resident partner with a US-based company, LLC. I Want to know the legalities & the compliances involved.
Ans: Generally, there are no restrictions on foreign ownership of an LLC or a US-Based Corporation. The procedure for a foreign citizen to form a company or becoming a partner in the US-based corporation is the same as for a US resident. It is not necessary to be a US citizen or to have a green card to own a corporation or LLC. However, to add a foreign-resident partner with a US company LLC, the requirements are a) two picture ID (e.g. Driving License or passport copy), & b) percentage of ownership to make such changes with the state and the federal government.
Q17. What are the US tax liabilities when we sell goods, which we import from India? What are the Income-tax liabilities?
Ans: All goods imported into the United States are subject to custom entry and import duty. However, if you sales goods in the US you need to pay state sales tax at the rate applicable to your state where the company is located.
About the Author:
Ajay Kumar is a CPA based out of New Jersey, USA. He is also a member of NJSCPA and AICPA. He holds a B.E. degree in Computer Science from IIT Delhi, MBA from NYU Stern.