Many business firms are taking a keen interest in setting up a company in the USA. Well, incorporating a business in the United States of America will be beneficial to their firm in many ways. Also, it will increase their company’s credibility, help them gain access to the US market, and reach out to new investors. This sounds like exploring the vast business markets and opportunities in the pool of investors.
However, building a base for the company is a matter of concern for many as they are based in India. To your surprise, it is possible to expand your business or start a company in the US with a few preparations, even if you are in India. Moreover, the preparation for the same starts with the recognition of the type of business.
Companies usually set-up their businesses in the USA in any of the following three situations:
- Though the company would be the USA-based, the operations would be carried out in India.
- The company started in the USA is used for marketing, building the brand’s image, boosting visibility, and the rest of the working is carried out in India.
- The company in the USA is a daughter company of the Indian business firm but carries out complete operation in the USA as well.
Any business in the USA in any of the above-mentioned cases can be set-up mainly via two business types: C-corporation and Limited Liability Company (LLC). You should choose the business type wisely and carefully as both of them have different tax computation methodologies.
It is suitable to establish a start-up in the U.S. even if its profits are taxed twice, first at the corporate level, and then as dividends to shareholders. But in many cases, tax planners can use salaries and pension costs to decrease the corporate income and get rid of much double taxation. It requires the following documents:
- Article of incorporation
- The most important legal document Bylaws along with the names and addresses of shareholders and officers of the company
- The shareholder agreement of the company
It is suitable for high-risk businesses as you will not be personally liable for debts gathered by your business. Your personal assets are completely safe if in case something wrong happens to the company.
- The LLC agreement
- The certificate of formation
- The agreement of confidentiality between the members of the business
The selection of company type is followed by the registration process. This process varies from one state to another and also depends on the type of your company. To get a basic idea of the procedure, you must have a look at the registration process in the State of Delaware.
- Choose a unique company name that is not already registered with the United States Patent and Trademark Office (USPTO).
- Permit a local registered agent to receive and represent official documents on your behalf.
- Fill a certificate of establishment with the Government. This certificate includes details like name and address of your company, name, and address of the incorporator, and the value of the company’s authorized shares.
- Pay the franchise tax.
- Get the Employer Identification Number (EIN) to open a bank account and get other licenses.
NOTE: You may need to provide the Industry Classification Code for your company during the registration process.
Once you are done with proper documentation, time is to form your company. A few minor paper formalities are left after the formation of your company, like opening a US bank account for receiving payments. Moreover, you can opt for INCFILE or Legalzoom to get your business registered successfully.
Another important thing is planning your budget carefully. It is advised to fix a specific sum that would keep your company alive and run for at least a year without any income whatsoever. On an approximation, setting aside $4000-$8000 for the US business would fund your business properly for a year. Till the time, you must work on improving your product and its customer base.
Additionally, it is suggested to hire a lawyer and let him handle the complicated taxation rules for you. And with this, you are all caught up with the basics of establishing a business in the USA in no time. You are free to operate it without any hassles.