Opening a company in USA from India
Due to Covid -19 stock market is very fluctuating no body is certain about their investment whether they will get the return or their investment money back. As a foreigner you can invest in USA or open a company in USA without necessarily adding any US person as a board member/Manager.
There can be three situations:
- The company will be set up in the US, but the actual location of the business will be in India.
- The company sets up a marketing or other front-end office in the US, and the bulk of operations will be carried out in India.
- The company will be a subsidiary of an Indian company, operating entirely in the US.
What type of company you can open company is USA?
In USA, there are five types of company that are allowed. However, USA allow to open C Corp and LLC for foreigners. Meaning income form LLC will pass through to the owners on the other hand, C-Corp are taxed as separate entities.
C-corp are 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.
Advantages of C corp
- C-Corp are taxed as separate entities. They are also subject to ‘double taxation’, if the profits are distributed to the owners as dividends.
- Owners are not typically responsible for business debts and liabilities.
- The advantage of having unlimited owners or shareholders is also available under C corporation.
- If any owner of C corporation incurs a disabling illness or dies, the corporation does not cease to exist.
- There is no self-employment tax.
Advantages of LLC
- There is no tax to the LLC on LLC income. All profits or losses pass through and are taxed to the members.
- LLC provides you limited liability protection which means that owners are not held personally responsible for business debts and liabilities. There is flexibility in allocating profits and losses among its various owners.
- To increase ownership in company and add more new members, one has obtain written consent prior.
- Ease of operation you need not to go through any corporation formalities.
Requirements to Form a Corporation or LLC in the USA
1.State Incorporation
As a foreigner u can open your company in any state of the USA. However, different states have different rules and different taxes. You need to know
- Where the operations are to be carried out.
- Additional cost involved in opening a company for ex New York has a rule that, after incorporation you have to publish your company in two news daily, which may cost you additional dollars.
- State Tax filing for example Delaware has less taxes for the first year but it will be high compared to other states from second year onward. Texas and Florida LLC are exempt from paying state income tax. New Mexico has the least tax.
2. Federal Registration
Once you do your state incorporation you need to do federal registration and apply for your EIN. This may take 5-10 business days if You are a foreigner. Once you obtain your EIN, you can approach any US banks to obtain bank account for your newly registered Company.
3. State Tax Registration
After this you need to apply to you state for payroll tax registration if you have employees and state sales tax registration.
Questions:
- Do I need to be resident of US for opening a company?
- Do I need to travel to us for opening a company?
- Do I need to have address in us for opening a company?
- Do I need a registered agent? The Registered Agent is a person or company that must have a physical address in the state of formation, be available during business hours, and will accept and sign for official legal and state documents for the company.
- How can Indian company register in USA? Whether it need to be a subsidiary or holding company of a USA company.