Most foreigners are familiar with the United States of America. But many of them don’t know that it’s easy to form in the United States. Because starting a business in the United States offers so many advantages (from low incorporation fees to access to banking and tax benefits), many people who want to start an online business usually choose the United States as their first choice of jurisdiction to incorporate their company.
In this article, we’ll explain the benefits of a US company for your business and why you should consider it as your first option when starting a new online business. This article is part of the US LLC for Non-Residents Ultimate Guide. If you don’t know the difference between an LLC and a Corporation, we recommend you read that article before returning to this one.
With that out of the way, let us look at the myriad of benefits a US company offers to foreigners:
The USA is one of the leading economies in the world. Companies based in the US are perceived as more reputable than companies from other countries. Customers can easily deduct invoices that are issued from your US company. This isn’t always the case if you use offshore companies registered in tax havens like the Seychelles or Bermuda; if your client is from a European country, they simply can’t recognize the invoice you issue them and deduct the expenses.
It’s inevitable that you will be concerned with taxes if you decide to form a US Company. The good news is that they’re not as troublesome as you might think. If you’ve read our Non-Resident Guide to US LLC, you know that you can build a tax-free online business with a US LLC structure, whether you’re offering copywriting, consulting, software development, dropshipping, or SaaS, to name a few examples. However, setting up a C Corporation would negate this advantage. That’s why it’s important to assess your situation and decide whether you should incorporate a corporation or form an LLC.
Don’t get us wrong, the American banking system isn’t perfect. But it has a lot of advantages. This is especially true if you’re a foreigner coming to do business here. For example, bank transaction fees are low, the US Dollar is a stable currency and accepted virtually everywhere Bank accounts in the US are insured up to $250,000 by the US government, higher than most European and other first-world economies. The US also has the most perks and bonuses for credit card holders. You’ll be impressed. Read our article US Business Bank Accounts for Foreigners to learn more.
In some countries, it is cheap to form a new company. However, in others, it can cost thousands of dollars for forming a new company, dealing with notaries and legal fees, and so on. Believe it or not, the US is among one of the few countries where the registration and renewal are affordable. This is what makes it so appealing for any foreigner. For example, the Wyoming LLC filing fee is just $100; try comparing that with Italy, where the average fee is 2000 euros.
In many ways, the United States is a great place to start a business because it’s just as easy to dissolve a business as you’re to start one. So even if your business is not going well in the US, you can easily dissolve it. Closing your business can cost less than annual dues in some states, less than $100 in Wyoming, for example.
In the United States, almost all payment processing options are available - virtually all the de facto ones you’ve heard of are readily available to you. With your US LLC you’ve access to payment processors like Stripe, Square, Paypal, Authorize.net and even high-risk payment processors. This is great because it gives you the opportunity to build the business you’ve always wanted - an online business without borders.
It’s important to know that as a business, some countries require you to spend a lot of time on annual compliance. Some countries even require you to have your books audited every year, no matter how small your business is. This is even more difficult if you’re registering a business in a country whose language you don’t speak. Fortunately, if you file a US business as an LLC, you only have to file the Annual Compliance Report or Franchise Tax, pay for Registered Agent Service, and file Form 5472/Pro Forma 1120 (assuming you’re not ETBUS and have ECI).
US financial markets are among the most liquid, flexible, and efficient in the world. The availability of capital is one of the reasons companies invest in the US market, where funding sources from banks and investment firms to venture capitalists and angel investors enable business expansion and innovation. If you’ve an exciting startup idea, your best bet is to set up store in the US and pitch to investors in the US. However, if you decide to go this route, incorporating a Delaware C-Corp instead of a US LLC is the only viable option, as most angel investors and venture capitalists will only invest in Delaware Corporations.
The bottom line is that the US is the best place for any foreigner who wants to start a business because of low fees, easy dissolution, vast payment processing options, and the availability of capital.
US is home to great opportunities for foreigners. The nation’s low startup costs, high liquidity, and pass-through profit distribution make it excellent for entrepreneurship or growth companies. Learn more about US business with our article, US Business Bank Accounts for Foreigners.
At StartFleet we help U.S. and non-U.S. founders to set up and manage their companies in the US.
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