How to start a US company from India

The United States is still one of the biggest markets as well as an investor’s heaven, for any business. A product becomes more appealing to the people when it has a US branding on it. Great companies can be built anywhere, selling apps and products to customers living anywhere. Incorporating enhances your credibility as a company. Building base in the US is a mammoth task. This article will give you the basics of starting a US company from India.

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Start a US company from India
Step 1: Which type of business entity: Corporation or LLC?

For foreign companies, there are two main business types: the C-corporation and the Limited Liability Company (LLC). The main difference between the two is that a C-Corporation pays taxes on the profits as a business and an LLC reports profits on an individual level. Majority of foreign businesses apply for a C-corporation. There are various online services that can help you register your corporation.

Step 2: Which state to incorporate in?

The formation documents (the Certificate of Incorporation, etc.) must be filed with the appropriate state agency, by paying a fee. In case you don’t wish to open an office there, states such as Delaware, Nevada, and Wyoming are known to be “incorporation friendly” choices, as they have low annual fees and taxes, as well as an easy legal framework. In case you wish to operate from multiple states, you have to register through a process called foreign qualification.

Step 3: Get a registered agent or a lawyer to do the legal work.

A registered agent is a person authorized to receive legal documents on behalf of the business during business hours. He must be located in the state where your corporation is registered. He helps you with most of your documents, including notices, lawsuits, and tax-related papers. An agent or a lawyer can be hired to work with you through the entire process.

Step 4: US postal address

This is mandatory in order to receive business documents or to mention in other documents. In case you don’t plan to set up an office in the US, you can use a mail forwarding address offered by many companies. As part of the package, they collect letters and documents, scan them, and email them to you. They also ship them to your postal address outside the US, at an additional cost.

Step 5: Get a tax ID and an EIN number

These are unique numbers issued by the Internal Revenue Service (IRS), for the purpose of payment of taxes. Individual taxpayer Identification Number (ITIN) is issued to those individuals, who cannot get a Social Security Number (SSN). It takes one to three months to arrive. In case there is more than one founder in your incorporation, each founder needs to apply for a separate ITIN through Form W-7.

Once this arrives, you can apply for your Employer Identification Number (EIN) through the SS4 Form, which takes three to four business days to arrive. EIN is unique to each business and is essential for opening a bank account.

Step 6: Open a US bank account

Most foreign business owners find it very challenging to open a bank account in the US, as different banks have different requirements for a corporate account. Big banks like Citibank, HSBC, and Bank of America don’t open accounts based on online interaction. It is easier to choose a bank such as Chase Bank or Silicon Valley Bank, which offers remote processing and operation. You may need a recommendation along with your EIN and a copy of your passport.

Step 7: Merchant Account

This is the final step to put your business out there in the market. A payment gateway is essential to do business online and is one of the primary reasons why most companies are incorporated in the US. The most popular choices are PayPal, Authorize.net and Stripe. There are also integrated platforms where most payment gateways are authorized for access. It is a big challenge to build and maintain any business in the US as a foreign national.

The steps outlined above make it a little easier to start out. Individually, careful assessment is required in terms of business plan, the legal framework in both countries, the financial investment, and product marketing, in order to make it big. Above all, it requires investment of time and money. However, as a foreign business, the benefits of registering in the US make it worth all the effort.

This article was also published in Tech in Asia

Nikita Bhatia
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