Use these crucial benefits of your company registration in the United States.
Starting a business in the US, do you need any American company registration?
Do you actually need to incorporate a US company if you create an Amazon business account or sell IT products or services?
Considering how to start a business online, can you simply do without any US company formation?
You’ll now get answers to such questions here.
Company Registration Reasons
If you fail to register a company in the US, you may encounter serious problems. As a result, you may lose profitable business opportunities.
Now, let’s take a look at a few practical examples.
1. Top Legal Framework
Establishing and running a business, you essentially create and accumulate business assets. They can be in the form of money, intellectual property (e.g., trademarks, copyrights, and patents) real estate, etc.
It’s important to determine who will own and manage all of those business assets. It can be, in particular, you (as an individual) or your company (as a legal entity). The second option is way more viable for liability protection, M&A, and other reasons. Company registration allows you to run your business via your own company (corporation or LLC).
To this end, your company needs a legal framework (jurisdiction) where it will exist and operate. One of the best incorporation jurisdictions in the world is the United States. Here, you can be sure that your business assets will be safe. That’s regardless of politics (e.g., who becomes the next President) and economy (e.g., how the annual GDP grows).
If someone treats your business unfairly, you can confidently rely on the American legal protections. In this respect, the U.S. law enforcement and court systems shield your company registration, ownership, and management.
2. Avoiding Offshore Company
Having chosen other jurisdictions, most people holding offshore companies now run into huge problems to open a bank account anywhere in the world.
In contrast, corporate America is certainly way more attractive than offshore company jurisdictions.
Moreover, American companies are generally more reputable than companies from other startup jurisdictions, including those in Europe and Asia.
So, the US should top your company registration wishlist.
3. American vis-a-vis American
Americans usually prefer to deal with American companies, rather than any foreign companies.
So, neither a BVI or Cypriot company in good standing would work as well as a Delaware company formation. That is partly due to the fact that the State of Delaware is one of the best — if not the best — jurisdictions in terms of corporate governance law. Alternatively, a New York company would work great as well.
The rational is clear: Americans prefers to conclude contracts with companies in the States, so that, if something goes wrong, they could resolve a dispute at home, rather than somewhere abroad. That’s why local company registration may be preferable.
Even if a foreign company somehow works, starting a company in the USA would highly likely work much better.
American businesses can effect a due diligence on their counterparts in a state registrar of companies online. For this purpose, it may suffice to check a company name with legal form (i.e., Inc/Corp or LLC).
Checking American companies is fairly straightforward, as you can see here.
4. US Bank Account Only for American Company
If you are a nonresident, then, without an American company, it’s virtually impossible for you to open a business bank account in the US.
The largest American banks normally refuse to open corporate accounts for foreign companies. That is due to bank compliance policies. They usually require American company registration documents.
Without a US bank account, you may be unable to receive payments from Amazon, for example, under the Amazon referral program.
So, company formation in the USA is normally a must in this case as well.
5. US Loan Only for American Company
You may eventually need to borrow money from an American bank.
In this case, the bank would certainly request your US business credit history.
The bank policy may, for instance, require an American company to exist for at least a couple of years.
Absent a US company registration, there would be no credit history at all.
So, the sooner you incorporate your American company, the sooner you create your business credit history.
6. US Investment Only for American Company
Your business may need to get an investment.
For this purpose, American market is the most attractive for you to find business partners and investors.
To finance your startup investment in the US, you need an American company registration again.
This is because the US investors are unwilling to finance a foreign company.
How would they check a company overseas?
Would you feel comfortable about such a due diligence?
In contrast, anyone can get a reliable investor information about the US companies. What investors expect to see, for example, is a Delaware certificate of incorporation or LLC operating agreement. In this case, the company search is just a breeze.
Ultimately, it would be outstanding if you could lead your business up to an IPO at the New York Stock Exchange or Nasdaq. This would capitalize your Delaware corporation business to the maximum.
7. US Immigration
You may wish to invest and work in USA.
In this case, your American company registration and US business immigration would help you a long way.
Specifically, you may get a business visa or work visa.
Having formed a US company, for instance, you may become a US treaty investor and get an E-2 visa (aka a US investor visa).
Alternatively, you may qualify for an L-1 visa (aka intra-company transfer visa).
Finally, you may get an EB-5 visa (aka investment green card in USA).
So, an American company would help you with your US immigration.
This list of practical examples is non-exhaustive.
As you can see, starting your own business in the US prompts you to register a company with Uncle Sam, even if you start a biz for fun.
This especially applies to company registration in USA for non-citizens, particularly those who consider how to start an online business.
Business actions normally take place on behalf of a company, rather than an individual.
They largely follow or come along with company incorporation.
Regardless of whether you are a US resident or nonresident, as an American business owner and manager, you need to perform many business actions.
You, in particular, need to:
- register business name;
- finance your business;
- own a share of your enterprise;
- limit your liability for business activity;
- establish and protect your brand;
- test unicorn startup business ideas;
- find business partners;
- pitch commercial offers;
- negotiate deals;
- make contracts;
- sell your products or services;
- get payments;
- protect your business assets;
- find investors;
- get loans; and
- prove a reputable jurisdiction status.
Now, can you see the role of your US company in this big picture?
All those actions necessitate a US company registration, even if it’s a small business.
This way, you can greatly benefit from incorporation of company in the USA.
You’ll definitely win if you start business as foreigner holding an American company — be it in the form of an LLC or corporation.
Now, you know how to start a business from a legal perspective.
By the way, are you aware of any other reason to incorporate a company in the US?
Please leave your comment below.
Do you need an action plan to start your business in the US?
Feel free to get our business setup checklist.
Thank you for your article, it is useful for me and my patners!
Dmytro Biryuk says
Thanks for your feedback, Lia! Happy to help 🙂
Megan Alder says
My parents and I have been thinking about starting a business in the US, and we are looking for information to do it. It’s interesting to know that as non-immigrants we can qualify to get an E-2 visa which will allow us to legally work and manage our business. We’ll definitely discuss this information and see if we’ll be able to make this happen.
Dmytro Biryuk says
Thanks for your inquiry regarding business immigration into the US.
We would be happy to help you move to America as a US treaty investor under the highly popular E-2 visa.
Feel free to contact us!
I recently started a company over in the UK. I provided software development services and want to do business with a possible US client. Do I need to register a company in the US to do that? I am having trouble finding a firm answer on that.
Dmytro Biryuk says
Thanks for your inquiry.
We would be glad to advise you on international business matters, particularly on legal issues of how to start a business in the US.
For this purpose, please feel free to contact us.
Reji Modiyil says
Well explained thanks, just one question what about tax process is it yearly also mandatory please reply
Dmytro Biryuk says
Thanks for your feedback and inquiry.
Generally, the US tax system is quite complex.
Upon US company registration, American tax return filing is normally mandatory and can, for example, be yearly.
In any case, you should consult a certified tax professional (e.g., CPA or EA) about your particular tax implications.
If you need a general information on the US tax issues, please let us know. We would then be able to prepare a relevant video post.
If you need any further help in this respect, please feel free to contact us.
Good luck with your US tax return filing!