Uduak EkpeStarting a business in the United States can be a daunting task, and one of the first steps is registering your company with the appropriate authorities. The cost can be around $500 and $1500 depending on the state.
But before you jump into the registration process, it is important to understand the costs involved. Knowing how much you’ll need to invest upfront can help you make informed decisions and avoid any financial surprises down the road.
In this article, we’ll provide a comprehensive breakdown of the costs associated with registering a company in the US, including the fees charged by the state and federal government, lawyers, and business formation services.
Types Of Business Entities You Can Open In The US As A Non-Resident
Non-US residents can form a limited liability company (LLC) or C-Corp in any US state. In fact, the process of registering a business is largely the same for both US and non-US residents, with a few additional requirements for non-US residents.
Here are the business entities you can register in the USA as a non-resident:
Limited Liability Company (LLC)
A Limited Liability Company (LLC) is a type of business entity that combines the liability protection of a corporation with the tax benefits of a partnership. This means that owners of an LLC, known as members, are typically not personally liable for the debts or legal obligations of the business.
This means that members’ personal assets are protected if the company is sued or goes into debt.
LLCs are also known for their flexibility, as they can be taxed as a partnership, S corporation, or C corporation depending on the needs of the business. This can provide significant tax benefits to members of the LLC.
For non-US residents looking to register a business in the US, forming an LLC is often the best option. This is because LLCs offer several advantages, including:
Limited liability protection – As mentioned earlier, forming an LLC can protect the personal assets of the owners in the event of lawsuits or debts.
Flexibility – LLCs are flexible and can be taxed as a partnership, S corporation, or C corporation, depending on the needs of the business.
Ease of formation – Forming an LLC is relatively easy and can be done online through most state websites.
No citizenship or residency requirements – Non-US residents can form an LLC in any state, and there are no citizenship or residency requirements.
Lower fees and less paperwork – LLCs generally have lower fees and fewer paperwork requirements than corporations.
Cost Of Registering Limited Liability Company (LLC)
Here is what you need to do to register your company in the US as LLC:
- Choose a unique name for your LLC or C Corp – This cost you nothing ($0)
- Hire a company registration service – It costs around $500 and $1500. This includes filing for incorporation with the state, registered agent fees for the first year, employer identification number (EIN), obtaining a physical U.S. mailing address and setting up a U.S. bank account.
C-Corp
A C-Corporation, or C-Corp for short, is a type of legal structure for businesses in the United States that is separate from its owners, meaning that it is a separate legal entity that can enter into contracts, sue and be sued, and pay taxes.
It is the most common type of corporation and is the default corporate structure for larger companies.
Here are some of the benefits of forming a C-Corporation for foreigners who are registering their companies under a C-Corp:
Limited liability protection – The owners of a C-Corporation are typically not personally responsible for the company’s debts or legal obligations, providing limited liability protection.
Access to US markets – Registering a C-Corporation in the US can provide foreign businesses with access to the lucrative US market, which can help to increase revenues and expand operations.
Investor appeal – C-Corporations can issue stock, which can help to attract investors and raise capital.
Flexibility in tax planning – C-Corporations have greater flexibility in tax planning than other types of businesses, as they can take advantage of various tax deductions and credits.
Professional image – A C-Corporation often has a more professional image than other types of businesses, which can help to attract customers, investors, and partners.
Ease of transferability – Ownership in a C-Corporation can be easily transferred through the sale of stock, making it a flexible option for business owners.
Cost Of Registering C-Corp
The cost of registering a C-Corporation in the US as a non-US resident can vary depending on the state where you are forming your corporation and the fees associated with that state.
Additionally, the cost can vary depending on whether you choose to use a formation service or hire an attorney to assist with the process.
Generally, the cost of forming a C-Corporation in the US for non-US residents can range from $500 to $1,500, and that cost can cover, filing for incorporation with the state, employer identification number (EIN), obtaining a physical U.S. mailing address and setting up a U.S. bank account.
Ongoing Costs Such As Annual Fees, Taxes, And Compliance Requirements
In addition to the initial costs associated with registering a C-Corporation or LLC as a non-US resident in the US, there are also ongoing costs that must be considered. These ongoing costs can include annual fees, taxes, and compliance requirements. Here are some examples:
- Annual fees – Most states require businesses to pay an annual fee to maintain their corporate status. These fees vary by state but can range from a few hundred to several thousand dollars per year.
- Federal and state taxes – C-Corporations are subject to both federal and state taxes on their profits.
The federal corporate tax rate is currently 21%, and state tax rates vary by state. LLCs, on the other hand, are pass-through entities, which means that the owners report the company’s profits and losses on their personal tax returns. - Compliance requirements – C-Corporations and LLCs are required to comply with various federal and state regulations, such as filing annual reports, holding annual meetings, and maintaining proper records. Failure to comply with these regulations can result in fines or other penalties.
- Legal and accounting fees – As a non-US resident, you may need to hire an attorney or accountant to assist with ongoing legal and accounting requirements. These fees can vary depending on the complexity of your business and the services required.
It’s important to budget for these ongoing costs when considering registering a C-Corporation or LLC as a non-US resident in the US. Failure to properly budget for these costs can lead to financial difficulties or even legal trouble down the road.
Tips On How To Reduce Costs
Since you are not living in the US, your best bet is to hire an agent such as Legal Trunk to complete the registration for you. You only need to pay the specified amount and supply them with your business details.
Here are some other tips on how to reduce costs when registering and maintaining a C-Corporation or LLC as a non-US resident in the US:
- Choose a state with lower fees and taxes – Each state has different fees and taxes associated with registering and maintaining a business. Researching and choosing a state with lower fees and taxes (e.g. Wyoming, Delaware, Nevada) can help reduce costs over time.
- Hire an experienced attorney – Hiring an attorney with experience in international business and US corporate law can help ensure that your business is registered correctly and that ongoing compliance requirements are met.
An experienced attorney can also help identify ways to reduce costs and avoid potential legal issues. - Use online resources – There are many online resources available for business owners, including state-specific websites that offer information on registration, compliance, and taxes. Utilizing these resources can help you save time and money.
- Do it yourself – Depending on your business’s complexity and your experience with US corporate law, you may be able to handle some tasks on your own, such as filing annual reports or maintaining proper records.
However, it’s important to be aware of any potential legal or compliance issues that could arise if tasks are not completed correctly. - Consider outsourcing accounting tasks – Hiring a full-time accountant can be expensive, but outsourcing accounting tasks to a professional can help ensure that your business’s finances are in order without the added cost of a full-time employee.
By being proactive and taking steps to reduce costs, non-US residents can successfully register and maintain a C-Corporation or LLC in the US while minimizing expenses.
Conclusion
Registering a company in the US as a non-US resident involves various costs, including initial registration fees, ongoing compliance requirements, and taxes. However, by understanding these costs and taking steps to reduce expenses, it is possible to successfully register and maintain a company in the US while minimizing financial burdens.