The US is undoubtedly one of the most attractive places to kick-start a new business or shift an established one for numerous business opportunities. Those non-American business owners, who are looking to move their businesses for better opportunities in the US, must know that the best way to ease things out is to open a US business account for foreign businesses.
Importance of having a US business account
The US has been believed to be a hub of opportunities for entrepreneurs for decades. To avail the advantages of these opportunities, even being a non-American entrepreneur, one can go for the alternative where they can simply open a business account in the US. Here are some of the good features of having a US business bank account for foreigners:
- Payments in dollars – The US dollar is one of the most powerful and trusted assets across the world. By opening a business account in the US, foreigners can receive payments in US dollars which is also one of the substantial currencies.
- Reputed banks and their security – Choosing a bank for all your business transactions is a difficult task. The US banks have maintained their reputation by making transactions easy and less scrutinized. US banks have been used for huge payments; therefore, they have specific measures of security and policies to protect the belongings of customers.
- Accessibility to big markets – With the help of a US business account, you can have access to big E-commerce markets and start new ventures. It also opens the door to sell your services or products in the US. With a US business account, payments are more manageable, and you can quickly sell your products to big markets.
Options for foreign businesses to open a US business account
Perhaps, the most integral part of the US rules and regulations regarding foreign business is that foreigners cannot open a business account in the US as an overseas entity. However, there are two possible ways by which a foreign company can opt for a US business account:
- Registering a new company
- Notifying the state about commencing business in the US (Foreign Qualification)
Registering a new company
To register a new company in the US, here are some of the prior preparations that owners or entrepreneurs must fulfill in order to apply for a business account in the US:
- Choosing a state for your company – Starting a new business can be challenging as each state has its own rules and regulations for registration and then there is the annual maintenance that you have to be compliant with. For most cases, we recommend choosing Nevada as it is one of the best states for starting a new business in comparison to any other state in the USA.
- Selecting a company type (C Corp or LLC) – The next step is to select the type of company an entrepreneur is willing to work for. It can be a Corporation or LLC, depending upon the owner’s choice.
- Preparing a Name and Directors/Shareholders information – Choosing a name for the company and ensuring that it is a unique one and not copied. Apart from the name of the company, the owner must collect the information of other working officials of the company, including directors. Even those who are connected to the business, such as stakeholders, must also provide all the information to the owner to register the company in the US.
- Obtaining a Certificate of Incorporation, Articles of Incorporation – During the registration of a new company, the company documents necessary for opening a US Business Account will be created for you.
- Obtaining a Business License (if required by the chosen state) – Whether you’re required to get any type of license to run your business depends on where you form your business and what kind of goods and services you sell.
- Providing an Office Address – To set up a company in the US, owners must provide an official license or proof of the physical address of the company here. This can be solved by using an office lease, which is an agreement between the landlord and a tenant who accepts the land as renting property for office work.
Notifying the State about Commencing Business in the USA (Foreign Qualification)
For commencing business in the US as a foreign qualification, here are some of the procedures that owners must follow:
- Collect Company Documents – You will need to collect a set of documents such as Articles of Incorporation, Certificates of incorporation and Certificates of good standing.
- Prepare information about directors/shareholders/UBOs – The owner must collect the information of other working officials of the company, including directors. Even those who are connected to the business, such as stakeholders, must also provide all the information.
- File Foreign Qualification Form – A foreign qualification form is required for companies that do not originate in the US but want to commence. This form requires all the information regarding the company and a certain amount as the fee of the form.
- Get Business License (if required by the chosen state) – Whether you’re required to get any type of license to run your business depends on where you form your business and what kind of goods and services you sell.
- Obtaining EIN from IRS – Registered companies will get a unique 9- digit Employer identification number (EIN) from the Internal Revenue Service office (IRS) to follow the tax procedures for the business.
- Providing an Office Lease – Companies are required to present the office lease ( an agreement of land between landlord and tenants for office work to prove the physical address of the company) to commence their business in the US.
Example: Procedure to open a US Business Account as a Foreign Qualification of a UK Limited Company in the US
Let us understand the process of opening a US business account with an example. Here are the steps for opening a business account in the US.
- Company formation documents – The company must have documents like Articles of Incorporation, Certificates of incorporation, Certificates of good standing, Foreign qualification registration etc
- Employer Identification Number (EIN) – Registered companies will get a unique Employer identification number from the internal revenue service office (IRS) to follow the tax procedures for the business.
- Company Formation Documents (i.e., Articles of Association, Articles of Incorporation, Articles of Organization, etc.) of a shareholder holding 25% or more shares of your company (if any)
- Identification Documents (such as US or Foreign Passport/ US Government Issued Identification Document – State Issued Driver’s License/ Identification Card/ Permanent Resident Card/ US Visa) of each individual shareholder holding 25% or more shares of your company and beneficial owner (if any)
- US proof of operations – this could include an agreement between UK Limited Company with a US based client
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