Why You Must Form a US Company
In order to start a business in the US, do you really need to register an American company?
Is it mandatory to have an American company in order to apply for Amazon FBA or selling IT Related products & services?
Taking into account the ongoing current Covid crisis, why it gets important for you get a US company?
You’ll get answers to such questions here.
Company Registration Reasons
If you do not register a US company and you fail to identify your business aa a US organization, you are more prone to lose bulk orders and fail to make a profitable business. Simply having a US registered company puts you in front line of competing businesses.
Now, let’s try to understand with some practical examples.
1. Problems of Offshore Company
First thing first, the basic instrument of any business is the business bank account and this is where offshore company face the most problem. Its almost impossible for non-US companies to get bank account opened in the USA without american registration..
In contrast, America is way more attractive than offshore company jurisdictions.
That’s not all, American companies are considered more reputable than companies from other startup jurisdictions, including even those in Europe and Asia.
So, the US must be at top if you plan to take your business global.
2. Americans vis-a-vis American
Americans like any other country usually prefer to deal with American companies, rather than companies of any other foreign origin more so because of ongoing Sino-American trade war.
So, neither a BVI or Cypriot company in good standing would work as well as an American company formation. That is partly due to the fact that the State of Wyoming is one of the best — if not the best — jurisdictions in terms of corporate governance law. Alternatively, a Delaware company would work great as well.
The reason is clear: Americans prefers to conclude important & sizable contracts with companies in the United States, so that, if by any chance something goes wrong, they could resolve a dispute at home, rather than in any foreign country.
There are instances and examples that even foreign companies are doing better and competing with American companies but to reach that level is very difficult specially for start ups, and consider this, though a foreign company may work but having an American company is more likely to work better.
Believe me opening an American company by foreigners is way more easy than you think. Only thing you need to keep in mind is that you must partner with a professional filing company which you can trust that they will share every loophole and keep you updated and help if anything goes wrong.
3. US Bank Account Can be Opened Only by American Companies
If you are a nonresident (and don’t have SSN), then, without an American company, it’s virtually impossible for you to open a business bank account in the US. This is where Logovely comes to your rescue, and this is why registration of LLC & getting EIN is mandatory (In Complete LLC Package) before you can apply for a business bank account.
After 9/11, the Patriot Act set strict regulations for foreigners opening accounts in the US banks to avoid money laundering and terrorism problems. All banks must follow strict guidelines to verify the individual’s identity. The largest American banks normally refuse to open corporate accounts for foreigner owned companies. That is due to bank compliance policies.
And without a US business bank account, you will not be able to receive payments from Amazon, Ebay or your own eCommerce store or IT start up.
So, company formation in the USA is a must in this case as well.
4. US Loan
With you doing business in US without a US company, you may eventually need to take loan from an American bank.
In this case, the lending bank will certainly ask you for your business credit report for certain period.
In the absent of a US company, you wont be able to produce it.
Hence, the sooner you register your American company, the sooner you create your business credit history.
5. US Investment Only for American Company
Over a period you may need to get investment for your business.
For getting investment, American market is the most attractive for you to find business partners and investors.
In order to fund your startup investment in the US, you need an American company again.
Most of the american investors do not find it fancy to invest in foreign companies.
reason being they would not be able to check the details and authenticity of the company overseas?
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.
6. Gateway to America (US Immigration)
You may wish to invest and work in USA.
In this case, your American company registration 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 business 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;
- 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.