Incorporating a business in the US offers plenty of benefits to business owners, especially for startups. The environment for startups in the US is conducive, and it provides numerous opportunities for further growth to aspiring entrepreneurs.
That’s why many business owners prefer to incorporate their businesses in the US, particularly those from other countries like the UK. The good news is that the incorporation process isn’t all that complex, even for UK residents.
However, there are differences you should take note of if you’re planning to incorporate your business in the US when you’re from the UK, such as whether or not your business is already registered in your home country.
With that said, here’s everything you need to know about setting up your company in the US as a business owner from the UK.
Why Incorporate in the US? – The Benefits
Before discussing how to set up your US company from the UK, let’s first discuss why you should do so. As mentioned, there are numerous benefits to setting up a company in the US when you’re a foreigner, especially if you’re a startup.
One of these benefits is the conducive environment for startups in the US, which gives these small businesses more opportunities to thrive and succeed, even in a highly competitive market.
For example, unlike in the UK, the US market gives business owners better and easier access to funding, especially those who have already incorporated their companies. The credibility that the incorporation process lends businesses increases the likelihood of attracting more investors.
They also have numerous options for financial sources, such as banks and private equities. US companies, particularly LLCs, also enjoy fantastic tax benefits that make them more attractive to investors.
Aside from the financial aspect, incorporated businesses in the US also have to deal with fewer bureaucratic processes, making it easier and less time-consuming for business owners to comply with regulations.
How to Incorporate a New Company in the US from the UK
Now that you know how incorporating in the US can be beneficial, let’s discuss how you can actually do so from the UK.
UK business owners follow much of the same steps as US residents when incorporating their business in the US. Therefore, in general, they only need to follow these 5 steps.
1. Choose the most suitable business structure.
LLCs tend to be popular among small business owners since it serves as a hybrid between sole proprietorships and corporations. However, most investors prefer businesses incorporated as C-Corporations.
Depending on what you wish to gain from incorporating your business in the US, it’s best to choose the most suitable structure for your company’s needs.
2. Select your state of incorporation.
Next would be to select where you want to incorporate your business. Incorporating in different states offers different benefits, depending on your industry.
However, if you’re looking for the most business-friendly states to establish your company in, the top choices would be Delaware, Nevada, and Wyoming.
3. File your business’s articles of incorporation.
After that, you can start the process by filing your articles of incorporation with your chosen state’s state secretary. If you prefer convenience, there are numerous online incorporation services available that can make the process easier for you.
The turnaround time for this process depends on your chosen state of incorporation, with some taking only as short as 10 business days for expedited processing.
4. Get your company’s EIN.
Once your company is registered in the US, you will need to get your employer identification number or EIN from the IRS, especially if you want to open a separate bank account for your business. Your business’s EIN is also required for paying taxes in the country.
5. Comply with filing requirements.
As a registered business in the US, you’ll need to keep your good standing with the authorities by ensuring you comply with the state’s annual requirements. This usually comprises filing your company’s reports with the proper regulatory bodies.
Understanding the “Delaware Flip” – How to Incorporate a UK-Registered Business in the US
If your business is already registered in the UK, that doesn’t mean you can’t incorporate it in the US. In this case, you can move your UK-registered business to the US using the “Delaware Flip” approach. You can find details about registering your business in Delaware here.
The process is simple; you just need to file your articles of incorporation with your chosen state and make your UK-based business a subsidiary by acquiring it. However, there are a few things you should note when adopting this approach.
First, it’s best if you consult with your lawyers and accountants to ensure you’re complying with all the regulations required to convert your company. This means settling any outstanding debts and paying all remaining equities before starting the incorporation process in the US.
Aside from that, you should also ensure that your UK-based shareholders all agree to contribute all their shares and company assets to the newly formed US company to turn your UK business into a subsidiary.
The process is a little more complex than starting a new company from scratch, but it’s the best way to enjoy the benefits of a US company when you already have a registered business in the UK.
Incorporating your business in the US when you’re from the UK can help you gain access to the broader pool of opportunities in the country and allow you to enjoy the benefits of having a US-registered business. With the advent of virtual incorporation services such as ZenBusiness,it is possible to get registered in the USA at a nominal price. Fortunately, the process is overall straightforward and convenient, primarily if you’re registering a new business in the US.