Delaware Company Formation For Foreigner
The best thing about company formation in Delaware is that you don’t have to visit or even stay there to carry out the processes. The citizens of restricted nations like Iran, North Korea, Syria, and Cuba, can’t establish a firm in Delaware, but apart from these, anyone can register their business in Delaware. Another perk here is that you don’t have to be a citizen of America to operate or to go for Delaware company formation.
In this article, we will be discussing all the popular doubts and topics related to Delaware company formation for foreigners. Keep reading!
Do I Need A U.S.A Business Address For Delaware Company Formation For Foreigner?
Do you often have the doubt if you need a U.S.A business address for Delaware company formation? The straight answer to that is no. As per the corporate law framework of Delaware, no limitations are imposed on the management or ownership of a Delaware firm by a foreigner. This means non-residents, without a business address can also go for Delaware company formation. However, Delaware LLCs and corporations don’t need any physical presence there, you’ll have to list out the services offered by a registered Delaware agent since all Delaware firms need to hire a registered associate.
This registered Delaware agent will be the connection between your corporation and the Secretary of State of Delaware. You can also be dependent on your agent for sending all types of legal papers, like the Franchise Tax notices, and service of process to your firm within the time limitation.
A registered Delaware agent not just is a resident of Delaware but is also liable to be on duty while normal work hours to get documents sent via the Secretary of State, Delaware to your firm. As long as you keep the registered agent of Delaware and his/her services, you can establish a corporation in Delaware, or an LP, LLC, and even benefit firm or NPC (a non-profit corporation) without even being a Delaware or US resident.
Your Delaware registered agent can provide services like a virtual office or mail forwarding, but you cannot make use of the agent’s address as your firm’s business site address. Your firm’s physical address will be counted as your home office in the nation from where you work.
Employer Identification Number (EIN) For Foreigners
One of the main responsibilities of several new firms or restructuring corporations is to obtain an EIN or Employer Identification Number, through the IRS. But what’s an EIN? It’s a 9-digit number that determines your corporation for tax requirements. It’s just like SSN (social security number) but is limited to corporation-related operations only.
As a firm owner, you will require an EIN to start a corporate bank account, file tax returns, issue a corporate license, etc. It’s best to file for one once you begin planning your work. This ensures that there aren’t any delays, and you get your license in time.
An EIN is important for any firm carrying out lawful business operations, starting a bank account, or recruiting workers in the USA. One also needs an EIN to pay or file taxes to the US treasury. You don’t need to have an SSN or ITIN to get an EIN. But, if you don’t own any of them, you’ll have to submit a copy of your government-filed ID or your passport for the individual marked as the liable party. You won’t need any US address to get an EIN.
Open A U.S. Business Bank Account
Every bank in the US has distinct needs related to starting a corporate bank account. Sadly, for non-residents of the United States, the most common but inflexible provision to open a corporate bank account in the U.S. is to be physically present. Some foreign business owners can travel to the United States to start their accounts, but it would be a problem for the ones who cannot.
Usually, people request anyone from the family or a friend who is a resident of the United States to start their business bank account on the behalf of their company. Other firm owners hire a director (corporation) or a manager (LLC) who is an existing resident of the United States and an official person to start and handle the corporate bank account. Certain firm owners have found success by locating a branch of a U.S. bank present near to them and requesting that the bank branch initiate account opening.
As soon as you pick the bank to open your corporate account in, it’s best to see what are the basic requirements for that bank, as requirements can be different for every bank.
Procedure for Delaware Company Formation For Foreigner
If you are a foreigner who is looking to establish a firm in Delaware, then there is a procedure that you would have to comply with that is overseen by Delaware business laws. Regardless of the nation you live in, you can form a company in Delaware as a foreigner. While it is not mandatory for the proprietor to be physically present while forming a Delaware company, you might be needed by legislation to either register or retain the services of a reputable Delaware Registered Agent.
Here are the steps for Delaware company formation for foreigner:
Select your business name
Select a name for your business that complies with the requirements of your state. Your chosen name must be unique and different and should represent what your products or services are about.
Appoint a registered agent
You must designate a registered agent for your business. The agent should serve as the authorized point of contact for all regulatory and administrative requirements of the organization and must have a physical address in Delaware.
File the Certificate of Incorporation
The certificate of incorporation, which is the establishing documentation of the business, should be drafted and prepared. Deliver the signed certificate of incorporation and filing payment to the Delaware Division of Corporations. It can be done either digitally or through mail.
Acquire the EIN
Acquire the EIN from the Department of Internal Revenue Service (IRS). The EIN is used in order to file and submit taxes and for opening a bank account.
Comply with ongoing requirements
It is crucial for you to fulfill annual corporate compliance with state laws after creating a Delaware company. The prerequisites for forming a Delaware company as a non-US resident are the same as those for a domestic or international business that operates within the state.
There are mainly three needs, which are as follows:
- Annual Reports
- Franchise Tax
- Maintaining a Registered Agent
Documents required while opening a bank account in Delaware
Another step towards Delware company formation is knowing what documents would banks need.
Let’s now have a look at an example of what banks might need when starting a corporate bank account for an LLC or corporation:
- Federal Tax ID Number (EIN)
- Certificate of Formation/Incorporation
- Proof of address
- Photo ID (such as a valid passport)
- LLC Operating Agreement
- Banking resolution document
- Corporate bylaws
A firm in Delaware might need to use state-certified and Secretary of State apostille-affixed documents if you’re commencing work with any nations that take part in the Hague Conference.
Taxes On Delaware Company Formation For Foreigner
A non-resident of the United States can’t possess an S-corporation in the U.S.A, so your firm in Delaware automatically will be either a C-corp or an LLC. An LLC generally is required to submit taxes on all United States sourced income if all the members are foreigners and not present in the United States. Whereas a C corporation is generally taxed on the complete earnings, comprising of both, non-U.S. sourced and U.S.-sourced.
The phenomenon of business taxation is complex and there are several variants. We suggest that you consult tax experts before starting a firm in the U.S. Reach out to tax treaties, IRS publications, and U.S. tax guides for foreigners.
There are numerous reasons why you may prefer Delaware company formation as a foreigner. One benefit is the absence of corporate income tax, personal property tax, and value-added taxes (VATs) in the state of Delaware. The Delaware Corporate Statutes give corporations a great deal of structural latitude in how they are set up. A further aspect that makes Delaware a wonderful site for foreign enterprises is the increased privacy that companies can enjoy.
If you are a foreigner who is looking to set up your business in Delaware, consult with our professionals from Odint Consulting.
Document requirements vary from bank to bank, but an example of what documents may be asked for is, LLC operating agreement, corporate bylaws, EIN, photo ID, etc.
Sadly, a non-resident of the United States cannot form a corporate bank account in the U.S. without visiting. Therefore, a physical presence is mandatory when opening a business bank account in the United States.
Yes, a foreigner forming a Delaware company can acquire the EIN from the Internal Revenue Service (IRS).
It is legal for foreigners to serve as executives or directors of a Delaware corporation if they are enrolling for a U.S. firm. Foreign nationals may join a Delaware LLC by forming a Delaware business for non-residents.