What to Consider Before Launching a US Company

• Why should I form a company?
• Where do I incorporate?
• What’s the difference between a C Corporation and an LLC?
• As a foreign founder or owner, what are unique considerations I need to think about?
• When does it make more sense to create a subsidiary instead of a new company?

Incorporating a Company in the US

• What does the incorporation process entail?
• How do I select the name of my company?
• What are shareholders and LLC members?
• As a foreign founder or owner, do I need to have a US citizen or permanent resident as a stockholder or LLC member?
• What are the differences between incorporating in Wyoming or Delaware or another state?

Important Details for Owners of a US Company

• What are stocks?
• How do I issue stock options?
• What is vesting and a vesting schedule?
• What is an EIN?
• As a foreign founder or owner, what are things unique to the United States that I need to do?

Maintaining a Company in the US

• What documentation should I maintain?
• Do I need to pay US taxes or file any tax forms?
• What are the ongoing costs for my company?

Growing a Company in the US

• What are the requirements if I hire new employees?
• Where can I go for services to help my company?

Why should I form a company?

Even though enterprises may be carried out without incorporation by an individual or partners, the main factors for choosing a corporate form is for the limited liability and the perpetual existence these organizations can offer.

• Other reasons why foreign founders might want to form a legal entity in the US include
• Raising money from VC firms and/or angel investors
• Accessing essential tools for running a business, such as payment processors
• Applying to a US-based startup accelerator
• Building trust with customers by doing business as a US-incorporated company
• Accessing a specific platform or service (e.g. Amazon)
• Pathway to immigration (O1 or L1 visas)
• Keeping money in a US FDIC-insured bank account
• Opening a physical location/office in the US
• Taking advantage of simplified bureaucracy compared to founder’s home country
• Accessing tax benefits available for foreign-owned companies in the US
• Signing contracts with US-based clients
• Accessing US-based talent
• Other reasons why US-based founders might want to incorporate:
• Limited liability
• Raising money from VC firms and/or angel investors
• Applying to a startup accelerator
• Splitting the ownership between cofounders
• Tax benefits
• Credibility
• Longevity of a business
• Issuing stock to employees, advisors, and others

Likewise, entities are capable of moving portions of the ownership interests in the company applying simple techniques. Furthermore, incorporating a business adds trustworthiness to the venture in the market because it gives identity and professionalism.

Where do I incorporate my business?

Corporate law in the United States is state law. Statutes and case law vary from state to state. When incorporating a business, you should consider your business model to understand which state has the legislation that fits better on your enterprise goals.

You must create a company or LLC under the laws of a certain US state. Thankfully, an entity incorporated in any state can operate outside of this state, even as a foreign-owned US entity. There are certain types of businesses (ie. brick and mortar stores or physical locations) that can require filing extra paperwork if you physically operate your business outside of the state of incorporation.

As a result, each state has its own set of rules and regulations around incorporating a business. For example, one founder is enough to form a corporation or an LLC in Delaware. Due to the specific needs of Firstbase.io customers, Delaware and Wyoming are the two states currently available for business formation. Additional information can be found here and here about why either of these states are a great fit for startups.

What’s the difference between a C Corporation and an LLC?

Both Limited liability companies (LLC) and C Corporations will provide limited liability for founders. When deciding between an LLC and a C Corporation, consider how you intend to structure the ownership and leadership of your business, your goals, and potential tax obligations.

When forming an LLC, owners create an Operating Agreement, a contract specifying how the business will be run and how costs and profits will be shared. As long as all parties agree to the terms, the actual structure of your LLC can be at your discretion.

Operating an LLC moves liability for debts and obligations of the business from the entrepreneurs into the entity itself. LLCs and corporations will provide limited liability for their shareholders.

The choice can be driven by many factors like tax obligations, corporate governance, the need to raise venture capital or issue stock to employees, or other enterprise objectives.

Concerning tax issues, LLCs are "pass-through" entities. Pass-through taxation allows LLC's members to pay personal income taxes on the income of the business.

On the other hand, a corporation is an independent entity for tax purposes. Corporations generally pay corporate taxes on their own profits, and their shareholders pay personal income on the capital distributed to them.

Shareholders are taxed separately if the company distributes dividends to them, or if it pays them a salary, in the case of employee shareholders. If the shareholders are not US residents and don’t have physical presence in the US, they are normally not liable for paying US personal income taxes.

Important: Generally, If the members or shareholders of a US entity are foreigners who don’t meet the “substantial presence test”, and the company doesn’t have any “US-connected income”, it has no tax liabilities in the US. The term “US-connected income” generally means income generated in the US, and applies to businesses that have physical presence of the business in the United States and operate in the US through a “permanent establishment” (e.g. an office or other fixed place of business) or have “dependant agents” (e.g. full-time employees, or contractors and companies that work almost exclusively for the company) that do something essential to grow your business in the US. The US uses the Substantial Presence Test as a way for international residents to assess whether they qualify for certain tax requirements based on the physical duration of stay within the US. From the guidelines provided by the IRS (www.irs.gov), here are the terms you must meet for the calendar year for tax purposes:

• 31 days during the current year, and
• 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
  • All the days you were present in the current year, and
  • 1/3 of the days you were present in the first year before the current year, and
  • 1/6 of the days you were present in the second year before the current year. If a foreign person meets the substantial presence test, they will be considered a US resident for tax purposes. In this case, a foreign person may become liable for paying US personal income taxes. Example: You were physically present in the US on 120 days in each of the years 2012, 2013, and 2014. To determine if you meet the substantial presence test for 2014, count the full 120 days of presence in 2014, 40 days in 2013 (1/3 of 120), and 20 days in 2012 (1/6 of 120). Since the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2014. However if you are over the 183 days for the substantial presence test, you may be required to pay US taxes. To receive an expert consultation, please speak with one of the tax attorneys or CPA firms within the Firstbase.io Network to assess your specific situation and obtain accurate information around the required tax liabilities. Some basic distinctions and examples of both types of legal entities are as follows: LLCs
• LLC is an excellent choice for eCommerce stores and small online projects.
• LLCs offer limited liability for founders, simple structure, and ease of management.
• LLCs don’t have shares, so you won’t be able to issue stock or go public — but many pretty huge companies are LLCs (Basecamp, Mailchimp), so you can still achieve a lot with this structure. C Corporations
• C Corporations are ideal for businesses seeking to raise money from angel investors or VC firms.
• Corporations also offer limited liability for founders and a flexible structure.
• The ownership of the company is expressed in shares of stock, and you can use these shares to raise capital and issue employee options. When deciding between an LLC and a C Corporation, consider how you intend to structure the ownership and leadership of your business, your fundraising and hiring goals. A core component of the Firstbase.io Network is access to law firms, tax attorneys, and CPAs who can support you as you grow your business regardless of the type of entity you launch with Firstbase.io. It is possible to convert an LLC to a C Corp in the future (even changing the state). Businesses may decide to change their structure to accept outside funding or allocate shares to employees.

As a foreign founder or owner, what are the unique considerations I need to think about?

As a foreign founder of a US legal entity, you are afforded the opportunity to access most of the resources available to US legal entities. Since most foreigners do not have a US Social Security Number, obtaining the EIN (more information about this below in this guide) is an extremely important first step before gaining access to one of the best startup ecosystems in the world. Firstbase.io allows you to obtain EIN without being a US resident.

Firstbase.io is a technology service supporting founders globally with customers from more than 120 countries. Firstbase.io operates an EIN authorization team that works directly with the IRS on behalf of foreign customers to expedite the process of retrieving the EIN from the IRS once it is issued. Please reach out to us if you have specific questions about how this process helps foreign business owners obtain their EIN faster.

The United States has a comprehensive path to immigration for entrepreneurs. You should consult an immigration lawyer to get insights into your visa application. Firstbase.io has a partnership with lawyers and unique legal tech companies that can help you and your families understand the options available in obtaining a US Visa.

The entity formation can expand your immigration opportunities, specifically giving you access to the O-1 and L-1 visa:

• O-1 Visa: A Firstbase.io partner is considered the “O-1 Visa company”. They provide support for founders to use a US-based legal entity to gain visa access. You can visit our help center to receive a free consultation about your visa application and qualification criteria.
• L-1 Visa: L-1 visa allows employees to transfer among an international group of companies. By creating a US legal entity, you can develop a “qualifying relationship” with your foreign entity that will qualify employees to transfer to the US-based company. The qualifying relationship can be in the form of an affiliate, a subsidiary, or a branch. Firstbase.io can specifically help create a subsidiary of your foreign entity.
  
  Founders and business owners can qualify for the O-1 Visa. By having a US legal entity, founders and business owners can petition for themselves when looking to qualify for the O-1 Visa. The O-1 is a visa aimed at people with extraordinary ability. In order to qualify for an O-1 visa, an applicant has to meet the US government’s highest criteria for extraordinary abilities including three criteria from the following list:
• Receipt of nationally or internationally recognized prizes or awards for excellence in the field of endeavor.
• Membership in associations in the field for which classification is sought which require outstanding achievements, as judged by recognized national or international experts in the field.
• Published material in professional or major trade publications, newspapers or other major media about the beneficiary and the beneficiary’s work in the field for which classification is sought.
• Original scientific, scholarly, or business-related contributions of major significance in the field.
• Authorship of scholarly articles in professional journals or other major media in the field for which classification is sought.
• A high salary or other remuneration for services as evidenced by contracts or other reliable evidence.
• Participation on a panel, or individually, as a judge of the work of others in the same or in a field of specialization allied to that field for which classification is sought.
• Employment in a critical or essential capacity for organizations and establishments that have a distinguished reputation.
  
  In certain scenarios, if you are a foreign-owned US entity, you may be required to complete a BE-13 form that collects information on the acquisition or establishment of a US-based company by foreign investors who own or control 10% or more of the US entity.
• What’s the purpose of the BE-13 filing? The BEA uses the BE-13 filings to collect information on the acquisition or establishment of U.S. business enterprises by foreign investors, as well as the expansions by existing U.S. affiliates of foreign investors.
• By when must the BE-13 filing be made? The BE-13 must be filed no later than 45 days after the effective date/completion of the reportable transaction (i.e., the establishment of a new entity, the closing of an acquisition, or, with respect to an expansion, the beginning of the expansion).
• How is the filing made? The U.S. affiliate of the foreign investor can file the appropriate Form BE-13 in a number of ways – post mail, fax, or electronically via BEA’s electronic filing portal at www.bea.gov/efile. The BEA website (www.bea.gov/fdi) also provides a number of filing resources, including forms, filing instructions, FAQs and even video tutorials.
• What are the penalties for failing to properly file the BE-13? Failure to properly file the BE-13 (whether missing the deadline, using the wrong form or providing incomplete or inaccurate information) can result in civil and/or criminal penalties, ranging from $2,500 or more than $32,500 per violation, as well as injunctive relief compelling compliance on the civil side, and imprisonment of up to one year and/or a fine of not more than $10,000 per violation on the criminal side (if it is found that such failure was willful).
• What form should be used for the BE-13 filing?
  • Form BE-13B – report for a U.S. business enterprise when a foreign entity, or an existing U.S. affiliate of a foreign entity, establishes a new legal entity in the United States and (i) the projected total cost to establish the new legal entity is greater than $3 million and (ii) the foreign entity owns 10 percent or more of the new business enterprise’s voting interest (directly or indirectly).
  • Form BE-13 Claim for Exemption – report for a U.S. business enterprise that (i) was contacted by BEA but does not meet the requirements for filing forms BE-13A, BE-13B, BE-13C, or BE-13D or (ii) whether or not contacted by BEA, met all requirements for filing on Forms BE-13A, BE-13B, BE-13C, or BE-13D except for the $3 million reporting threshold.
    
    Creating a foreign parent company and/or a subsidiary is an important decision, so we encourage you to seek further legal counsel before taking this step in growing or starting your business.

When does it make more sense to create a subsidiary instead of a new company?

If you want to create a subsidiary of a foreign parent company, you need to verify whether it is subject to agreements that forbid the creation of a subsidiary. You should have the required lender or shareholders’ approval before the incorporation. Firstbase.io can offer recommendations to help facilitate some of these legal discussions if necessary through our Firstbase.io Network.

There are several scenarios where a subsidiary is a useful option and relevant alternative instead of a new entity:

• The subsidiary can help overcome bureaucracies. If you want to maintain the same management structure, a subsidiary can help ease in paying out contractors, affiliates, or partners without dealing with some of the financial roadblocks and red tape that may exist in countries outside of the United States.
• On the other hand, subsidiaries are flexible enough to offer larger multinational companies the ability to expand into a country with different legal structures that may require a unique management structure due to the nature of the entity or type of business.
• Similarly, larger multinational companies who have a diverse portfolio of products or services can find value in creating a subsidiary to maintain financial dependence on the parent company while creating a separate structure that maps to the specific needs of the unique product or service.
• Lastly, organizations can diversify a corporate identity by forming subsidiaries that are housed under a larger parent company while offering the flexibility to create a unique brand that may be different or separate from the brand and voice of the parent company.

What does the incorporation process entail?

The incorporation is the process to form a business entity in the United States. The founders will create a new entity to separate the liability from them as individuals. Protecting personal assets, and giving credibility to the enterprise are several value adds to incorporate in the United States.

The meaning of a par value Par value is the minimum issue price for a share of stock. Most founders who incorporate a Delaware C Corp to raise venture capital prefer to choose low par value since it has an effect on the annual franchise fee amount due for Delaware corporations. Wyoming companies don’t have to pay a franchise fee.

To calculate the franchise fee for your corporation in Delaware, you can use one of the following two methods that are detailed below (information is available at https://corp.delaware.gov/frtaxcalc/). Use the method that results in the lesser fee.

• Authorized Shares Method: The Annual Franchise Fee assessment is based on the number of authorized shares of the company. The minimum fee is $175.00.
• Calculation:
  • 5,000 shares or less (minimum tax): $175.00
  • 5,001-10,000 shares: $250.00
  • Each additional 10,000 shares or portion thereof add $85.00
  • Maximum annual tax is $200,000.00
    
    Example: Although the amount is at the founders’ discretion, we recommend new corporations initially authorize 10,000,000 shares to be easily divided among founders, sold to investors, and/or offered to employees. To avoid legal difficulties, we also recommend keeping the total value of all shares under $100.
    
    Placing a very low initial value on your stock, like $0.00001, allows you to create a very large amount of shares, which is attractive to shareholders. However, if you authorize a lot of shares (e.g. 10,000,000), the Authorized Shares Method will result in a high fee, so you may prefer to use the Par Value Method.
• Par Value Method: This method calculates the amount due based on how many shares are authorized, how many shares are issued, and the amount of total gross assets. It takes a company’s “par value” per share times the number of shares it has authorized (i.e. the total market capitalization), rounds up to the nearest million dollars, and takes 0.035% of that as the tax.Total Gross Assets shall be those “total assets” reported on the US Form 1120, Schedule L (Federal Return) relative to the company’s fiscal year ending the calendar year of the report. The tax rate under this method is $400.00 per million or portion of a million. If the assumed par value capital is less than $1,000,000, the tax is calculated by dividing the assumed par value capital by $1,000,000 then multiplying that result by $400.00.
  
  Delaware Franchise fee is easy to pay, and our team can assist you with this process. An incorporator
• The incorporator is someone with the power to represent the business as an agent during the process of development.
• The incorporator has the authority to prepare, sign, as well as submit the Certificate of Incorporation, and also any other required records.
• The incorporator's authority ends when the company is signed up - by filing the Certification of Incorporation with the state - and the first Director is designated. The incorporator does not own the company.
  
  The officer's roles Appointed by the Board of Directors, officers are in charge of the everyday procedures. Firstbase.io collects this data to complete the necessary paperwork when creating a Corporation.
  
  The appointed officers are:
• Chief Executive Officer (CEO): Responsible for overseeing all of the day-to-day operations of the business. Some common roles include:
  • Growing the value of the company
  • Providing direction and top-level decision making for the business and business strategy
  • Overseeing the operations of the business
• President: Responsible for logistics and business operations and confirming the company policies are implemented effectively. Some common roles include:
  • Guiding and leading managers
  • Implementing company strategy
  • Providing feedback and recommendations to the board of directors
• Chief Financial Officer (CFO): Responsible for all financial matters which may include maintaining all the corporate financial records and preparing financial reports.
• Secretary: Responsible for maintaining corporate records, preparing and organizing shareholder meetings and providing necessary corporate documentation when needed.
  
  Please note that one individual can fill all of the roles of the appointed officers.
  
  The certificate of incorporation determines the existence of the company. In Delaware, they charge a filing fee, and the application should be submitted to the Delaware Secretary of State. Firstbase.io handles all the necessary steps and our one-time fee includes the filing fee, EIN obtainment, business bank account opening, post incorporation documents, legal consultations and over $20,000 in rewards and incentives for additional services and tools for your business.
  
  Few requirements exist to fill out a certification of incorporation. To maintain flexibility you can mention only the name of your business and the name of the Incorporator to avoid future modifications to the certificate.
  
  The Board of Directors takes on the bylaws in its business resolutions. The Bylaws state the policies and the company procedures that impact governance. The Board has the duty to approve the Approval of Organizational Resolutions. It is a document with the organizational matters approved by the Board of Directors.
  
  The detailed process is one that Firstbase.io will manage on behalf of all our customers. The customer success team at Firstbase.io utilizes partnerships, our internal tech-enabled service, and the data collected during the online application process to efficiently complete all the necessary steps to incorporate a US legal entity. The Firstbase.io platform and team draft all of the necessary legal documents in-house.
  
  Please reach out and complete the online application to speak with a representative from our team.

How do I select the name of my company?

Founders should ensure that their company name isn't the same, in their state, as that of an existing corporation, partnership, or LLC. If it is identical or similar, the founders need to choose another name.

Once you have a business name idea, you can go to Firstbase.io and complete the online application. Firstbase.io validates that your specific company name is available in the state where you wish to incorporate, and the Customer team will work with you to find alternatives and suitable variations if your exact business name is not available.

Firstbase.io offers resources and partnerships that can help trademark your company name and/or brand in the United States.

What are shareholders and LLC members?

Simply described, shareholders are owners of a corporation and members are owners of limited liability companies (LLCs). Although there are some overlaps, generally speaking these are terms for owners of your legal entity, depending on the type.

Shareholders are individuals who own shares of a private or public company. Shareholders can be an individual, a company, or another institution. Shareholders (or stockholders) can receive dividends from the shares and a portion of the company’s profits. Shareholders are not liable for the debts of the company.

Members are included in the formation documents of the LLC. Members of the LLC share the risk of liability equally with the other registered members. Members of an LLC may or may not be a part of the operations of the company.

As a foreign founder or owner, do I need to have a US citizen or permanent resident as a stockholder or LLC member?

To develop a United States business, there are no US federal or state regulations demanding a shareholder or LLC member to be a US citizen or green card holder. Thus, a foreigner can own shares of a US corporation or be a member of an LLC.

What are the differences between incorporating in Wyoming or Delaware or another state?

Delaware and Wyoming are renowned for their business-friendly legislation. They usually have low fees, and more organizational freedom. Delaware has an established body of case law and an innovative perception of social enterprises. For instance, the state created a Public Benefit Corporation (B-Corporation) as a new form of a corporate structure.

The decision about where to incorporate involves the analysis of the business model, the corporate structure, and the entrepreneur’s goals. Thus, a corporate lawyer can find the best state law for a particular enterprise. Firstbase.io specifically incorporates LLCs and Corporations in Wyoming and Delaware due to the flexibility and low-cost for starting a business. You can find a more detailed breakdown below:

Choosing Wyoming to incorporate

• Wyoming LLC:
  • Low cost, manageability, flexibility and a focus on small business
  • No franchise or state personal and corporate income tax
  • No minimum annual fees
  • Does not require listing of members and keep your information private
• Wyoming C Corporation:
  • Favors smaller and privately controlled companies
  • Ownership information is kept private
  • No franchise or state income tax
  • Annual report is $50 on the anniversary month of incorporation
  • Unlimited shares allowed at no par value
  • Does not collect corporate income tax information to share with the IRS
    
    Wyoming is extremely popular among bootstrapped companies and smaller companies that don’t want to raise venture capital, and want to avoid paying Delaware franchise fees (usually, a few hundred dollars per year for early stage companies). The only fee would be a $50 annual report filing fee.
    
    Choosing Delaware to incorporate Delaware is worldwide renowned because of its corporate law and jurisprudence. The law is innovative and flexible allowing for significant advantages for early-stage companies, technology startups and foreign-owned US entities. More than 60% of Fortune 500 companies are incorporated in Delaware.
• Delaware LLC:
  • State laws provide the strongest shield of any state
  • Most pro-business laws in the US
  • No state income tax if your operations are in other states or countries
  • Annual franchise fee is $300
• Delaware C Corporation:
  • Favors larger companies, often publicly held ones
  • Angel and VC investors may prefer to invest in Delaware Corporations
  • Has a history of over 100 years addressing shareholder rights
  • “Pro-Management”
  • Offers exceptional flexibility in terms of corporate structuring and the broadest privacy protections
  • Minimum franchise fee is $400 (if you use the par value method)
  • Minimum franchise fee is $175 (if you use the authorized shares method
  • Ownership information is not reported to the state.
    
    As a result, foreign founders or business owners find tremendous value in the flexibility of the Delaware state tax regulations. You can learn more about some of the unique advantages by checking out the Firstbase.io FAQ.

What are stocks?

A stock is a security representing the ownership of a fraction of a corporation. The shareholders own a proportion of the company's assets and profits according to their amount of stocks.

How do I issue stock?

The issuance of stock must be accepted by the Board of Directors. The approval of the issuance depends on the majority at a meeting, or by unanimous written consent.

The potential shareholder must pay a value to the corporation for the stock. The company must act in accordance with the securities laws, providing the investors with information about the company, and the risks involved in the enterprise.

What is vesting and a vesting schedule?

Vesting is a schedule that defines when and how shares of your company will be distributed to members of your business.

A vesting schedule is an incentive program you can set up as the business owner to provide your co-founders or employees an opportunity to share in the success of your business with equity. For example, you can offer a percentage of the company to an employee as an incentive, but to provide security for yourself and to hold your employees accountable, you can use the vesting schedule to gradually gain percentage points over the vesting period that you define.

This is an important component of your business, so we recommend spending time doing research and learning more about what is best for your specific needs as a company.

What is an EIN?

Vesting is a schedule that defines when and how shares of your company will be distributed to members of your business.

A vesting schedule is an incentive program you can set up as the business owner to provide your co-founders or employees an opportunity to share in the success of your business with equity. For example, you can offer a percentage of the company to an employee as an incentive, but to provide security for yourself and to hold your employees accountable, you can use the vesting schedule to gradually gain percentage points over the vesting period that you define.

This is an important component of your business, so we recommend spending time doing research and learning more about what is best for your specific needs as a company.

As a foreign founder or owner, what are things unique to the United States that I need to do?

If the founder is a foreigner, he/she would need a registered agent who has the duty to receive official correspondence on behalf of the company. Firstbase.io has partnerships to facilitate all the necessary documentation and steps to legally and successfully form your entity. A registered agent is not a legal part of your entity, but they work more so as a way to communicate and represent your company in the United States. You can learn more about registered agents on our blog post here.

As a foreign-owned US-based entity, even if you do not pay taxes in the US in any given year, in most cases you will still need to file some simple tax forms. The Firstbase.io tax consultation that is included in the one-time fee can provide additional information if necessary.

What documentation should I maintain?

Keep in mind that organizing your paperwork is crucial for your business success. It keeps you on track and updated with the corporate regulations.

You must keep your business tax returns for auditing purposes. The Internal Revenue Service requires companies to keep their income tax returns for a minimum period of 3 years.

If you have employees, you must keep their job applicant information, employee records, and payroll tax records. This measure is important to prove that your business has been running according to the employment law, and non-discriminatory standards. You should keep those documents for at least 7 years.

Furthermore, hold your documents of incorporation and ownership.

The Internal Revenue Service understands that electronic records have the same value as the original papers.

Do I need to pay US taxes or file any tax forms?

• If you don’t have any US-connected income
  • Generally, if the members or shareholders of a US company are foreigners and the entity doesn’t have any US-connected income , this company won’t have any tax liability in the US. Just selling products or services through your US company doesn’t make you subject to US taxes — even if you are selling to customers based in the US. In some instances, you may be liable to pay taxes in your home country on the income that you get from your US business. Please consult a local attorney in your home country.
  • Companies that do not have US tax liability for their LLC may need to complete yearly forms like the Form 5472 or 1120 to exchange basic information with the IRS. Please use our free tax consultation to clarify this information specifically for your business.
  • Example: If you are a B2B software company based in India selling a software subscription online with no full-time employees in the US, you may qualify as NOT having US-connected income.
• If you are a foreign-owned US Company that has US-connected income
  • Examples of a “US-connected income” may include having full-time employees in the US, operating a warehouse, or having a physical location in one of the states. Generally, the source of income is the geographic location where the services are performed and where the income-producing asset is located. In this case, you might have to be liable to pay US taxes on a portion of your profits.
• If you are a foreign-owned US Company that has US-connected income
  • C Corporations file a corporate tax return and pay corporate income tax on the company’s profit. The distributions to shareholders are also taxed at the shareholder level.
• LLCs are more flexible than corporations when it comes to taxation. Because it doesn’t have its own tax classification with the IRS, LLCse can be classified in one of three ways: - Disregarded entity: the LLCs income and expenses pass through to the owners’ personal tax returns. The LLC tax form is Schedule C of that return.
  • C Corporation: File Form 8832
    
    LLCs are pass-through entities (the profits and losses transfer to the owners like a partnership) while corporations pay their own taxes. The LLC members do not need to fill a corporate tax return because they will pay on their personal taxes.
    
    New entrepreneurs usually know about the income federal tax, but almost every state has a corporate income tax. Also, depending on your business model, you may expect to pay property tax, excise tax, property tax, employment taxes, or self-employment taxes.
    
    We are not an accredited legal company, but our package includes one free tax consultation. Our legal partner will be able to assist your tax needs and provide specific advice based on the unique details and variables in your specific business.

What are the ongoing costs for my Company?

• Wyoming
  • Registered agent fee after the first year is $49/year. Firstbase.io appoints a reliable agent for you within Wyoming.
  • Annual Report fee is normally $50 on the anniversary month
• Choose a US-based mailbox that normally starts at $9.99/month. The first month is covered with the Firstbase.io fee to accept business mail, including your debit card and bank account information. In Wyoming, the address is included by your assigned registered agent.
  • Please note that you can stop using this mailbox after the first free month.
• Delaware
  • Registered agent fee after the first year is $50/year. Firstbase.io appoints a reliable agent for you within Delaware.
  • Normally the franchise fee is a few hundred dollars a year. You can reference the “Where do I incorporate my business” section to read more about how to calculate the franchise fee in Delaware. You have two options depending on which method will yield the lowest fee. The registered agent can provide support in calculating this fee with you.
  • Choose a US-based mailbox that normally starts at $9.99/month. The first month is covered with the Firstbase.io fee to accept business mail, including your debit card and bank account information. Please note that you can stop using this mailbox after the first free month.
    
    The ongoing fees described above can be paid online with your corporate debit card provided by one of our banking partners.
    
    You can view this specific response and others in the Firstbase.io FAQ

What are the requirements if I hire new employees?

• Hiring remote talent as independent contractors
  • When hiring contractors for your US-based company who are outside of the US, you need to have them fill out a W-8BEN to limit tax liabilities. This form will verify their non-US status. We have partnerships with tools that help you hire and collect forms for independent contractors located outside the US.
• Hiring US-based independent contractors
  • You will need to file a 1099 form. We have partnerships with tools to manage your independent contractors in the US to ensure that tax regulations and legal policies are accounted for automatically within the documentation created for your contractors.
• Hiring US-based employees
  • We have partnerships with some of the easiest, most powerful tools for managing employees. You can use software tools to manage your employees payroll, benefits, etc. The forms and the necessary documentation to complete this process for your employees can be done automatically with a few clicks of a button.

Where can I go for services to help my Company?

All Firstbase.io customers receive over $20k in rewards and discounts for services and software. Here are a few of the services that we offer our customers that will help you grow and manage your new company:

• Free tax consultations
• Free legal consultations
• Free business banking account with Mercury (and $500 free when you spend $10,000)
• Special offer on corporate credit cards from Brex
• $5,000 in Amazon Web Services cloud credits
• Free offers on Bookkeeping services from Bench and FreshBooks
• Special discounts on payroll services from Gusto and Deel
  
  Read more about our special customer discounts here.

Firstbase.io is helping foreign and American startup founders set up a US entity — a powerful legal structure used by some of the most innovative companies on earth. From anywhere, in a few days. Firstbase.io’s powerful platform enables entrepreneurs a convenient way to grow and access to the most powerful startup ecosystem in the world. As a remote-first global company with thousands of customers around the world, Firstbase.io has the knowledge and expertise to help you launch your company. We’ve helped founders based in 120 countries, and almost every US state For more information about how you can quickly launch your company, get a free business banking account, and take advantage of $20,000 in partner rewards, visit the our help center, or get the process started yourself by filling out our simple application.

The information contained on this guide, whether free or paid, is for educational and informational purposes only. The Company assumes no responsibility for errors or omissions in the contents of the guide. The information contained on this guide is not intended as, and shall not be understood or construed as, legal or tax advice. The information contained on this guide is not a substitute for legal advice from a licensed attorney who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided on this guide is accurate, providing valuable information.

Regardless of anything to the contrary, nothing available on or through this guide should be understood as a recommendation that you should not consult with an attorney to address your particular information. The Company expressly recommends that you seek advice from an attorney prior to taking any actions. Neither the Company nor any of its employees, owners, or contributors shall be held liable or responsible for any errors or omissions on this guide or for any damage you may suffer as a result of failing to seek competent legal advice from a licensed attorney who is familiar with your situation.