How do I form a US company from overseas?
Hey guys
I'm looking to form a company in the US from the UK (as an NZ citizen). For now an LLC would be enough as I have no funding but long term if I want to scale I believe a C Corp is the way to go.
Any advice on this? Should I just do a C Corp now?
And secondly, out of Stripe Atlas, ZenBusiness and Firstbase.io and advice on which to pick? Or any others I've not considered?
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Firstbase hands down (not affiliated). Seamless process, affordable, supports Delaware and Wyoming.
As for LLC vs. C-Corp, you must ask a professional. It's not just about whether you want to raise funds & co. which is a typical US founder's concern when choosing, but as a non-resident you'll have to figure out how you will be taxed between the US vs. your home country.
For instance, an LLC is a passthrough entity, which means you could be taxed only in your home country (provided you don't have some sort of establishment in the US), but then you also must make sure your home country won't give you trouble for having your company abroad (and make sure you won't qualify as a resident in the US by staying there too long accidentally etc.).
A C-Corp is always taxed in the US but then you have to figure out how to get money out and the implication of that in your home country.
Anyway, I highly recommend asking https://onlinetaxman.com/ (also not affiliated).
Hope this is helpful!
💯 seconded! Even if the actual forming is easy and online, doing the whole thing right is much more complicated than it seems.
Can I ask why you want/need to set up the business in the US?
I imagine you have good reasons, but in my experience the UK is a much more entrepreneur friendly place to start a company - you'll have a limited company and bank account in like 24-48 hours after spending probably £15. In the US it will cost you hundreds, and eventually thousands in legal, accountancy etc and the admin totally sucks (all money you could spend on your business growth). Not to mention that the banking is terrible, with high transactions costs and even their best challenger banks (Mercury arguably) are only as good as the average highstreet business bank accounts from the UK.
Hey, good question. And yes super painful. I'm on a tier 2 visa, which means I'm not allowed to form a company in the UK. I could switch to a partner visa if I can convince the other half, but cost for that is £3.5k. From what I can see, I can form a company in the US and that would have no impact then on the Visa.
don't they have some sort of entrepreneurial visa in the UK?
They do but think I’d need funding to qualify.
Oh yeah, that's annoying :( You could also create an NZ holding company and have that set up the UK one, but then you end up with just as much bureaucracy as going with a US Inc probably haha.
Are you already in business/ready to charge for your services?
I could just create an NZ company full stop and run the whole thing from there remotely. App is launching in the next couple of weeks when I get trademark approval. Will be free initially anyway.
Maybe I go back down that route since it’s the one country I can guarantee I’ll never have issues with. I can use my father as an NZ based Director.
Seems like a good option to me, the lower you can keep your costs to begin with the better. That said, if you're ever thinking of taking investment you might not want to go down that route as you might have to do a bunch of restructuring and/or have higher tax liabilities later.
What is the product by the way? :)
I do want to try and get funding. But just need to launch first. So whatever way I can do that easily to start.
It’s a fitness meet up app. https://connectwithstride.com
Nice, it looks cool :) As it's free initially I'd consider waiting 3-4 months before deciding about incorporation. We waited 8 months to incorporate Squeaky and just offered it free in that time in exchange for feedback from users. I'd say 8 months is too long for most products of course, but definitely no need to incorporate pre-launch if you're starting as a free product :)
Thanks for the help! So LLC for now sounds like the way to go. Did you raise funding or bootstrap?
Still bootstrapped at present, we only publicly launched last month. Won't rule fundraising out but we've got a bit of runway and some revenue...so no urgency just yet!
LLC is a good option to start with. . A single-member LLC is like a sole proprietorship, but it limits your personal liability in the business, hence very beneficial to start with. If business grows and you want investors, you can always convert your LLC to C-Corp.
I don't see much point in starting a C-Corp now. It would require more compliance, paperwork and less flexibility.
You can check this guide on Sole Proprietorship vs LLC vs C-Corp - https://www.doola.com/blog/sole-proprietorship-vs-llc-vs-corporation
doola is another one that offers a full stack solution. Checkout some testimonials here - https://www.doola.com/wall-of-love
You can try startfleet. They are very helpful and can help you regarding your tax doubt..
Many company just form your company and cut-off after giving you documents. But I found Startfleet to helpful whenever you send them message. Also they they guiding you to multiple methods to avoid unnecessary taxes.
I used Incfile, I paid like 50 USD for a LLC in New Mexico (dont buy any extra). You can order the EIN via fax from the IRS (free), and with the EIN you can get a Mercury account (for free), with the account you can set up Stripe or a cheaper alternative.
Stripe Atlas?
Thanks. What’s your thinking of that over the other 2?
And would you suggest LLC or C Corp at this stage (pre venue only just entering the market)
If you plan on raising capital from angels or VC a C Corp is probably the way to go. There are certain structures in place with a C Corp that investors are looking for. If you don't plan on raising capital an LLC would probably be the way to go.
Hi @castle08 I am not based in the US, so I cannot give you any advice on which you should go with.
Perhaps you could either lawyer up or even contact one of those services for professional advice.
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