As an non US entrepreneur, the United States offers an unparalleled opportunity to establish your startup and unlock its full potential. While many foreigners are familiar with the economic prowess of the US, they often overlook the distinct advantages of setting up a business entity in this thriving market. In this article, we delve into the myriad of benefits that make the US the ultimate destination for non-residents to register their startups.
Reputation and Credibility
The United States boasts the largest economy in the world, and companies based within its borders are perceived as highly reputable. Unlike offshore companies registered in tax havens like Seychelles or Bermuda, which often face intense scrutiny from European tax authorities, a US-based entity can issue invoices and conduct financial transactions without raising any red flags. This credibility factor can be invaluable when dealing with clients and partners, as customers are more likely to trust and accept invoices from a company that isn’t associated with a tax haven.
Tax Advantages
One of the most significant benefits of registering a startup in the US as a non-resident is the potential for tax-free operations. Contrary to popular belief, structuring a US company as a Limited Liability Company (LLC) can provide a tax-free environment, provided certain conditions are met. If the business does not have a physical presence, employees, or agents within the US, it can operate as a tax-free online business. This applies to various services, including copywriting, consulting, software development, dropshipping, or Software as a Service (SaaS) offerings. It is crucial to understand the nuances of the LLC structure and its associated caveats to ensure compliance and maximize the tax benefits.
Access to the US Market
With a GDP of $20 trillion and a population of 325 million consumers with the highest household spending globally, the US consumer market is undoubtedly the largest and most lucrative on earth. By establishing a US entity, non-resident startups can gain direct access to this vast market, eliminating the need for middlemen. Moreover, US consumers tend to prefer purchasing from US-based companies, further enhancing the potential for success within the domestic market.
Venture Capital and Investment Opportunities
The United States is home to the world’s most respected venture capitalists and a thriving investment sector. If you have an exciting startup idea, setting up a company in the US can make it easier to approach and attract investors within the country. However, it’s important to note that most angel investors and venture capitalists prefer to invest in Delaware C-Corporations, as they are more familiar with the state’s corporate laws. Forming a C-Corporation would negate the previously mentioned tax advantages, so it’s crucial to evaluate your situation carefully and decide whether to opt for an LLC or a C-Corp structure based on your specific goals and priorities.
Banking and Financial Services
Although not perfect, the US banking system offers numerous advantages for businesses. Low banking fees, a stable currency (the US dollar), and government-insured bank accounts up to $250,000 are just a few highlights. US banks also provide superior perks and bonuses for credit card holders compared to institutions in other countries. Furthermore, opening a US bank account facilitates the buying and selling of cryptocurrencies using US dollars, providing additional financial flexibility.
Payment Processing and Credit Facilities
The US boasts an extensive range of payment processing options, including popular choices like Stripe, Shopify Payments, PayPal, and even high-risk processors that can be utilized with a US LLC. Stripe, in particular, is a popular choice among non-US residents as it allows for quick business setup even in countries where Stripe is not available. Additionally, a US-based Stripe account offers the fastest payout, within just two business days, and even provides the option for instant payouts with a 1% processing fee. This streamlined cash flow can be a game-changer for online businesses, especially when compared to longer payout periods in countries like Brazil (30 days) or Singapore (7 days). Moreover, a US-based Stripe account provides access to Stripe Capital, a branch that offers loans based on past performance history, even for businesses without a credit history, as long as they have a steady revenue stream over the past few months.
No VATs or GSTs
For online businesses that rely on paid advertising for growth, registering a company in states like Delaware or Wyoming can be a significant advantage. Unlike businesses in countries like India (18% GST), China (6% VAT), Singapore (7% GST), or the UK (23% VAT for non-VAT-registered companies), a US-based entity does not have to pay sales tax, VAT, or GST for every dollar spent on advertising platforms like Facebook, Google, or TikTok. This can result in substantial cost savings and improved profitability.
Low Setup and Maintenance Fees
The United States is among the few countries where registration and renewal fees for businesses are relatively affordable, provided the right state is chosen. The process is straightforward and can be completed without the need for a physical presence in the US. There is no requirement for a lawyer, local director, or corporate secretary, which can significantly reduce the overhead costs associated with setting up and maintaining a business. For instance, filing an LLC in Wyoming costs only $100, a stark contrast to countries like Italy, where total fees can easily exceed 2,000 euros.
Moreover, dissolving a business in the US is just as simple as incorporating it. If a startup is not performing well, it can be dissolved with minimal costs, sometimes less than $100 in certain states.
Easy Annual Compliance
Annual compliance requirements in the US are relatively straightforward compared to many other countries. While some nations mandate annual audits by certified public accountants regardless of the business size or require the presence of a local director (which can cost thousands of dollars annually in countries like Singapore), a US LLC can be 100% foreign-owned. Annual compliance primarily involves paying the reporting fee, the Registered Agent Service fee, and filing Form 5472 if there are no federal tax liabilities. Structuring a tax-free US LLC can be a powerful strategy, and understanding the intricacies of this company structure is essential for maximizing its potential.
Conclusion
The United States presents a compelling case for non-residents looking to launch their startups. With its reputation for credibility, tax advantages, access to the largest consumer market, investment opportunities, robust banking and financial services, a wide range of payment processing options, cost-effective setup and maintenance, and straightforward compliance requirements, the US emerges as the premier destination for foreign entrepreneurs seeking to establish and grow their online businesses. While other countries may offer their own advantages, the combination of benefits provided by the US remains unparalleled, making it the optimal choice for non-residents to register their startups.
