The Ultimate Guide to Non-Resident Business Incorporation

Can I File as a Corporation in the United States Without Becoming a Resident?

The short answer is yes. For starters, the IRS allows non-residents to file the paperwork that establishes the company's presence in the United States. They can own the business and profit from it, even while living outside the United States. If you are thinking about incorporating, it helps to understand the major types of businesses that are recognized by the U.S. government.

• S corporations are closely held entities whose income and tax obligations pass through to individual shareholders, who pay personal income taxes on the earnings.
• C corporations are also closely held entities. They are taxed on their earnings, though, and enjoy some regulatory differences from S corporations while being used for many of the same purposes.
• LLCs, or Limited Liability Companies, are the most popular entity type for non-resident and United States business owners alike. This is due to limited regulations (compared to other entity types), simplified bookkeeping and protection for owners that parallels Corporations.
• Partnerships are recognized business entities made up of individuals, and they are generally taxed like S corporations in that the individual members bear personal responsibility for the partnership's tax obligations.
• Sole proprietorships are businesses that are owned by one person who pays the taxes on the company's income through Schedule C of his or her personal income tax returns.

It is worthwhile to note that the IRS considers LLCs to be partnership entities. That means a sole LLC, one that only has one shareholder, is viewed as a "disregarded entity" under most circumstances. This means the IRS essentially treats the business as a sole proprietorship regardless of its legal status. To avoid this, you need to file IRS Form 8832 and elect to be taxed as a corporation.

Filing IRS Form 8832 to elect to change the company's tax structure allows entrepreneurs to choose between being taxed as a corporation and a disregarded entity, or between being taxed as a partnership and a corporation. The form does go two ways. That means entities that have previously elected to be taxed as a corporation can revert to disregarded entity or partnership modes of taxation.

The IRS limits these changes to once every 60 months under most circumstances, but filing the form alongside the establishment of an LLC does not count as a change for the purposes of that restriction. This provides entrepreneurs with a little flexibility when determining the best way forward.

Are There Types of Businesses Non-Residents Cannot Create?

The U.S. government allows non-residents to own any kind of corporation in the country, and to file businesses under any business type. Once filed, businesses need to obtain an EIN, and they also need to complete any additional IRS forms required for proper taxation. Since business incorporation happens at the state level, there may be some restrictions to the founding of certain corporate entities in certain jurisdictions. For non-residents looking to open businesses in the United States, local research into the requirements for filing a corporation helps. Another option is to work with professionals who understand U.S. tax law to make sure your company is established in line with all local laws.

Can Non-Residents File for an EIN?

While the EIN was not created explicitly for non-residents who own businesses in the United States, it is the system for tax accountability that takes their needs into account. Some entrepreneurs wonder if they can file for more than one EIN. The answer to this is complicated.

Generally, the IRS issues one EIN per company or other entity. Entities include not only LLCs and other businesses, but also churches, nonprofits, and even estates. This means that one individual might be responsible for several entities, each with their own EIN. It does not mean that any of those organizations possess multiple tax numbers, though.

If an LLC receives a new charter from the state in which it is established, a new EIN will be necessary. This applies both when it is changing structure from one business type to another and when LLCs with a specific duration expire. This is a different situation from the decision to elect to be taxed differently

What Is Required for Non-Residents to Open a Bank Account?

Since most banks in the United States require people to be present in person to open accounts, it can be difficult to establish a bank account when you do not live in the country. It is possible, though. Most business owners simply incorporate first. Then, they use their company incorporation documents to provide the bank with the information needed to open a business bank account. There are also some banks that do support remote account establishment. If you are looking for a bank like that, it helps to work with a professional who understands how to help you establish your business in the United States.