Ask HN: How to setup a company in U.S. without being there?

Ahmed, The issue is not setting up the company - what Maro describes below is a long and unnecessary way for most small companies to start up an american company. It can be done for 2 - 400 just to form the company. If you are seriously contemplating VC, then you need lawyer. I would also agree with Maro about accountants :)<p>Anyway, the issue is that no merchant account will accept your US company, even if it has an EIN and a bank account, without a personal guarantee. And they won't accept a personal guarantee unless they can either: 1. Pull your US credit report (which you don't have) 2. Be assured you have some assets that are within reach of the US judicial system or 3. take a huge rolling reserve off of your payments.<p>I would strongly suggest using 2CO, Paypal to get started. Too often we get involved in the paperwork and other stuff without proving the MVP.<p>Good luck from due east.

This might help<p><a href="http://blog.freshdesk.com/how-to-incorporate-a-us-corporation-from-outs/" rel="nofollow">http://blog.freshdesk.com/how-to-incorporate-a-us-corporatio...</a>

Disclaimer: I'm not a lawyer or accountant, and this is not legal or accounting advice.<p>I recently created a US company. Here's what I learned:<p>Most companies are set up in Delaware, because of Delaware's taxation and advanced corporate legal system. Setting up (and shutting down) a company in Delaware is very simple and streamlined, and most big US corporations are technically Delaware corps.<p>If there's a chance of raising US VC capital in the future, you will want to create a Delaware "C" Corporation, specifically. Many VCs will demand that you create a "C" Co. and transfer IP/business if you had another Co. previously. Ownership in a "C" Co. is based on shares, and the "C" Co. can later release and sell new shares to VCs: that's how investment deals happen in a nutshell.<p>To set up the company, we used a lawyer. After shopping around, $300/hr is what you should be prepared for, with about 10-20 hr to set up the "C" Co., another 10-20 if you want to transfer IP. Also, if your existing Co. is located in say Egypt, you'll need Egyptian legal council to cover your ass on that end (VCs will demand egyptian legal opinion for transfer of IP).<p>Once you have the company, you will need an EIN. That is simple and can be completed using a website for a Delaware Co. Then you need to open a bank account. In our case a US based partner did that at his local bank. There's an outfit called Bank of Silicon Valley who seem to be helpful in cases like yours and you can open an account with them, over the phone. Then you will need a virtual office and mail forwarding services, such services exist for Delaware Co's for a low yearly fee (~$50/mo), your lawyer will set you up. You'll also need a US accountant. Btw. your US lawyer will give you all this information. Overall you should expect to spend $10-20K on this.<p>In practice, the whole thing is pretty simple, and can be managed through email (scans for signatures), and US businesses are used to this. The whole thing can be completed in 1-2 weeks from the point of making initial contact with the US lawyer. Although lawyers have a bad reputation, I found that most lawyers are usually very professional and upfront about what they will charge and what the process will be, what to expect. If you need a contact try <a href="http://wsglegal.com" rel="nofollow">http://wsglegal.com</a> is who we were recommended, used, and were very happy with. (I'm not affiliated).<p>So far so good, what sucks is the accounting / tax issues. That's where you will waste most of your time, esp. if you are based in Egypt. In our experiences, while lawyers are pretty professional about what they do, accountants are less so, and accounting/tax issues are the worst offenders for wasting valuable time. That's where you should be prepared for shit to hit the fan initially, esp. for international issues where neither side (US/Egypt) will have complete legal/accounting/tax knowledge. Your cheap plain vanilla local accountant will be useless.<p>Finally, you should know that the USA is a very litigious country, meaning people are more likely to sue you if they feel you owe them or you've wronged them. So once you have a US presence (a US Co.), customers and business partners, sooner of later shit _will hit the fan_ and you will probably get sued. It's the cost of doing business.<p>Overall, in my experience, if you don't want to raise US capital, I would suggest you do _not_ set up a US Corp. Staying local, and having to only deal with local legal/accounting/tax issues is _much_ simpler for you. Also, if your company is based in Egypt it's probably harder to sue you. I would invest major energies is trying to figure out how to take payments as an Egyptian entity, although admittedly I don't have much experience in this. You could also look into setting up a UK Co., I know people who did that to take payments.<p>The EverWrite guys have a nice writeup here:<p><a href="http://everwrite.com/opening-a-delaware-corporation-an-incorporation-guide-for-foreigners/" rel="nofollow">http://everwrite.com/opening-a-delaware-corporation-an-incor...</a>

This article from my blog might help. <a href="http://blog.carlmercier.com/2011/08/29/us-incorporation-for-canadian-startups/" rel="nofollow">http://blog.carlmercier.com/2011/08/29/us-incorporation-for-...</a><p>It's more geared towards Canadians but I'm sure many things apply.

You'll be eaten alive by taxes if you're not careful, but yes, you can do it.<p>Law firms help do this. A few grand you can get someone like <a href="http://www.grellas.com/" rel="nofollow">http://www.grellas.com/</a> do it 100% venture capital ready in Delaware.<p>If you're really just looking for a merchant account, make an LLC and get one in the name of that. Far cheaper, but will require the redo when/if you want investment.<p>Make sure you file the paperwork to do it's taxes like a C corp instead of a disregarded entity (Form 2553)<a href="http://www.irs.gov/pub/irs-pdf/f8832.pdf" rel="nofollow">http://www.irs.gov/pub/irs-pdf/f8832.pdf</a>

If I was to look for creating an offshore corp I'd look at Hong Kong as opposed to Delaware, mostly for litigation reasons, to a lesser extent tax reasons. corps are pretty standard in both jurisdictions though. You'll be looking at around 10K-15K for setup and around 1K-2K a year in management / accounting fees. If you can find a lawyer / accountant in your jurisdiction that specializes in this they usually have preferred agents they work through to get you set up.

Can anybody recommend a good US CPA and an accountant with experience in working with tech startups?<p>If you are looking for a lawyer I received good recommendations for:<p>- Ryan Roberts @ <a href="http://startuplawyer.com/contact" rel="nofollow">http://startuplawyer.com/contact</a><p>- Scott Edward Walker @ <a href="http://walkercorporatelaw.com/" rel="nofollow">http://walkercorporatelaw.com/</a><p>- Grellas Shah LLP @ <a href="http://www.grellas.com/" rel="nofollow">http://www.grellas.com/</a>

You can find a lot of information here:<p>1) <a href="http://everwrite.com/opening-a-delaware-corporation-an-incorporation-guide-for-foreigners/" rel="nofollow">http://everwrite.com/opening-a-delaware-corporation-an-incor...</a><p>2) <a href="http://everwrite.com/opening-a-us-corporation-an-incorporation-guide-for-foreigners-part-2/" rel="nofollow">http://everwrite.com/opening-a-us-corporation-an-incorporati...</a>

Good info listed so far. We've written up a guide here: <a href="http://www.mynewcompany.com/international.htm" rel="nofollow">http://www.mynewcompany.com/international.htm</a><p>A few things:<p>-Getting a US FEIN no longer requires a Social Security Number or ITIN, you can call a special phone # the IRS provides.<p>-As mentioned, you can form the company now (e.g. a Delaware Corporation) using an online service like ours (~$300) and the VC will require you to modify your articles of incorporation later anyway so I don't see the necessity of spending this much up front unless you are guaranteed getting financed.<p>-There ARE some banks that will open an account for you without a visit, we've listed a few at the link above but it usually depends on if they have a branch in your home country or if it's a "trusted" country (e.g. Singapore vs. Nigeria).

If you just need a way to get paid then there are better ways than setting up a company. You could easily waste a lot of time there.<p>The way I branched out my company into unknown territories is to find a reseller there. Let them take care of the regulatory stuff. In this economy it should be easy enough to find someone who already has the company in place and needs some extra work on the side.<p>You can set up the contracts in such a way that you retain the option to buy them out and set up your own company at some point in the future.

I did this before I became a citizen and before I had residency. Trust me: You only have one minor problem right now and it's not having a merchant account. Focus on solving that. Setting up a US corporation is a world of expense, complexity and hurt you don't need. The issue goes beyond the obvious, for example it's likely you'll be refused entry to the USA on a tourist visa if you're a shareholder and director of your own USA C corp. [No it's not documented anywhere so don't bother Googling]

Is it really a good idea for a foreign startup to setup a US company just because of handling recurring payments for international customers, even including the factor of US tax?

I found that article here in HN some months ago: <a href="http://www.pluggd.in/incorporating-company-in-usa-from-outside-297/" rel="nofollow">http://www.pluggd.in/incorporating-company-in-usa-from-outsi...</a><p>There are some useful info on that article. Nevertheless if someone has more info I would like to know different perspectives on that topic.

This is a good place to look: <a href="https://www.usa-corporate.com/setting-up-a-us-company-as-a-non-resident/" rel="nofollow">https://www.usa-corporate.com/setting-up-a-us-company-as-a-n...</a>

You might be able to find answer to your question by contacting these guys. Hope it helps.<p><a href="http://www.ready2inc.com/outsideUS.asp" rel="nofollow">http://www.ready2inc.com/outsideUS.asp</a>

Hi.. pls support my startup: eCompuCloud on IndieGoGo: <a href="http://www.indiegogo.com/ECompuCloud?a=742602" rel="nofollow">http://www.indiegogo.com/ECompuCloud?a=742602</a>

Lets say, I incorporate as LLC, and decide down the road to take investment, can it be done? Can a LLC be changed to C-Corp, later?

It's not possible to open a bank account without being here in person (due to Patriot/Anti-Terrorism Acts). Other than that, there are many companies who can help you to get incorporated just by e-mailing papers back and forth.

Hi Ahmed, Here's my experience - I'm not a lawyer or anything, but I run one (an American LLC).<p>1) Ask yourself WHY you need a company in the US. It might not be worth it.<p>I registered one so that 1)it would be easier to accept payments from the US through their native gateways, because in my country, all of them suck.But if I had known the pitfalls first, I would rather have integrated with Paypal.<p>2)An American company's products are always perceived to be better than the rest.<p>I registered an LLC and every year, I'm required to pay an annual fee of $250 USD as Franchise tax. Mine is in Delaware so its just $250, if its in California, its going to be approx. $800 or so. $250 might not sound like a big deal, but for companies like mine, that are bootstrapping, it really is.<p>You are required to pay some more money as tax, apart from the Franchise tax on your ECI. ECI is effectively connected income - ie, The income generated by doing business with the US. This is going to get complex if you have an online internet business model.<p>You are required to have a registered agent to represent your company in Delaware. They charge anywhere from $50 to $200 a year.<p>The total tax you might end up paying for the same revenue stream is:<p>Franchise tax + tax for your ECI + registered agent fee + your local country's tax.<p>The situation gets even more complex when you hire more people.<p>Also, the organization's taxation methods change depending on the number of members (single/partnership/multi-member, etc.)<p>More on this: <a href="http://www.irs.gov/businesses/small/article/0,,id=98277,00.html" rel="nofollow">http://www.irs.gov/businesses/small/article/0,,id=98277,00.h...</a><p>The worst part is, if someone decides to sue you, suddenly you are answerable to the American government, which you were not before. Your liability is also increased (unsure of this though).<p>Travelling to the US becomes a nightmare when you own an American company. Visa officers think you have a higher probability of settling there, rather than returning and it becomes increasingly difficult to get to the US, which I'm pretty sure is not what you want.<p>FYI:<p>I registered through a known friend, but the best place to get it done, if you ask me, is through Harvard business services (www.delawareinc.com). They have a lot of benefits (total cost to set up an LLC is under 600-700$ USD) and MANY of my friends have registered through them. They also are very transparent and their registered agent fee is only $50 a year! (I'm not their salesman though, for god's sake)<p>Anyway, If I had known these disadvantages first, I might as well have gone with a local organizational structure. Just keep these in mind while registering your new company... my 2 cents.

ahmed,<p>among all these comments the one by ari_1 is the only one i would attest to.<p>i am not a u.s. citizen nor a resident but i was in u.s. as a graduate student between 2007 and 2010. i formed my company <a href="http://www.pratimaanllc.com" rel="nofollow">http://www.pratimaanllc.com</a> in 2009 and went through the situations that you are considering. i even have an eVerify number so that i can hire persons with valid work permit in the u.s. who are not u.s. citizens or residents.<p>my company was originally an industrial design firm but i found many people interested in the basic questions that you are faced with.<p>i re-geared my company to provide start up services like the ones you require.<p>no matter what, a company in the u.s. needs to be bound to a human's Social Security Number (SSN). A company can be formed by the Employer Identification Number (EIN) of another company which, in itself can be tied to an EIN of another and so on. but eventually there is a human's SSN tied to this arrangement.<p>forming a foreign company's u.s. subsidary is common and easy in every state due to the reforms in 2008 where practically every state adopted simpler procedures and "Uniform Corporation Codes". it is so simple that many state governments have a daily limit (15 or 20) on the number of companies that can be created with the same SSN or EIN. yes, a daily limit means that there are people registering more than 15 companies daily with the same SSN.<p>the most crucial component is a manager within the u.s. who carries out the "fiduciary" obligations partnering to the company's daily operations. you don't have to explain all these operations and the managers'complete role at the time of incorporation. but you really ought to do thin in an "operating agreement" which basically a document maintained at the company premise explaining the company's bylaws, rules, regulations, roles etc.<p>depending on the state, registering a company can take between $50 to $300 as a processing fee taken by the secretary of state's office. as a personal observation, states on the west coast and the east coast are the most expensive, the central ones are the cheapest.<p>i registered my company in iowa, another one in seattle and one ind washington d.c. i'm operating them from india.<p>all these offices were merely to grab market share based on the services i am providing and for giving my employees a sense of belonging and ownership. i'm an industrial engineer and i believe that work must inculcate such a notion in a worker.<p>but what you really ought to consider is, why do you actually need an office and bank account in u.s.? do you expect more than 5 daily transactions? is you plan to accumilate these daily transactions at the u.s account and transfer them to yourself in egypt monthly to avoid transaction fees?<p>something like that does make sense but...<p>to start out, using paypal would be a valid and worthwhile advice. all the paper work takes time, money and will remove you from the actual process of dealing with your customers and providing them the service/product they need. all the u.s. banks have weird hidden fees and shopping for banks is an arduous task which, is also a very serious managerial decision.<p>if you want to chat more send me a hollar on my company's website. but as ari_1 suggested, concentrate on proving Market Value Proposition before dealing with the backend processes that companies eventually need to handle.<p>wish you all the best,<p>sam khan

Incorporating in the USA varies by the state, and there are implications based on which state you incorporate in. For instance, some states have no corporate income tax, others due (Which is completely separate from federal taxes.) Various states have different amounts of regulation, licensing you might need (depending on your business) and different burdens of bureaucracy to deal with. Just something to be aware of. You'll need to at least file annual reports and pay a fee each year to keep the corporation going, though there may be other paperwork you have to keep up too.<p>The company corporation exists to provide most of the services you need. You can find them at www.incorporate.com They are good about reminding you of everything you need to file, and they also provide registered agent services. Every company needs to have someone in the state where they are incorporated who is there to receive process (e.g.: if someone sues you you have to have an agent who is identified publicly so you can get the court papers.)<p>They provide registered agent services and will facilitate incorporating in many of the states.<p>If you decide you need a mailbox in the USA, then there's earthclassmail.com which will offer you addresses in many states. I'm not sure what they require for non-american citizens to set up an account.

Since I own a small business (freelancer 1 man company), I can assure that if the idea is just to save money on international merchant account etc, the OP should do more research about cost and benefits. To setup any corporation in the US, there are multiple steps which also include cost. Do not go for the online ads that claim you can setup a company for $100. There are far more things like state filing etc. that are usually not included in those. Not to mention that you will be dealing with one of the most dreaded income tax collectors (a.k.a IRS in the US). I say this having lived in 3 different countries including the US. If you absolutely need a foregin company outside Egypt, look into Asia (Hong Kong or Singapore preferably).