Setting up a company in the USA as a Non-Resident (IT Industry)
                     Foreign Company to be Setup in USA
Webinar Series: Episode 3
PRESENTED BY:
Vivek Shah Mansi Shah
US Tax Expert  US Expat Tax Expert  
Managing Partner  Sr. Tax Manager  
@Smart @Smart 
Accountants Accountants
Webinar Overview:
Procedure to incorporate 
Purpose the company in USA
Capital Transfer from India 
KEY Entities to USA
Company incorporated in Compliances at Federal 
USA by Non resident Level
Compliances at State Level
   
What is Purpose to Set Up A Company in USA:
 The main purpose of setting up a company in the USA is to Create Global market and Global 
Brand.
 
 Due to the favourable economic environment i.e. Non resident can purchase U.S. assets at 
lower prices than their home country. 
 Incentives offered by federal, state and local governments. 
 Access to new markets.
 Stable Political environment. As say USA is “most attractive market for ventures capital and 
private equity funding. And World Bank ranked U.S fifth for its overall “ ease of doing 
business”. 
  Technological advancement: USA is known for its advanced technological innovations which 
will enhanced business’ Production and World Wide Communication.
 Protection of Intellectual Property: The USA leads the world in the way it protects 
intellectual Property Rights (IPR). 
 
 
   
Key Entities can setup in USA for doing a business:
 When beginning a business, you must decide what form of business entity to establish ? 
 The most common forms of business are : 
Business Entity
Corporations Partnership
  Limited Liability Company (Including Sole Proprietorship
Disregarded E
C Corporation S Corporation Limite
ndti tLyia) bility 
General Partnership Limited Partnership
partnership
 
 
Continue…
Gen. Sole 
C Corp. S. Corp LLC Partnership Proprietor
Owners have limited liability for business debts and 
obligations X X X
Created by registration with state X X X
Perpetual duration X X X
Unlimited owners X X X
Owners need not be U.S. Citizens or residents X X X X
May be owned by another business entity rather than 
individuals X X
May issue stock X X
Owners report business profit and loss on personal tax 
returns X X X X
QUESTION
1. Which of the following type of entity Owners report business profit and loss on 
personal tax returns? 
a. General Partnership
b. C Corporation
Company Incorporated in USA by Non-Resident
 Here, We are are understanding that how to incorporate company in the USA as a foreigner, non-citizen or US citizen 
that lives outside the country.
 Incorporating in the United States can increase your company’s credibility, gain access to the US market and investors 
(the world’s largest source of each).
 If you are located outside the United States and wish to form a company in the US, then there are TWO types of 
Business Entity to form:
Types of Business Entity to form
Form a Corporation Form a Limited Liability Company
Procedure to Incorporate the Company in USA
QUESTION
2. The Registered Agent may or may not have a physical address in the state of  
formation. 
a. TRUE
b. FALSE
   
Explanation Of Procedure :
1.  Choose Which type of Business Entity to Form
 If any of the owners of the company are not US Citizens, then you have the option of either forming a Corporation 
or an LLC. There’s another entity type called an “S-Corporation” but that entity requires all shareholders to be US 
Citizens.”
 
2. Which State to Form Your Corporation or LLC
 
 In the United States, there are 50 States or Washington DC. Which state you choose will depend on why you are 
forming the company. 
 Some US states are more “business-friendly” or “international-friendly” than others.
 In USA there are 10 best States to form an LLC or Corporation.
 Wyoming New Hampshire
South Dakota Nevada
Alaksha Utah
Florida Delaware
Montana North Carolina
 
QUESTION
3.  Foreign person cannot be shareholder/member of? 
a. C Corporation
b. S Corporation
c. LLC
d. None of the above
   
Explanation Of Procedure :
Now, we understand that which state given how much benefit to the company and Owners 
Wyoming Delaware Nevada
 There is no state income tax and  While Wyoming is growing in  Nevada State with no state income tax 
essentially no sales tax in Wyoming. popularity due to their lack of state and zero to fairly low annual franchise 
 There is no corporate income tax. corporate margin tax, Delaware offers 
fees.
business-friendly tax law which helps  Nevada does have a number of other 
 In Wyoming State there is no to get rid of these tax expenses. business licensing regulations and 
franchise tax.  Delaware has no Sales Tax. For some depending on the type of work, it may 
 In Wyoming Minimum requirement is of our clients that run dropshipping not be worth the headache.
to maintain a file annual report by businesses and have suppliers in the 
January 1st. US, this is definitely a big win for not 
 Wyoming offers greater benefits to just the business, but also for the 
 
smaller companies with increased consumers.
privacy and fewer taxes.  Paying Delaware's state income tax is 
  not needed for the people who are 
from different states and countries.
 
   
Explanation Of Procedure :
 There are Some States Where Tax Rate is High for LLC Or Corporation:
1. Maryland
2. Connecticut
3. New York
4. California
5. New Jersey
 Now, we compare that which state is more beneficial for Corporating Company or LLC
California South Dakota
• CA have some of the highest state level tax burdens in • South Dakota is one of the most tax-friendly states for 
the US. businesses. 
• In CA Corporate Income Tax Rate is 8.84% and State • Corporate taxes are imposed only on banks and 
 and Avg. local Sales Tax Rate is 8.25%. financial institutions. 
• California franchises taxed is $800 (minimum) annually. • South Dakota charges no personal income tax to 
residents.
• There is no any franchise tax in South Dakota.
 
   
Explanation Of Procedure :
Provide Name & Add. Of Employer Identification Apostille or Certificate of 
Choose a Company Name Hire A Registered Agent
Directors & Members Number (EIN) Authentication 
● If you intend to open a bank 
● The Registered Agent is a account in your home country 
● For Corporating Company or or if a local company or 
person or company that must 
LLC required all members government office will require 
We will search to be sure this have a physical address in the ● Names, Directors Name, ● Once your company is filed by proof of the formation of your 
state of formation, be 
name is available in your Name of Authorized Persons, the state, there is required to US Corporation or LLC, you 
available during business 
chosen state. hours, and will accept and and Percentage of Holding of apply for “EIN.” may need to have the 
sign for official legal and state Directors in the Company or company formation 
LLC. documents certified with an 
documents for the company.
“Apostille” or “Certificate of 
Authentication”.
 
 
QUESTION
4.  The LLC formation can be done at state level by applying for? 
a. Article of Organization
b. EIN
c. Certificate of good standing
d. Apostille AOI
   
Funds Transfer From India To USA
Overseas Direct Investment (ODI):
 Direct investment outside India means investments, either under the Automatic Route or the Approval Route, by way of contribution 
to the capital or subscription to the Memorandum of a foreign entity or by way of purchase of existing shares of a foreign entity either 
by market purchase or private placement or through stock exchange, signifying a long-term interest in the foreign entity.
 As per the FEMA Regulations, any investment under the overseas direct investment may be in either of the followings:
a. Overseas Joint Ventures
b. Wholly Owned Subsidiaries
 Here, Wholly Owned Subsidiary means a foreign entity formed, registered or incorporated in accordance with the laws and regulations 
of the host country, whose entire capital is held by the Indian Party.
General Prohibition on making of Overseas Direct Investment (ODI)
 As per the FEMA Regulations, any Indian entity may, subject to the approval of Reserve Bank make investment in the foreign entities 
 
engaged in the below mentioned sectors;
a.   Real Estate
b.   Banking Businesses
 An Indian Party may create charge, by way of pledge, on the shares of Joint Venture (JV) or Wholly Owned Subsidiary or Step Down 
Subsidiary outside India as a security in favor of an Authorized Dealer or a public financial institution in India or an overseas lender, for 
availing of fund based or non-fund based facility for itself.
 
QUESTION
5. Fund from foreign country is allowed under FEMA for which entity type: 
a. LLC
b. C Corporation
Compliances In USA
 The need for compliance with government requirements only gets more important after forming a corporation or LLC.
    Very often the corporation or LLC was set up in the first place to help protect personal assets and provide tax-deductible benefits for 
owners and employees.
 Corporations and LLCs have both internal and external ongoing requirements.
Compliances at the Federal Level
 
Federal Income Taxes- This is Typically based on earned Income. Taxes will vary for every business and paid accordingly.
S- Corporation Election- – In order to enjoy the best-possible tax savings for your business, you need to have the right tax Classification. 
Many C corporation and LLCs elect to file for S Corporation status because of the advantages  and once- a-year tax filing requirement.
LLC Tax Status Election- When you form an LLC, it is automatically assigned a “default” tax status unless you choose  otherwise. One-member LLCs 
are generally taxed as sole proprietorships, and those with multiple members are taxed as Partnership.
   
Continue…
Compliances at the State Level
Articles of Incorporation :When you form a corporation, you file the Articles of Incorporation with the state to show that  you 
  have incorporated. This is also referred to as a “Certificate of Incorporation.
Articles of Formation : – When you form an LLC, you file the Articles of Formation with the state to show that you have 
formed it. This document is also referred to as “Articles of Organization,” “Certificate of Organization,” or “Certificate of 
Formation.” 
Annual Reports : States in which your corporation or LLC is formed or qualified to do business generally require you to 
file an annual report. By filing an annual report, you’re providing the Secretary of State with updated information about 
your business. 
Foreign Qualification: In order to do business legally in states other than your home state, you’ll need to register your 
company in those states
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