How to Incorporate your Startup in the United States?

This article will cover the steps a startup can take to incorporate in the U.S. and how to apply for company incorporation.
How to Incorporate your Startup in the United States?
Published on
November 28, 2022

There are many decisions a startup will have to make, and one of the most important is the legal structure under which it will operate. Although it may seem complicated, resources and online services can make it easier. Most startups and tech companies incorporate in the United States because it gives them access to payment gateways for international customers.

What is Incorporation?

Incorporation is the legal process a business must follow to form a corporate entity or company. Corporations can be established in most countries and are identified by terms such as 'Inc' or 'Ltd.' Incorporation is how a business is formally organized and separates the legal business entity from the owner's assets.

The steps involved in the U.S. can be complex. It is recommended that foreign nationals seek help from an incorporation service that can apply on behalf of a business and guide them through the legal requirements.

Advantages of Incorporation

  • Protects the owner's assets
  • Allows for easy transfer of ownership
  • Offers a lower taxation rate
  • Provides lenient tax restrictions and the ability to carry losses
  • Allows for the sale of stock to raise capital

How can a non-U.S. founder incorporate his startup in the U.S.?

There are no restrictions on foreign ownership of a company in the U.S. For non-residents seeking to set up a corporation, there are steps to go through and taxation issues to consider. Many startups use an incorporation service like Firstbase.io or Stripe Atlas to ensure their business operations are correctly set up.

Five steps to incorporate your startup in the U.S.?

Company incorporation in the U.S. is administered at the state level for foreign nationals and U.S. citizens. It is important to note that the process is different in every state.  Company incorporation in the U.S. is administered at the state level for foreign nationals and U.S. citizens. It is important to note that the process is different in every state.

Step 1. Choose a Business Structure

C Corporation and Limited Liability Company (LLC) are the two most common company structures. Most tech companies and startups are C corporations, which means owners and shareholders are taxed separately from the company.

Step 2. Decide on the Location

Deciding which state your company will lodge incorporation and conduct business in is essential. Every jurisdiction is different, and some states have stricter guidelines. Incorporating in the same state where your business operates can be cheaper.

Step 3. Choose a Company Name

Every state has its laws and requirements. It is necessary for all states that the company name is not registered or used by another business. If your new company is a subsidiary, you can add 'U.S.A' to your current name.

Step 4. Obtain a Tax ID Number

All U.S. registered businesses must have an employer identification number (EIN). The owners must submit the correct forms to the IRS to obtain an EIN and meet all taxation requirements.

Step 5. Submit Company Documents

Incorporating requires every U.S. registered company to submit the correct documentation from the company's formation to taxation.

Choose an Incorporation Service

An online incorporation service is the easiest way for a non-U.S. startup to incorporate in the U.S. Below is a list of the best online services for startups.

Incorporation services will do your hard work, from lodging the proper forms to setting up a U.S. bank account. It can be overwhelming and time-consuming to set up incorporation in the U.S. Engaging the services of a third party can help navigate the legal and taxation requirements. Below is a list of recommended incorporation services, the cost involved, and their offer.

  1. Firstbase.io - The best choice for startups
  2. Stripe Atlas - Good for post-incorporation processes
  3. Doola - Good for businesses who need a fast-tracked service
  4. Clerky - Easy to use automated setup
  5. Capbase - Helps manage legal requirements

#1 Firstbase.io - The top-performing incorporation service for startups wanting to launch in the U.S. The all-in-one platform takes 5 minutes to fill and gives startups access to expert tax and legal consultants and lifetime support.

Cost: $399 one-time fee.

#2 Stripe Atlas - Used to help businesses lodge C corporation status in Delaware. Stripe Atlas assists companies in setting up a U.S. bank account but does not offer the same service as other online incorporation providers.

Cost: $500

#3 Doola (formerly StartPack) - Can set up a C corporation or LLC in any U.S. state. Services include a fast-tracking fee, setting up a U.S. bank account, state compliance, and taxation filings.

Cost: $199/month

#4 Clerky - Offers quick and easy setup through an automated process that requests information and submits it to a third party in Delaware. Services include incorporation paperwork, annual reports, and taxation reminders. Cost includes a fast-tracking service that can have a business incorporated in 2-3 days.

Cost: $799 one-time fee

#5 Capbase - Lodges forms for a C corporation in Delaware can set up a board of directors and register a business in any state. Services include legal requirements, compliance, and corporate governance.

Cost: $999 per year.

Recommendations

Our Recommendation: Firstbase.io

Firstbase.io is the incorporation service that gives startups everything they need in one place. The lifetime support and affordability make Firstbase.io the best choice for startups wanting to set up business in the U.S. Firstbase.io makes the incorporation process easy and gives startups the peace of mind that all legal requirements for incorporation are being met. For a one-off fee of $399, Firstbase.io is the best value for money and enables entrepreneurs to grow globally.


       

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