Setting up a Delaware Company as a Non-US Resident
This is the age of entrepreneurs and a question that the modern day entrepreneur is confronted with is, can a foreign citizen or a non-US resident start a business in Delaware and if they can, will there be any restrictions imposed on them? The answer is simple – setting up a Delaware company as non US residents is very much possible and the icing on the cake is that you will also have access to angel investors, venture capital, and a host of public markets. The process for starting a business in the US as a foreign national is quite similar to that of starting a domestic company but it is also quite a lengthy process as there are specific requirements one needs to fulfill. This article has been created keeping in mind the process based requirements including Delaware company formation with a bank account, choosing a name, hiring a registered agent, obtaining an Employee Identification Number or EIN etc.
Starting a Company in Delaware
The state of Delaware with a GDP of $72.461 Billion has a strong economy and robust transportation infrastructure that businesses can leverage. The efficient business climate that the state boasts of is driven by the strategic location, which has been the center of business in the Northeastern United States. It is home to 84,675 small businesses and had an annual growth rate of 2.3% in 2019. The economic and business climate is conducive for Delaware company registration for non-residents and you can choose to form any type of business entity like corporations, limited partnerships, limited liability companies, and other corporate entities. You can even open a Delaware company online but right now, you are probably wondering what makes Delaware so popular for a new business.
Why choose Delaware to start a business?
An attractive economic and business environment is what makes Delaware so popular amongst new businesses and entrepreneurs. When setting up a Delaware company as non US residents, you will be able to benefit from the low cost of doing business and pro-business legal and tax system. There are several other advantages that make this state not only one of the best places for incorporation but also ensure strategic positioning of your company. Some of the top advantages are:
- The process of starting a new business is not complicated although it may require you to file several documents. You can even open a Delaware company online.
- The Delaware Court of Chancery with expert judges instead of a jury to play a key role in protecting businesses by quickly and efficiently resolving corporate issues.
- If you are planning on setting up a Delaware company as a non-US resident, then tax advantages are one of the salient benefits. The state does not have corporate income tax, personal property tax, value-added taxes (VATs), unitary or inventory tax, and stock transfer taxes among others
- Another important tax benefit is that once you open a Delaware company online and your company has shareholders not residing in Delaware then they don’t have to pay taxes on shares in this state
- The Delaware Corporate Statutes imparts a lot of structural flexibility when it comes to organizing a corporation
- The Delaware company registration for non-residents is quite similar to that of domestic business entities
- There is greater privacy that businesses can enjoy. For example, Delaware corporations are not required to disclose the name of directors or officers in their formation documents.
These are some of the reasons why more than half a million businesses have formed in the state and are successfully operating in Delaware. You can enjoy these benefits post Delaware company registration for non-residents.
Setting up a Company as a Non-US Resident in Delaware
If you are residing outside of the U.S and want to start a business in Delaware, is it possible? Are there any restrictions? Generally speaking, the corporate law structure of Delaware does not impose any kind of restrictions on management or ownership of a Delaware company by a U.S non-resident. This simply means that Delaware company registration for non-residents is possible and the process to form or incorporate a business is quite similar to that of a domestic company.
How to form a Delaware LLC or Delaware Corporation as a Non – US resident?
If you are a non – US resident and want to start a company in the US or in Delaware then there is a process governed by the Delaware business laws that you would have to follow. You can actually start a new business in Delaware irrespective of which country you reside in. Although Delaware company registration for non-residents is possible, physical presence of the owner is not mandatory, however you will be required to enlist or hire the services of a reputed Delaware Registered Agent by law.
In order to form a Delaware LLC or Delaware corporation as a non – US resident you will need to be compliant with the business laws and fulfill certain criteria like obtaining an Employer Identification Number (EIN), file franchise taxes, Delaware company formation with a bank account, and pay US taxes as a nonresident. You will be required to file all your incorporation or formation documents with the Department of State: Division of Corporations.
Do I need a US Business Address to form a company in Delaware?
One of the important requirements for setting up Delaware Company as a non US resident is that of a physical address. You may start a business in the US while residing anywhere in the world but your business in the U.S needs to have an address, which has to be shared with the office of the Secretary of State and Delaware Division of Corporations. The address is used primarily by the state departments or agencies to send certificates, important business mail, reminders or notifications etc. The physical address will also be required to facilitate Delaware company formation with a bank account or open a new bank account. The address is a mandatory requirement of the state for business formation and hence needs to be fulfilled.
Since, you are residing outside the U.S, how do you fulfill this requirement? This is where a registered agent like IncParadise can provide you with a physical address through the virtual mailbox service to fulfill state requirements as well as business needs like receiving important mail and helping you to maintain regular business hours in Delaware.
Start a new business in Delaware’s pro-business climate!
Steps to start a Delaware company
The process for Delaware company registration for non-residents is quite similar to that of a domestic company formation although there may be some extra requirements.
1. Choose a name for a Delaware company
One of the important steps towards setting up a Delaware Company as a non US resident is to identify a name and reserve it. Firstly, you will need to identify a name that is unique and available. You have to check for availability by performing a name search on the website of the Department of State: Division of Corporations. If your chosen name is unique and available then you have to reserve it online or by submitting a paper form. The fee is $75 and the form is submitted with the Delaware Secretary of State. A name can be reserved for a period of 120 days and is important if you plan to open a Delaware company online.
2. Hire a Registered Agent
A Delaware company registration for non-residents is possible only if you are in compliance with all requirements of the state and this includes hiring a registered agent. A new business as well as existing business in the state has to hire and maintain a registered agent pursuant to 8 DE Code § 132 (2012 through 146th Gen Ass) for corporations and 6 DE Code § 18-104 (2016) for LLC. The primary objective of a Delaware registered agent like IncParadise is to receive all official mails from the office of the Secretary of State and also handle service of process on your behalf. We can be your registered agent in Delaware for handling of service of process and fulfill other business related requirements.
3. File Certificate of Incorporation or Certificate of Organization
The most important step towards setting up a Delaware company as non US residents is filing for the formation documents. The documents will differ according to the type of business entity you form. If you are planning to form a stock corporation then you will have to apply for the Certificate of Incorporation pursuant to 2 DE Code § 102 (2014 through 146th Gen Ass). You have to submit a cover memo and a minimum fee of $89 along with the incorporation certificate form to the Delaware Division of Corporations.
If the Delaware company registration for non-residents is a limited liability company then you will be required to file the Certificate of Formation pursuant to 2 DE Code § 18-201 (2014 through 146th Gen Ass). You have to submit a cover memo and a fee of $90 along with the form to the Delaware Division of Corporations. You can submit the form by mail or open a Delaware company online.
4. Obtain Employee Identification Number or EIN
An Employer Identification Number (EIN) is a 9-digit unique identification number that is assigned to a business entity by the Internal Revenue Service (IRS). This is also known as the Federal Tax Identification Number (FEIN) and it is mandatory for a company to obtain an EIN prior to setting up a Delaware Company as a non US resident. This number is used for filing tax returns and is also required during Delaware company formation with a bank account, applying for loans, and other business related activities. It is important to note that as a US non-resident, you will not be required to show or possess a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) to obtain an EIN.
5. Open a business bank account
Delaware company formation with a bank account is possible and you are not required to be a U.S. resident alien or American citizen to open a business bank account in Delaware. Although, each bank in the U.S has its own set of requirements, if you have your Certificate of Incorporation or Certificate of Organization and Employee Identification Number (EIN) then you will be able to apply for a Delaware business bank account. You may also be required to furnish other information such as location or address of your company and address of your registered agent. You can apply for a business bank account prior to or after setting up a Delaware company as a non US resident. Some of the common documents required by Non-US residents for a business bank account include:
- Certificate of Incorporation or Formation
- Federal Tax ID Number (EIN)
- Proof of address
- Photo ID (such as a valid passport)
- LLC Operating Agreement if you have formed an LLC
- Corporate bylaws
6. Maintain annual corporate compliance and requirements
Once you open a Delaware company online, it is important to ensure that you maintain annual corporate compliance and requirements of the state as this will help your business to enjoy active status. The annual requirements vary from one state to another and are also different for different forms of businesses. If you are setting up a Delaware Company as a non-US resident, then the requirements will be the same as a domestic or foreign company operating in the state. There are primarily three requirements and they are:
If a company fails to maintain annual corporate compliance and requirements then the state may charge penalties and even administratively dissolve the said business entity.
7. Use virtual office/mail forwarding service
One of the primary requirements for a Delaware company registration for non-residents is a physical address. You can form any business in Delaware but you will need to provide the business address in the formation documents and also for obtaining business related documents like a business license or even a tax ID like EIN. It is not always possible to own a brick and mortar office or rent out a commercial space, especially if you reside outside the U.S. In such a scenario, you can still obtain a business address to open a Delaware company online and this is possible through opting for a virtual office or a mail forwarding service.
IncParadise can provide you with a virtual office and mail forwarding services in Nevada and Wyoming. In fact, you can start a new business in Delaware and opt for Nevada mail forwarding or virtual office services. One of the salient benefits of opting for a mail forwarding service is that you will never have to compromise on communication with your customers and vendors even if you were to change office address or move to another location
Need Any Help in Forming a Delaware Company?
Whether you plan on setting up a Delaware company as a non US resident, requires a registered agent, or want to obtain an Employer Identification Number (EIN). We at IncParadise can provide the necessary assistance. We are an expert incorporation and registered agent service provider in Delaware and we can help you to start your business in Delaware and also maintain annual compliances with the Secretary of State or Division of Corporations.
We believe that every business in Delaware has its own set of requirements and hence we offer a wide variety of business related additional services. These services include S Corporation status election, U.S. street address, Certificate of Good Standing, amendment to the Articles, and foreign qualification among others. You can