Registering a company in the USA is a popular option for Indian entrepreneurs looking to expand their business globally. The process is relatively straightforward, and one of the key advantages is that you don’t need to be a U.S. citizen or resident to start a business. In fact, you can establish your company in as little as 6-7 days, and unlike India, only one person is required to register a company. There’s also no minimum capital requirement, making it an attractive option for startups and small business owners.
One of the most popular states for business registration is Delaware. Known for its investor-friendly laws, flexible business environment, and robust legal system, Delaware has become a prime destination for entrepreneurs from around the world. In this article, we will explore the benefits of USA company registration especially in Delaware, the step-by-step process to follow, and the post-registration obligations that Indian nationals must be aware of.
Types of Business Entities in the USA
Just like in India, you can register different types of business entities in the USA. The most common ones are:
- Limited Liability Companies (LLCs)
- Corporations
- Limited Partnerships (LPs)
Each of these entities has its own advantages and legal implications. However, it’s important to note that Indian nationals can only establish a C Corporation or an LLC in the USA. If your goal is to raise funds from investors, a C Corporation is the better option as it is designed to allow for easy issuance of shares.
Importance of a Registered Agent
A critical requirement when registering a company in Delaware is having a registered agent within the state. This individual or service is responsible for receiving legal documents and correspondence from the Delaware Division of Corporations on your behalf. If you register through a professional service, the registered agent fees for the first year are often included in the incorporation package. After the first year, the fee is usually around $150 per year.
Compliance with India’s Overseas Direct Investment (ODI) Rules
Before moving forward with your registration, it is essential to understand the Overseas Direct Investment (ODI) rules outlined by the Reserve Bank of India (RBI). According to the Liberalised Remittance Scheme (LRS), Indian residents can remit up to a certain amount per fiscal year for the purpose of investment in a foreign company. Familiarizing yourself with these regulations will help you ensure that your investments are compliant with Indian law.
Steps to Register a Company in the USA
1. Selecting a Name for the Company
The first step is to choose a unique name for your business. Delaware offers an online portal where you can check the availability of your desired name.
2. Choosing the Type of Business Entity
As mentioned earlier, you’ll need to decide between a C Corporation or an LLC. If your goal is to raise venture capital, a C Corporation is the best option.
3. Appointing a Registered Agent
You can appoint a professional registered agent service or someone who resides in Delaware. This is a mandatory step for business registration.
4. Filing the Certificate of Incorporation or Formation
You will need to file the Certificate of Incorporation for a C Corporation or a Certificate of Formation for an LLC with the Delaware Secretary of State.
5. Creating an Operating Agreement or Bylaws
These documents outline the operating rules of your business. While not required to be filed with the state, they are important for internal governance.
6. Getting an EIN from the IRS
An Employer Identification Number (EIN) is required for tax purposes. If you have a Social Security Number (SSN), the process will take about 7 business days. Without an SSN, the process may take up to a month.
7. Documentation Requirements
Basic documentation includes the name of the company, its purpose, the name and address of the registered agent, and details about the number and value of shares (for a corporation).
Timeline and Post-Registration Obligations
The registration process typically takes between 1-3 weeks, depending on whether you have an SSN and how quickly the Delaware Division of Corporations processes your documents. After registration, it’s important to stay compliant with U.S. regulations, including filing annual reports, maintaining good standing with the state, and fulfilling tax obligations.
In summary, company registration in USA, particularly in Delaware, is a relatively simple process for Indian nationals. With no residency requirements and no minimum capital necessary, it presents an excellent opportunity for those looking to expand internationally.
