Cross-border e-commerce has entered the era of refined and vertical competition, along with the accelerated pace of Chinese cross-border enterprises “going out”, the United States, as the world’s largest economy, has become an important destination for many enterprises to invest overseas, such as Amazon, ebay and many other platforms can see the figure of Chinese cross-border enterprises.
Most cross-border e-commerce is a domestic company identity stationed in the operation of Amazon and other cross-border e-commerce platform stores, subject to the U.S.-China trade war, VAT reform, overseas warehouse dilemma and other issues, more sellers struggle whether they need to register a U.S. company? Today I will explain to you the need for cross-border e-commerce registered U.S. companies!
What are the advantages of registering a U.S. company?
apply for the U.S. Amazon prerequisites. Amazon North America site is the preferred site for many cross-border e-commerce, the U.S. company more local consumer trust, low rate of closure, and the U.S. company for the U.S. bank account, low remittance losses;
can be stationed in Wal-Mart, Overstock, Sears and other cross-border e-commerce platforms that restrict access to U.S. companies only;
in the local platform can get policy care, such as lower commissions, the risk of closure, category restrictions, etc.;
reduce the tax burden of business operations. All overseas companies have tax deductions or exemptions, saving you considerable tax burden every year;
Establish international image and expand overseas market. Authorize domestic production, enhance product image and corporate reputation, increase sales added value, and align business development with international markets;
Open a U.S. account, facilitate foreign exchange operations. Not subject to domestic foreign exchange control, free access to foreign exchange, convenient use of funds;
immigration and visa convenience. After registering the U.S. company for 1 year, the lawyer can apply to the U.S. official residence card to achieve immigration purposes;
Favorable for overseas listing and financing. You can apply for relevant commercial or project loans, or directly or indirectly listed abroad, to achieve the purpose of financing for enterprises.
In the cross-border e-commerce industry, conducting business with a U.S. company can better compete with U.S. domestic enterprises and can rely on the perfect legal system of the U.S. to bring convenience to business operations, such as listing and financing, obtaining U.S. tax ID, free withdrawals, etc.
What are the types of U.S. corporations?
There are four types of U.S. corporations: LLC (Limited Liability Company), C-Corporation (Class C Corporation), S-Proprietorship (Class S Corporation) and Partnership (Partnership).
The first type of corporate form is the Limited Liability Company (LLC). This is a hybrid structure that combines the limited liability features of a stock corporation with the tax and operational flexibility of a partnership. If the business is small, this is a more appropriate form of company.
The second type of corporation is the Class C Corporation, or C-Corporation as it is commonly referred to in the U.S. This type of corporation is a separate legal entity that is jointly owned by the stockholders. It is a more complex corporate structure and is suitable for companies of a certain size.
The third type of corporation is the S-Corporation, also known as the S-Corporation in the U.S. This is a special type of corporation that differs from the C-Corporation in that the corporation itself is not taxed and the profits and losses of the corporation are recorded directly on the shareholders’ tax returns. However, the shareholder of a Class S corporation must be a U.S. citizen or a foreign national who is a U.S. resident.
The fourth form of corporation is a partnership, which is jointly owned and managed by multiple individuals. The taxation of a partnership is the same as that of an LLC, in that it is not taxed at the corporate level, and its profits are counted directly to the individual level.
In which state is it better for a business to incorporate in the United States?
The United States is a federal country. The 50 states of the United States are like 50 small countries, each with their own laws and regulations, and different business environments.
California: The most populous state in the United States, the second international financial center, suitable for industry, education, oil, electronics, film and television, etc.
New York State: the nerve center and economic heart of the United States, incorporating a company in New York can bring a lot of business convenience, suitable for finance, commerce, industry, art, clothing, etc.
Delaware: Delaware is known as the “capital of the world’s companies”, and most of the companies listed on the New York Stock Exchange and more than 60% of the Fortune 500 are established here; suitable for machinery, plastics, gemstones, chemicals, etc.
Washington State: Washington State’s agriculture and forestry are extremely developed, and its manufacturing and high-tech industries are also important industries, suitable for manufacturing, high-tech, international trade, etc.
Nevada: Suitable for tourism, storage of goods. No business in the United States, no need to pay federal income tax.
Texas: Suitable for high-tech research and development, health care, marine science and technology, etc. Some areas are exempt from sales and use tax.
Georgia: Suitable for transportation equipment, industrial machinery, paper and pulp, chemicals, and electrical products.
Massachusetts: the largest manufacturing center, suitable for agriculture and fishing, industry (machines, motors, instruments), etc.
New Jersey: suitable for high-tech research, pharmaceutical industry, etc.
What conditions are required for the registration of U.S. companies
Application requirements: one or more company directors and shareholders (natural or legal persons without nationality restrictions), valid identification documents (ID card or passport).
name selection: the company name does not have any restrictions, as long as the register does not have a duplicate name can be; general name followed by CORP (CORPORATION), LTD (LIMITED), INC (INCORPORATED) or CO (COMPANY), LLC and other words. Please include two or more company names when registering to avoid delays when no choice is available. Before the establishment of the company, the company name can be reserved for free for six months.
Registered capital: Different states, the registered capital is different and does not require capital verification and in place.
When registering a company, you need to state the amount of stock issued when the company is established. Usually the initial amount of stock issued by the company is 3,000-50,000 shares. The number of shares issued by your company can be increased at any time after the company is established.
Share allocation: the percentage of shares ( % ) for each shareholder in the application for registration of a U.S. company.
Registered address: A local registered address is required.
U.S. company registration process and time
In the United States, the company is governed by the state where it is located, so it is necessary to apply to the Secretary of State’s office (Secretary of State) to register the company.
First decide what type of company to open, then prepare the name of the registered company, and then submit the document filing application and application fee to the relevant department of the state government (usually the Secretary of State), confirm the scope of the company’s business, provide the basic information of the company’s equity holders (such as passport and contact information, etc.) and the percentage of equity distribution.
Class C or S companies file a Certificate of Incorporation, and LLCs or limited partnerships file Articles of Organization/Formation.
Afterwards, you will receive the Certificate of Incorporation, the statutory incorporation documents, the company seal, the shareholders’ certificate and other statutory incorporation documents. After successful registration, you will register with the IRS and apply for a tax ID number.
Then you will register for business licenses & permits that may be required. Once you have an EIN, you can go to a bank and open a business account. Once the company is established, it can have a separate office address or an agent’s address. The whole registration process takes about one month.
U.S. Bank Account Opening
When a cross-border seller or overseas seller has registered their company, they can apply for a bank account with a U.S. company.
However, many banks in the United States will require the presence of the account opening, but for various reasons, we may not be able to go to the United States, what should we do at this time?
Actually, don’t worry.
Although it is complicated for non-U.S. citizens to open a corporate account in the U.S. after registering a U.S. company but without access to the U.S., it is not completely impossible to do so.
How should I choose the right bank?
There are many things to consider when choosing a bank, but most importantly, the safety of your money.
There are many very small digital banks in the US, which usually offer no-threshold, 0-fee offers in order to take in more deposits.
However, many of these small banks do not participate in FDIC insurance, once the bank has problems, it is difficult to protect the safety of funds.
Therefore, it is recommended that sellers going abroad choose a bank with FDIC insurance to open an account.
The following are some of the banks with FDIC coverage, and depositors can be the first to get paid when there is a problem with the bank.
Advantages: no limits on transfers and wire transfers; multi-currency accounts; fast dollar transfers
Disadvantages: high threshold for account opening
Bank of America
Pros: FDIC deposit insurance of 250,000; no foreign exchange control
Disadvantages: only support single currency account in USD; high transfer fee
Pros: 250,000 deposit insurance; bank specializes in Chinese, and provides Chinese customer service
Disadvantages: Currently only supports single currency accounts in USD
In addition, each bank has different service options and fee structures, so it is best to check with the bank on the following issues:
1. What is the bank’s monthly fee?
2. What is the initial deposit amount required by the bank?
3. What is the minimum balance required for the account? Will it affect the daily operation of the funds?
4. What is the fee for transferring funds?
5. What are the account management fees?
6. Do banks have multi-currency accounts?
There may still be overseas sellers who are confused: Why do we have to open a public account? Why don’t I just use my personal account to receive and pay?
The main reason for separating personal and public accounts is to avoid unnecessary tax audits.
By separating personal expenses from business expenses, you can better reconcile your monthly accounts, and it will be easier for you to file taxes at the end of the year.
What documents do I need to open an account?
In general, most banks in the United States require the following documents to open an account:
Information about shareholders or directors
proof of identity, usually a passport is sufficient;
Proof of personal address, mainly providing invoices for water, electricity, gas, telephone communication and other utility bills
A full set of company establishment documents
Relevant business supporting documents
Purchase contracts and purchase invoices
Sales contracts and sales invoices
Export customs declarations, bills of lading, etc.
Domestic or overseas affiliated companies
A declaration of beneficial ownership form provided by the bank. It identifies the true identity of the business owner before they open a bank account and is designed to prevent illegal financial activities.
Depending on the characteristics of the client’s industry, and the location of the company, the bank may require additional supplementary documents to verify the authenticity of the company’s business, and the need to open a bank account.
Most banks will require the customer to appear in person and submit the above documents.
However, it is important to note that even if the documents are fully prepared, there is no guarantee of 100% success in opening an account.
No bank or service provider can guarantee in advance that the account will be opened successfully.
U.S. banks are required to conduct KYC (Know Your Customer) work with customers and require customers to comply with KYC and anti-money laundering regulations to limit fraudulent behavior.
If an account is rejected, the bank will not inform the reason.
In order to reduce the occurrence of such cases, it is recommended to seek professional assistance for account opening to reduce the probability of rejection.