"BY" Belarus
"BI" Burundi
"CF" Central African Republic
"CU" Cuba
"CD" Democratic Republic of the Congo
"IR" Iran
"IQ" Iraq
"LB" Lebanon
"LY" Libya
"NI" Nicaragua
"KP" Democratic People's Republic of Korea (North Korea)
"SO" Somalia
"SS" South Sudan
"SD" Sudan
"SY" Syria
"UA" Ukraine
"YE" Yemen
"ZW" Zimbabwe

Digitize agency is not just a business formation service. Digitize agency is a full suite to manage all of your business back office activities. Here are a few of the areas covered,

1. Registered agent
2. Tax ID
3. Bank account
4. Bookkeeping
5. Invoicing
6. Annual state tax filings
7. Annual federal tax filings
8. Legal services
9. Trademark
10. Phone number and mailing address

If you'd like to request any additional services, reach out to us on email at team@Digitize agency.co and we'll do our best to get that done for you!

You must change your business name with the IRS if you change the name of your LLC. Under most circumstances, changing your business name with the IRS will NOT require a new EIN—though it will require an EIN name change. To make this determination, see IRS Publication 1635.

Sometimes changes to names are made right after EINs are issued. If you recently received your EIN and have not made any tax filings with the IRS, then send your business name change request to: IRS, Stop 6055, Kansas City, MO 64999

If tax liability for the EIN has already been determined (i.e., you've already filed a tax return for the entity), there are two ways to notify the IRS of your LLC name change:

When filing a current year tax return, you can change your business name with the IRS by checking the name change box on the entity’s respective form:

• Corporations – Form 1120, Page 1, Line E, Box 3
• S-Corporation – Form 1120S, Page, 1, Line H, Box 2
• LLC (sole member) – cannot update name by filing return; must use Option 2.

If you have already filed the return for the current year, you do not have to wait until next year to change your LLC or corporation name with the IRS. Changing the name of an LLC or corporation typically requires a Certificate of Amendment to be filed with the state or country where the business entity was originally formed.

Deliver a filed copy of this Certificate of Amendment, along with a letter informing the IRS of the company name change, to the address where you filed your return. Corporations must have the letter signed by a corporate officer while LLCs must have the letter signed by a member.

Once you’ve changed your business name with the IRS, you’ll need to let everyone else know you’ve changed the name of your company, too.

Make a list of all the other agencies and companies that you do business with on a regular basis; be sure to include all state and local tax authorities, vendors, suppliers, service companies and banks.

Now after you've signed up and paid, you'll be required to upload a copy of your passport for all verifications. You'll also need to confirm all the details one last time. Now here is what happens in the following days (all days are in business days, holidays and weekends are not included).

Day 1

After you've started we'll issue your phone number within the hour. This will be your US phone number and all the calls to this number will be forwarded to the local phone number you provided during the signup. You have 30 minutes of forwarded calls available free for the first month. If you'd like to continue using the phone number here is the applicable call rates depending on your country. Outgoing calls is not possible from this number. SMS to this number will be emailed to your registered email.

Day 3-5

As soon as you complete the signup we'll start preparing your state filings and file them in the respective state. We get the state filing done in about 3-5 days. You'll get an email at the end of the process with your certificate of formation from the state. Immediately after the state filing, we'll also issue your mailing address in the US. All mails sent to this address will be scanned and uploaded to your Digitize agency dashboard. 6 scan and forwards included. You can also choose to forward the mail physically to your country, we'll decide the cost based on your package.

Day 5-20

You'll need to sign a EIN application form at this stage. It's fully online and you can sign from your laptop or computer. Then we will send that to IRS to get your EIN number. Currently we are seeing delay from the IRS for your EIN which is your tax ID. However our process will be completed in 10-20 business days. As soon as you get your EIN issued, we'll start processing your bank account and send you a link for you to activate your bank account. You'll need to activate the account and wait for another 3-5 days for verifications from the bank's side.

Day 25

You'll be ready to roll with your new business 🥳 Usually, we take 20-30 business days to setup everything including the bank account, rarely upto 40 business days.

You'll get regular email from us with all the updates along the process, if you have any questions during the process you can always reach out to laks@Digitize agency.co for an update. You can also call us at +1-415-418-7725.

Traditionally if looking to raise funds we do see clients use a corporation vs an LLC.

Information such as the member(s) name, address and the percentage of the business owned is not required to be provided to the state of Delaware and therefore is not part of the public record. This information is kept on file internally within the LLC's Operating Agreement.

The LLC's Operating Agreement can be altered as needed by the members, without filing the changes with the state of Delaware. Some of the typical changes people make are the removal or addition of a member or the change in percentage of a member's ownership.

The LLC's Operating Agreement must be amended to reflect that a new member is now part of the LLC, or to reflect the removal of a member, and all current members must sign the newly amended Operating Agreement, but you are not required to file the amended Operating Agreement with the state of Delaware.

Digitize agency will not need to know of the change and neither will Delaware Division of Corporations, so there is no charge.

Apart from a sole proprietorship, freelancers can choose between two other business structures: LLC and corporation. To help you decide on the right model, we’ve come up with a corporation vs LLC comparison that will reveal which is better for one’s circumstances.

Corporation and LLC: a Brief Overview

Corporation

The corporation comes with a well-established structure, easy share transferability, and perpetual life. All of these features matter if you’re looking to attract outside investors.

The owners of a corporation are its shareholders and the number of shares owned determines the ownership percentage. For instance, if a corporation has 2,000 outstanding shares and you own 1000 of them, you’re a 50% owner of the corporation.

LLC

Short for limited liability company, this structure is like a simplified version of the corporation. It’s more flexible in terms of taxation and management and has fewer record-keeping requirements.

If you start one, you’re entitled to liability protection from the debts that your LLC incurs. Owners can use their personal assets to make legal claims against the company. LLCs are quite common as the structure offers a similar liability shield as a corporation and is easier to set up.

S Corporation vs. LLC? How Are They Different

The S corp isn’t a business structure but rather a tax category. These corporations aren’t subject to corporate income tax so the profits are passed through to the owners, who would file personal income tax returns on those profits.

To be classified as an S corp., a company can’t have more than 100 shareholders. S corporations shareholders can’t be non-resident aliens, partnerships, or other corporations. What is more, these businesses can only have one class of shares to avoid being be taxed as a C corporation.

In terms of taxation, the main difference between LLC and S corp business structures is that S corp owners can be employees of the company. On the other hand, owners of LLCs are self-employed. As a result, LLC owners have to pay payroll (Social Security, Medicare) and income taxes on their share of the business’s profit.

Conversely, owners of S corps are supposed to pay themselves reasonable salaries for their work. With most payroll services, payroll taxes will be withheld and they’ll pay income tax on their salary later.

What Is Better, LLC or S Corp?

We’ll now take a closer look at the pros and cons of the LLC and the S corps and tell you which works better for freelancers.

LLC Pros

There are many benefits of having an LLC:

Protection of Your Personal Assets

We’ve already mentioned the greatest benefit that the LLC brings to the table, which is limited personal liability. The importance of this detail can’t be overlooked.

For instance, if you start work without a formal business structure, the government will put you in the same bracket as your business. You’ll be responsible for paying business taxes on your personal tax returns. While this is a quick way to set your business in motion, it’s a rather precarious approach.

The reason for that is that you risk losing your personal assets if you get into legal trouble. The courts may take away your personal investment portfolio, cars, and even your home to meet liabilities incurred by your business activity.

But if you establish an LLC, you’ll have protection for your assets from most non-fraudulent liabilities that your business racks up.

Low Maintenance and Easy Setup

More often than not, freelancers are discouraged from setting up their business due to operational burdens and astronomical costs associated with corporations. In particular, an S corp requires quarterly government filings besides the initial. Other demands include shareholder and board meetings, payout level and corporate taxes, company minutes, record-keeping, and bylaws. That’s why freelancers are usually better off with an LLC.

Once you’ve formed your LLC, the only real requirement is to file the Articles of Organization. Even though the fee for submitting these differs, the amount is nearly negligible.

Other than that, you’ll probably need to come up with your Operating Agreement that will lay out the rules for governing your freelancing business. The rules normally include distribution details, new owners, and voting rights.

Taxation Flexibility

We’ll go through LLC tax treatment to demonstrate just how flexible it is. After setting up an LLC, people choose one of two forms of taxation:

· Corporate taxation – Sometimes called ‘double taxation.’ under this system freelancers pay a corporate tax rate and also personal taxes on the distribution on wages as employees or owners of the company.

· Pass-through taxation – Here, your earnings are taxed like partnerships. The business doesn’t incur any taxes – they are passed through to the owner.

The LLC combines partnership and corporate tax structures and takes full advantage of the benefits of both types. For example, single-member freelance businesses that meet S corp requirements can work under corporate taxation first and S corp taxation afterward.

Accordingly, you’ll avoid the initial tax and only pay your capital gain rates. This gives you an ideal combination of tax benefits.

LLC Cons

That said, LLC isn’t a perfect business structure. This is what you need to consider before starting one:

Attracting Outside Investors Is Challenging

One of the main disadvantages of the LLC comes to the forefront when you need a quick injection of money. If you’re not eligible for bank loans, you’ll likely have a hard time attracting investors. Conversely, if you own a corporation, you may issue more shares in return for investor cash.

Costlier Than Partnerships and Sole Proprietorships

LLCs can be more expensive to start and operate than a partnership or sole proprietorship. You may be responsible for filing fees associated with your EIN and annual report fees.

S Corp Pros

The S corporation also brings a lot to the table:

No Federal Taxes

S corporations aren’t usually subject to federal taxes. For this reason, the structure can help owners save a lot of money on corporate taxes and the aforementioned double taxation. Similar to the sole proprietorship or LLC, this structure allows owners to report profits on personal tax returns.

Higher Credibility

Considering that established S corporations are committed to the shareholders, their credibility with customers, investors, and suppliers is higher. Owners also enjoy protection from personal liability, denying creditors access to non-company assets.

Dividends

Dividends in an S corporation can serve as powerful incentives for employees to work and help the owner recruit talented workers.

S Corp Cons

The main drawbacks of using the S corp as a freelancer include:

It’s Cumbersome

This business structure isn’t as easy to manage as an LLCs when it comes to the establishment and operations. Namely, it requires the nomination of corporate officers and a board of directors, which are not present in an LLC. Furthermore, regulations and filing guidelines are more stringent for an S corp. You have to manage several challenging aspects, such as meeting minutes, stock shares issuance, and shareholder meetings.

A Host of Fees

An S corp can be subject to many fees, such as hiring registered agents, filing annual reports, and more.

Should I Start an S Corp or an LLC?

While the S corp has its benefits, the LLC is generally more favorable to freelancers. This is mainly because it’s easier to set up and comes with fewer establishment expenses. In addition, the taxation options are flexible, there are fewer fees, and the similar liability protection keeps your assets safe.

Final Thoughts

To sum up, freelancers have to consider many aspects when selecting their preferred business structure. You need to figure out if the tax requirements work for you and how much time you want to spend on administration.

In general, the LLC is a better option for freelancing work. It provides a simple and flexible form of organization that doesn’t prevent you from focusing on delivering high-quality products or services. In any event, the key is to organize your operations under a clear structure so you won’t face the risks associated with working as a freelancer.

Picking the best state for business in the USA can be quite tricky because each state has its own laws and regulations. Naturally, you want to work in a state with the lowest cost so you can better grow your company over time. However, many more important factors come into play when deciding on the right state.

To narrow down your choice, we’ll compare two of the most favorable states for freelancers in the US, Delaware and Wyoming. We’ll also cover the main details to take into account when setting up your organization.

How Should I Choose the Best State to Do Business in the USA?

Before deciding on a state, consider the following issues associated with setting up a business:

Formation Fees

When forming an LLC or corporation, you’ll be responsible for a one-off fee to the Secretary of State’s office in your state. Residents of Arkansas, Hawaii, Colorado, Oklahoma, Mississippi, and Iowa enjoy the lowest formation fees, which stand at $50. Conversely, the highest corporate formation fees are Connecticut ($455) and Texas at a slightly cheaper $310.

Given that this is a one-time fee, it may not be a deal-breaker for most.

Annual Filings and Fees

LLCs and corporations in most states are subject to annual fees for maintaining their operations. In addition, they also have to submit annual one-page reports and filing fees to the Department of State. Here’s how much certain states charge for annual filing fees:

· New York - $9

· California - $21

· South Dakota - $50

· Wyoming - $52

· Delaware - $300 for an LLC, $225 for a corporation

· Nevada - $325

The only states that don’t require annual reports are Alabama and Ohio.

Franchise Taxes

Generally, franchise taxes are imposed in lieu of or along with annual report filing fees and income taxes. States levy franchise taxes for incorporating or registering businesses to conduct operations within the borders.

The determination of franchise taxes varies by state. For instance, franchise taxes in California are income-based, with at least $800 per year, even if the company isn’t making money. Conversely, Delaware’s franchise tax depends on the number of shares and the par value, which means that these taxes are irrelevant for smaller companies. Wyoming and Nevada have no franchise taxes.

Corporate Income Taxes

There are six states that don’t have corporate income taxes:

· Wyoming

· Washington

· Texas

· South Dakota

· Ohio

· Nevada

However, Washington, Texas, and Ohio levy gross receipts taxes based on the company’s gross revenues. Moreover, among the above, South Dakota, Wyoming, and Nevada also don’t have personal income taxes.

The absence of personal income and corporate taxes is an enormous boon for companies based in the abovementioned states. But these benefits don’t apply to businesses present in another state. For instance, if your company is located in and operates from California, there’s no way to avoid paying income tax by incorporating your business in South Dakota. The laws of taxation will apply to you, no matter which state you conduct business in.

Bear in mind that you may not save money by forming your corporation in the most affordable state. For example, if you conduct business in your home state, it doesn’t matter if you incorporate a company in a different state. You’ll still have to register your company to conduct business operations in your home state, which comes with all the attendant taxes and filing fees.

In other words, there’s not a lot to gain from choosing an incorporation state based on taxes or filing fees.

Investors

If you’re looking to attract capital, your best bet may be to start your company in Delaware. This is because many investors there are familiar with Delaware’s corporate law.

Court and Legal System

Delaware is home to most Fortune 500 businesses in the USA. The main reason is Delaware’s court system that allows judges to settle business disputes rather than juries. As a result, cases are resolved much faster and companies are not subject to runaway verdicts.

Is Delaware or Wyoming the Best US State to Start a Business?

We’ll now take a closer look at two states conducive to freelancing businesses, Delaware and Wyoming.

Wyoming

Wyoming may be better suited for single-owner corporations due to lower fees and taxes. This is the state where the LLC was first established in the USA, so it’s worked with LLCs for longer than Delaware.

If you own a small business, incorporating your freelance company in Wyoming comes with many advantages. Typically, the state only charges an annual report fee of the greater of $50 or two-tenths of a million of a dollar, depending on your LLC’s assets in Wyoming.

When starting an LLC, you’ll also be charged a small filing fee of $100. Furthermore, there are no franchise or state income taxes and changing a Registered Agent in Wyoming comes free of charge.

Lastly, your LLC might be required to obtain a good standing certificate from the Department of State. You can get the certificate for free in Wyoming.

Delaware

We’ve already covered some of the reasons why Delaware the best US state for business. Here’s why Delaware works great for freelancing:

A Highly Esteemed and Established Court System

As previously mentioned, Delaware’s court system is incredibly friendly to corporations. The Court of Chancery consists of experts in corporate matters. Hence, if you’re engaged in litigation, your case will be decided by a judge well-versed in complex business issues.

Additionally, most corporate attorneys know Delaware’s business laws out and out. Your business attorney will very likely be familiar and can provide you with outstanding legal advice.

Delaware Offers Flexible Corporation Structuring

Delaware’s corporate statutes are flexible with a corporation’s structure and board members. For instance, the officers, directors, and shareholders don’t have to be Delaware residents. Furthermore, a single person can be the director, officer, and shareholder of your corporation. In some states, you might need at least three people to hold these positions.

Delaware Provides Greater Privacy

The names of directors and officers don’t have to be disclosed in your formation documents. This offers a bit of privacy, if necessary.

Delaware Gives You Some Tax Benefits

Although Nevada and Wyoming are gaining popularity owing to the absence of income and corporate taxes, Delaware also has business-friendly taxation. In particular, Companies started in Delaware that don’t have operations there aren’t subject to corporate income taxes. Plus, Delaware taxes aren’t imposed on shares possessed by people outside of this state.

The State Is Conducive to Investments

Investment banks and venture capital firms generally prefer Delaware’s corporation to businesses in other states. So, if you’re considering going public or attracting VC funding, incorporating your business in Delaware will be a wise decision. You won’t have to convert your business when a venture capitalist or investment banker demands it somewhere down the line.

There Are Many Delaware LLC Advantages You Can Enjoy

Some of the most significant Delaware LLC benefits boil down to the filing fee. More specifically, LLCs in both Delaware and Wyoming must pay a filing fee at formation. However, the fee in Delaware stands at $90, making it slightly lower than Wyoming’s. The state also offers a same-day service for some procedures, which isn’t something you can find in Wyoming.

Finally, Delaware LLCs aren’t obligated to file annual reports.

Final Thoughts

All things considered, Delaware is the best option to start your freelance business. Even though Wyoming might be a bit more affordable due to not charging certain taxes and fees, Delaware’s business environment is unmatched.

The legal and court system works in your favor and ensures that only highly competent people resolve your litigation. You may also be able to attract more investments in Delaware since venture capitalists and bankers find the state ideal for funding. Lastly, Delaware’s LLCs are entitled to convenient services during their formation, and the state doesn’t jeopardize your privacy.

All in all, there’s no going wrong with forming your freelance company in Delaware. Many renowned companies have already launched their operations in this great state, and there’s no reason you shouldn’t follow suit.

If you’re establishing your company here as well, knowing all the intricacies of the US bank account setup will greatly expedite the process. To that end, we’ve put together an in-depth guide with all the information you need to open your bank account.

How to Open a US Bank Account

First things first, you’ll need to own a company if you want to set up a business account. If you haven’t done so already, we’ll briefly describe what the process looks like for an LLC. Starting one is generally easier than establishing a corporation, and this is what the formation consists of:

· Choose your LLC’s name

· File your Articles of Organization

· Hire a Registered Agent

· Designate manager or member management

· Formulate an operating agreement

· Adhere to tax and other requirements

Among other things, the final step includes getting an Employer Identification Number (EIN). Its purpose is to enable the IRS to monitor company payroll. You can obtain your EIN on the IRS webpage.

Types of Business Accounts

You can open three types of accounts:

Checking Account

This type will be your primary business account. It’s used to receive payments and disburse purchases.

Savings Account

A savings account is basically a deposit account. In other words, you use it to hold money in place while earning a small interest rate.

Credit Account

Credit accounts serve as a backup for whenever your company needs additional funds. This can help you address immediate financial concerns.

Paperwork Requirements

In general, banks will ask new customers to visit one of the branches in-person and submit the paperwork. To open your bank account, you’ll be asked to hand over these documents:

· Photo ID of the director setting up the account

· Proof of the director’s personal address

· Articles of Organization – You’ll need to prove that your company is registered properly. The submissible documents vary, depending on the kind of entity owned.

· EIN confirmation letter used for tax purposes

· Proof of your business address. In some cases, you’ll be required to prove your business address in the same state and geographic area as the branch opening your account. Other institutions may be more flexible.

Finally, some banks demand a minimum deposit when setting up an account. Before visiting your preferred bank, make sure to check the document requirements and if there’s a minimum deposit.

How to Set Up a US Bank Account Online

Opening a US bank account online was common practice. Individuals didn’t have to go to the bank, whether for a personal or business account. One of the few requirements associated with opening corporate accounts remotely was a company’s state of registration or incorporation.

Nowadays, online account opening doesn’t take place very often. Instead, American banks require physical visits when opening your first account. Nevertheless, after opening their first account in-person, customers can set up additional accounts online.

Just bear in mind that remote bank account opening may come with additional conditions. For instance, if you’re setting up a business savings account, you may need to deposit more than $100,000. Additionally, most banks let customers begin the process online but may require them to visit the bank and show their documents. Some banks are more accommodating and allow you to perform the whole procedure online.

Business Account Signatory

Another detail to remember is that you should never entrust access to your money to third parties. For example, certain providers may offer to take control of some positions in your company. In this case, they might act as the company signatory at the bank. There are a few advantages of allowing this, such as eliminating the need for business owners to be physically present when opening a bank account.

Still, allowing your account to be opened by a third party may simply lead to fraud. The person opening your account may transfer the money wherever they want and disappear. That’s why you should never agree to hand over the position of the controlling manager of your company. To avoid losing money, you should be the only person with access to your money.

Charges and Fees

Before starting a US business account, don’t forget to read the terms carefully. Most importantly, go through the section concerning bank charges and fees since the structure may be very different from what you’re accustomed to.

In most cases, you’ll find fixed banking transaction fees and monthly charges for handling your account. Even if these fees appear insignificant, they can accumulate and put a dent in your budget. Many accounts come with terms that stipulate a waiver of charges if the customer meets specific conditions, such as keeping a minimum daily or monthly balance.

Periodically, your company may need to send or receive international money transfers. While any US banks would offer this service, foreign wire transfer fees might be extortionate at some banks. So, read through the section regarding international fees if you intend to make international transactions.

Unfortunately, you’ll rarely find an American bank with a favorable deal when their customers want to make payments overseas. More often than not, they include high administration charges for processing these transactions, along with cumbersome transaction fees. The fees are fixed or a percentage of the sum transferred.

However, even if the fees are low, the bank will usually find another way to profit and cost you some money. Instead of transparent fees, you may find that the bank’s profit is generated through unfavorable exchange rates. If the exchange rate is worse than the middle rate, the bank gets the better end of the deal.

To prevent this, a good idea is to use online currency converters. These can help you check the most current exchange rates before making international transfers.

Choosing a Bank

There are a plethora of banks in the US where you can open your business account, both prominent and local. Determining which bank offers the best terms for your bank account is tough. Some offer advantages like a broad branch network with ATMs all over the country. Others have international operations and offices in Asia, Middle East, Europe, and other regions worldwide.

However, you typically can’t go wrong with any of the Big Four. The following institutions are well-known for high customer satisfaction.

Wells Fargo

One of the greatest benefits of working with Wells Fargo is the checking accounts that are a perfect match for non-profit organizations and small businesses. As with any other bank, Wells Fargo’s products (including charges and fees) vary by state, which is why you’ll have to type in your zip code to get the relevant details.

JP Morgan Chase

One of America’s biggest banks, JP Morgan Chase has many products tailored to business accounts and charges monthly fees ranging from $10 to $95. A great thing about this bank is that it waives your monthly fees if you can maintain a minimum deposit. The products available vary depending on your location. Again, obtaining all necessary details requires you to enter your zip code.

Citibank

Citibank is an excellent choice for its wide array of business checking accounts for companies of all sizes. You also get specialist accounts designed for various sectors. To figure out which one suits you best, you can take a look at the comparison table on the bank’s website. Citibank has hundreds of branches in the USA and even more overseas.

Bank of America

You can open two types of business accounts with BofA. They are subject to fees, which you can avoid if you meet specific conditions. For instance, you can avoid the monthly fee (of $30 or $17, depending on your account) if you complete a certain number of payments or transactions per month. The bank has over 4,000 branches in the USA.

Don’t Keep Your Business Waiting

Now you know how to set up a US bank account, which is one of the final steps of forming your company. Before you head to a branch or start an application online, make sure all the necessary paperwork is in good order. In addition, go through the terms and conditions of your banking agreement carefully to avoid unpleasant surprises in the future.

Once your account is open, you can finally start making transactions and growing your company.

Why Starting a Business in the US Is Your Best Bet

Here are the main reasons why setting up a freelancing business in the US is a wise decision:

Business-Friendly Environment

America is known for investment opportunities, such as more affordable real estate than most other popular countries worldwide. Additionally, the USA’s large population (over 320 million people) gives freelancers access to a larger customer base. There are various interest and income diversities that you can target, regardless of what you market.

Tax Benefits and Other Incentives

Many cities and states offer various incentives to freelancers establishing a business. Some of them come as tax credits. In particular, the USA has become more accommodating toward foreigners buying real estate with lower commercial taxes. Moreover, there’s a range of support available to businesses available during the formation stage.

Numerous Market Options

Each state in the USA wants to expand its business environment, which is why many cities motivate people to set up companies in their communities. There are basically limitless options for establishing your freelancing organization and you can decide on the climate and terrain that matches your interests.

On top of that, America has agreements with many countries, which can be a boon to any company. Apart from Americans, you can also sell your products or services to hundreds of millions of people across the globe.

Advanced Technology

Cutting-edge technology is one of the USA’s strongest suits and many freelancers start their business here just to access it. This way, they can enhance many facets of their companies, such as communication with their customers.

Intellectual Property Protection

America leads the way in enforcing intellectual property protection for US companies. The US Patent Office enforces stringent federal laws that provide top-notch protection against all forms of infringement.

The USA Promotes New Ideas and Innovation

One of the most significant benefits of being a freelancer in America is that the country fosters new ideas. Many other countries are reluctant to accept innovation, which may inhibit the growth of new companies. Conversely, Americans embrace different solutions and rarely make rash judgments on which business decision is the right one. Your organization can quickly thrive in such an open-minded atmosphere.

Fewer Formalities

Some countries are all about formality in their business operations. A typical example is Germany, where you’ll seldom find people calling their colleagues by their first name, despite working with them for years. This formality indicates that people think differently about everyday assumptions and interactions.

On the other hand, Americans tend not to be obsessed with job titles and social niceties. While this may make the environment less polite than other cultures, it also means that the residents are impatient for actions. As a result, you can be more productive and make faster breakthroughs.

America Appreciates Immigration

Admittedly, America’s immigration policies are controversial and the country could make significant improvements to allowing talented foreigners to pursue their dreams here. However, the USA is more welcoming to immigrants than many other nations. For instance, Japan is nearly entirely homogenous and reluctantly seeks out immigrants who would work there. Also, Europe receives a lot of immigrants every year but doesn’t do a good job of integrating them into their society, making it difficult to start a business.

This is not to say that all immigrants have it easy in America, but its open society makes it much easier to succeed as a freelancer. The culture here is more flexible, which is why you can get accepted soon and start establishing business connections.

What is more, foreigners registering their companies in America can facilitate their immigration process. In particular, the government can issue them a work or business visa. For instance, you may be eligible for an L-1 (intra-company transfer) visa. Alternatively, you can also get your EB-5 visa, also known as the USA’s investment green card.

The Ability to Open a Business Bank Account

Even though freelancers aren’t mandated by law to have a business account, opening one comes with numerous benefits. You can keep track of your expenses and simplify the process of filing your annual tax returns. Additionally, an account lets you receive Amazon payments under its referral program.

However, if you’re a non-resident without a company, setting up an American business bank account is almost impossible. The largest banks generally refuse to open a corporate account for a foreign company due to compliance matters.

Hence, starting a business in the US is a must if you want to use a corporate account.

The Rest of the World Admires America

Despite the USA’s military interventions in various countries, the country still manages to influence people and win over their admiration. Foreigners look to replicate many aspects of living in America, such as culture, food, and music. As a result, American companies draw more attention than others, providing you with more people that you can target with your products or services.

US Companies Are More Trustworthy Than Offshore Businesses

One of the biggest obstacles confronting offshore companies is the lack of trust among clients. In contrast, American businesses are much more attractive because people find them extremely reliable. Offshore jurisdictions, such as those in Asia and Europe, don’t enjoy the same level of reputation as US companies. Therefore, America should be your first choice when registering a freelance business.

Furthermore, Americans generally prefer dealing with companies from their country rather than foreign. Accordingly, no Cypriot companies (for example) would be viewed in the same light as a company registered in Delaware. The reason why we’re bringing up Delaware is that the state presents a nearly perfect environment for setting up a company. Bear this in mind when starting your freelance business.

Even if foreign businesses are successful, founding a US company is likely a better choice. This is because Americans are more eager to enter into agreements with domestic companies. In this case, resolving difficulties and settling disputes will be done at home and not someplace overseas.

Bank Loans

Eventually, you may need to get funding from American banks. To be granted a loan, a bank will have to go through your business credit history. An additional requirement might be that your company has to conduct operations for some time. If you don’t meet these requirements, your application will be declined.

So, make sure to start your freelance business as soon as possible so that you can build your credit history sooner and obtain loans when necessary.

Attracting Investments

From time to time, businesses could use external investments. The US market is perhaps the most attractive destination to find investors and business partners. Again, setting up your business in the US is much better than doing it offshore. Otherwise, investors would be reluctant to finance your company since they wouldn’t be able to check its history or determine whether the investment pays off.

Conversely, getting reliable information about American companies is simple. All you need to do is visit a government agency website, such as that of the US Securities and Exchange Commission (SEC). For instance, investors can use this method to see if you’re incorporated in Delaware or other business-friendly states.

The USA Is a Freelancer Paradise

If you had any doubts about whether opening a business in the US as a foreigner is a wise choice, all your concerns are now dispelled. This amazing country offers ample opportunities for you to set up and grow your freelancing business. There are tremendous tax benefits and the country fosters innovation, allowing you to showcase your creativity to the fullest. Plus, US companies enjoy greater customer trust worldwide, eliminating various reputation concerns offshore companies are plagued with.

So, start freelancing in the USA now and reap all the benefits of the incredible business environment.

Who is the customer?

Chispa lab is a software studio from Argentina.

Chispa Lab

Chispa is a design-driven studio for social innovation. We believe in design with humankind and technology for good, the best way to deliver positive impact at scale.

Chispa Lab

What was the customer requirement?

Chispa wanted to serve their ever growing customers in United States and around the world. They needed access to better tax, payment processing and the infrastructure.

Where is the customer based at?

Argentina

How long did the process take?

10 business days

Since doing business online in the US from another country can be tricky, we’ve put together a guide to describe how it works.

How Does Starting a Company in the USA for Non-Citizens Work?

Foreign companies have two choices for the structure: the limited liability company and the C corporation. You’ll also come across S corporations in the USA but forming one as a foreigner isn’t doable since the shareholders have to be US residents or citizens.

The C corporation lets you accumulate capital and you may be more appealing to an investor looking to work with incorporated companies only. The number of shareholders or owners is unlimited and transferring your corporation’s ownership is an option. Unless a corporation is terminated, it can last beyond the owner’s lifetime.

On the other hand, the most significant benefit of an LLC is that it’s subject to pass-through taxation. This means that profits flow through to the owners and are only taxed once.

Starting a company in the USA as a foreigner doesn’t restrict you to certain states. Many people choose Delaware, Wyoming, or Nevada due to their business-friendly atmosphere and lower business taxes. In any case, you should conduct thorough research while choosing your state to make an informed decision.

This is what comes after figuring out the location of your business:

Hiring Your Registered Agent

Having a registered agent is beneficial on many levels. The person or company holding this function is authorized to handle your paperwork and responding to crucial correspondence. Once you have a registered agent, they will be recognized by your state and approved by the company to perform various operations, such as accepting services of process. On top of that, registered agents will keep business licenses renewed and satisfy the requirements of the business structure, even if you’re working outside the US.

To be eligible, registered agents must reside in the same state where your LLC or corporation was formed. Many companies render this service and can assist you in establishing your business entity.

Obtaining an EIN

The Internal Revenue Service (IRS) uses the employer identification number (EIN) to identify your company for tax and payroll purposes. To apply for an EIN, you first need to have a social security number (SSN).

But if you’re a foreign owner and don’t qualify for an SSN, you can use your Individual Taxpayer Identification Number (ITIN) that will be necessary later on.

Setting Up a Business Bank Account

This step is one of the most complicated stages of companies operating online and outside the USA. Requirements for setting up a bank account vary, but you generally need to provide your passport, ITIN or EIN, and paperwork proving your company is an LLC or corporation.

Submitting these documents is best done in-person, but when doing business online, you can hire a service that will set up your account on your behalf.

Finding a Neobank

A neobank is a financial technology institution that extends only financial services without physical branches. They target tech-savvy clients who prefer doing business through mobile apps.

Apart from cutting-edge technology, a neobank provides many other conveniences. Since there are no physical branches to visit, you can complete business transactions from any place with an internet connection. Moreover, the banking costs of this model are lower, allowing neobanks to lower their fees and render services to more people.

While neobanks don’t have identical structures or offerings, they generally differ from traditional banks and credit unions due to the following features:

· They aren’t plagued by federal or state regulators as much as conventional banks.

· Their services are streamlined and specifically designed for cell phones and other mobile devices.

· Neobanks team up with brick-and-mortar banks when insuring customer deposits.

· They don’t offer overdrafts and other types of credit.

In many critical aspects, neobanks are quite similar to traditional banks and credit unions. For example, a neobank also offers savings and checking accounts, transfer services, budgeting help, and other financial education resources.

From a client’s perspective, working with a neobank may amount to just managing your money and making decisions using a mobile app. For people well-versed in technology, setting up a neobank account is easy. In many cases, you can start using neobanking services without providing physical paperwork. You need only create your account and download the application.

However, a neobank doesn’t replace a conventional bank for all clients. That’s why you should consider linking your neobank account to your traditional business bank account, as allowed by some institutions.

Managing International Business Payments

Making overseas transactions can be extremely challenging due to communication problems, legal complications, and exchange rate fluctuations. There are many other pitfalls, such as relationships with distributors and suppliers. They can easily break down and lead to losing money. To lower the risk of encountering such situations while performing online business, you can adopt several approaches:

Carefully Negotiate Payment Terms

Since US payment laws may not apply in some of your international transactions, you want to limit the risks associated with such payments as much as you can. To do so, try to negotiate a type of arrangement you’re most comfortable with. To name a few, you can use advance payments, letters of credit, or bills of exchange once the customers receive your products.

To decide on how the payment will be carried out, take into account how risky it is, as well as what your customer requires and expects. Plus, growing businesses need to pay special attention to their cash flow because international transactions may expose you to extended payment terms and limit the operating capital available to you.

Manage Currency Rates

Fluctuations in the dollar’s value will determine your budget when entering into purchase agreements with your distributors or suppliers and making or receiving payments. Therefore, it’s always smart to plan your operations. A good practice is to speak to a bank or other currency provider about pre-purchasing or pre-booking currency at a preferable rate. Foreign exchange (FX) providers can also streamline this process.

In addition, you can use a forward contract to safeguard against exchange rate fluctuations for a specific period. This rate is established when purchasing a contract in a selected period, which helps control your cash flow and minimizes risk by avoiding future costs.

Consider Obtaining Trade Credit Insurance

Insuring your company against nonpayments by international customers can prevent your business from getting into a cash crunch. However, you might want to factor the insurance cost into your pricing discussions with customers. Also, figure out whether you need government-supported or commercially available insurance.

Hire Professionals

Considering that laws and rules surrounding finances change all the time, doing business online comes with numerous intricacies. To help navigate them, it can be a good idea to hire experts like business filing companies, attorneys, or accountants. They can help you manage your overseas operations. Handling legal concerns and finances comfortably on your own will usually require a lot of time and having expert guidance can be a huge boon.

America Is Waiting for You

Now you know how to run online business from home. And there’s no better place in the world to start your company than right here in the USA. While expanding into America from a different country requires a lot of work, this is a wise investment as it enlarges your market and should thus increase sales. Join many other companies that have made the same move and watch your organization flourish.

Structure Background

CodeSoft US, LLC is a United States Limited Liability Company which sells a variety of software and physical goods to U.S. and foreign customers. Gabriel is citizen and resident of Romania, and the sole owner of CodeSoft US, LLC. He maintains his offices in Romania, and is not physically present in the United Staes. As a Single-Member LLC (SMLLC), CodeSoft US, LLC is classified as a disregarded entity for Federal tax purposes per Treasury Regulation § 1 301.7701-3 2

The following is a summary of the products sold:

1. Software as a Service (SaaS) monthly web application subscriptions and onetime purchase applications. The majority of the software sold is to U.S. customers using the software un the United States, and the remaining portion to foreign customers.
2. E-Commerce; Physical Widgets sold and shipped through Amazon FBA warehouse located in the United States and directly to U.S. customers. Source and Taxation of Royalty Income (SaaS Applications) For the use of copyrighted software (either used as a web application subscription, or one time purchase), royalties are sourced where the property was used per Internal Revenue Code § 861 . 3 4 Based on the Tax Treaty rate of Royalties earned in the United States, residents of Romania are taxed at a flat rate of 10% .

Source and Taxation of Physical Goods (E-Commerce) All sales in the United States are sold and fulfilled through Amazon FBA. Once manufactured, the widgets are shipped directly from the supplier to an Amazon FBA warehouse in the United States. Once sold to a customer, the goods are then shipped from Amazon’s warehouse directly to customers throughout the United States. Amazon then pays CodeSoftUS, LLC for the revenue related to the purchase of goods (less any fulfilment/shipping fees).

Although the sale of goods from Amazon FBA warehouse to the U.S. customer is considered Effectively Connected Income (ECI) earned by the LLC per IRC 864(c)(3) , as the result of sale of inventory attributable to a U.S. shipping and 6 destination location per IRC, §865(e)(2) and 882 , the business profits of the 7 8 Limited Liability Company (and that of its Sole Non-Resident Owner) qualifies for a Tax Treaty Exclusion under the Romanian-U.S. Income Tax Treaty Articles 5 and 7 . 9.

Article 5 of the Romanian-U.S. Tax Treaty describes the definition of a Permanent Establishment. Article 7 of the Tax Treaty states “Industrial or commercial profits of a resident of one of the Contracting States shall be exempt from tax by the other Contracting State unless the resident has a permanent establishment in that other Contracting State.”

Monetary Transactions

1. CodeSoftUS, LLC sells SaaS Subscriptions totalling $300,000, of which $210,000 is by U.S. customers using the software in the United Staes, and $90,000 of foreign customers using the software outside the United States.
2. CodeSoftUS, LLC pays a third party supplier company to manufacture widgets for $100,000 which are then shipped to the Amazon FBA warehouse. The widgets are then sold to U.S. customers for $300,000, resulting in a net profit from this activity of $200,000.
3. On its Income Statement, CodeSoftUS, LLC reports Net Income of $500,000 ($210,000 U.S. SaaS Subscriptions/Applications + $90,000 U.S. SaaS Subscriptions/Applications + $300,000 Product Sales through Amazon FBA E-Commerce - Less $100,000 Cost of Goods Sold).

Tax Compliance

Form 1040NR (Gabriel). As a sole owner of the disregarded LLC, Gabriel files Form 1040NR, U.S. Nonresident Alien Income Tax Return, to report the royalty income of $210,000 taxed at 10% rate, or a $21,000 withholding tax. Additionally, a Tax Treaty exclusion is claimed on Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) for the E-Commerce widget sales. The tax treaty article which directly applies is Article 7, Business Profits.

Result

As a result of this structure, the U.S. tax lability of Gabriel (as a Disregarded Entity Single Member LLC owner of CodeSoftUS, LLC) is $21,000.

*Disclaimer*: Sieve, Inc. or Digitize agency is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Sieve, Inc. or Digitize agency is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Sieve, Inc. or Digitize agency.

1. Registered agent — $100 per year
2. Corporate tax preparation by Digitize agency CPA (Federal)  
   Zero income returns – $299
   Gross income $0-$50K – $399
   Gross Income up to $50K-$100K – $799
   $100k to $500K – $1299
   Income over $500K – we will quote after reviewing the financials.
3. State tax filing
   $399 for LLCs in Delaware
   $299 for LLCs in Wyoming
   Corporations depends on issued shares and assets.

So here is an example, if you are a Delaware LLC with $25k in gross revenue, your annual cost of running the business is approximately $100+$399+$399 = $898 from the second year.

Questions about taxes? Here is a more detailed post about taxes.