Foreign investors interested in expanding their operations on the American territory can consider opening a branch that can be activated through a corporation in the USA. Setting up a branch in the USA is subject to varied conditions, but for a better understanding of how such business entities can be created in one of the USA’s states, we advise you to talk to your team of company formation specialists in the USA. One should consider that each state has its regulations when it comes to the business environment.
| Quick Facts | |
|---|---|
| Applicable legislation (home country/foreign country) | For foreign countries |
|
Best used for |
– banking, – financial operations, – insurance |
|
Minimum share capital (YES/NO) |
No |
| Time frame for the incorporation (approx.) | Around 5 weeks |
| Documents to be filed by the parent company |
– Articles of Association, – business plan, – specific forms |
| Management (Local/Foreign) |
Local, but not mandatory |
| Legal representative required (YES/NO) |
Yes |
| Local bank account (YES/NO) |
Yes |
| Independence from the parent company |
Dependent on the parent company |
| Liability of the parent company | Full liability on the branch office's debt and obligations |
| Corporate tax rate |
21% |
| Annual accounts filing requirements |
– balance sheet, – financial reports, – standard forms |
| Possibility of hiring local staff (YES/NO) |
Yes |
| Travel requirements for incorporating branch/subsidiary (YES/NO) |
No |
| Double tax treaty access (YES/NO) | Yes |
Table of Contents
What to consider when opening a branch in the USA in 2024
From the beginning, we mention that a branch is not a separate legal entity, as it has to report all the operations and profits to the parent company from overseas. If you would like to set up a branch in the USA, you must understand the conditions imposed in this sense, and the first one is related to the legal way in which you can activate on the market. A US branch can be set up as a corporation, with complete respect to the applicable legislation related to registration, business, and taxes in the chosen state. The process of incorporation of a branch in 2024 starts with the Business Division of the Secretary of State in which you want to set up the activities. One of our agents can tell you more about the formalities for branches in 2024 in the USA.
Filling out the required forms and paying the fees are extra requirements after you have submitted the Articles of Association of the parent company. Moreover, these documents must contain information about the new business office in the USA and about the registered agent who can be a natural person or another company but observing the condition of having residency in the state where the branch is set. It is good to know that the state of Delaware is a preferred destination for business, as it has a favorable tax system that involves benefits for foreign entrepreneurs. Please bear in mind that if you want to open a branch in the USA, the following information must be provided:
- the name of the owners;
- the board of managers;
- the business address.
Instead of worrying about the incorporation process of a branch in the USA, we suggest you address your inquiries in this sense to our company formation agents in the USA. We can help you open a company in the USA in any chosen state you wish to do business with. You can also discover the infographic below for details on this topic:
Tax requirements for opening a branch in the USA
Even though it is not a preferred business structure in the USA, due to the applicable taxation of the company’s profits, branches can be easily set up in 2024. As it is known, such business forms must respect US legislation in this sense, including the rules and regulations regarding the payment of the federal and state income tax on worldwide income.
As for the dividends of such corporations with establishments in USA, these can be exempt from taxation if the USA has signed a double tax treaty with the foreign country from which the branch comes. Starting a business in USA is subject to fewer requirements and bureaucracy, but it is best to talk to our local advisors in this sense.
Opening a branch in USA as a foreign investor can seem difficult without specialist help. We recommend the services of our local agents who can take care of all the formalities. Thus, this structure can be ready in approximately 5 weeks, including the opening of a bank account for the company’s future operations.
We point out to those interested in the branch in USA that the EIN can be obtained in a maximum of 30 days, but you must take into account the correct preparation of the documents. If you would like to expand your business in another country, for example in the Philippines, you can rely on our partners who can help you set up a branch office or a subsidiary in that country.
Do I need a business plan for a US branch?
Of course, foreign entrepreneurs who want to open a branch in the USA must prepare a business plan in detail. Here is what this document should contain:
- A business plan must comprise projects for no more than 5 years.
- Company description – Needs to include details about the business, how it differs from the others on the market, and which markets it is heading to.
- Executive summary – Contains clear information about the company’s profile and its goals in the market. You can also add details about the products you want to sell.
- Market research – Every business needs market research, especially if it will develop in a foreign country, as is the case with foreign branches in USA.
- Company organization – Information about company management is required.
- Product and service information – A business plan must provide detailed information about the products and services to be placed on the market.
- Marketing and sales – Marketing and promotion plans can be included in a business plan.
Branches in the USA are easy to register, and they represent one of the main benefits when looking to enter on a local market. Some international enterprises prefer branches instead of subsidiaries due to great and fast formation and registration.
These are some ideas that should be included in a business plan if you want to open a branch in USA. You can receive more information in this direction from our team of local agents who can deal with the registration of your company with the relevant authorities. Plus, we have prepared a video presentation on this topic:
Obtain the EIN for a branch in the USA
EIN is the abbreviation for Employer Identification Number or more precisely the identification code for a company with commercial activities on the market. This code shows that the company is registered for taxation. Even a US branch must comply with the charging rules, so do not hesitate to talk to our team and find out what steps to follow in this direction.
Opening an LLC company in Delaware is a process that can last around 2 months. The formalities involved can be successfully managed by our local representatives as soon as you get in touch with us. Opening a bank account, preparing the necessary documents, registering for the payment of taxes, and obtaining the company seal come under the attention of our company formation agents in the USA. We emphasize the fact that you will need local representatives for registration, a matter where we can provide support.
Even if you don’t live in the USA, you can open a branch, without complications. As soon as you choose the business structure, preferably LLC, you must register for the payment of taxes. There is no need for a green card to be eligible for such a business type in the USA.
According to the legislation, foreign companies must report their financial operations to the IRS, each year. As such, filing form 1120-F is needed until April 15th after the tax year ends.
A 30% branch profits tax is applicable in the USA, besides corporate-level income taxes. Such tax is imposed on the earnings and profits of the branch for the year that are not reinvested in a USA business by the end of the tax year. Though, the branch profits tax can also be cut under a tax treaty, if signed.
Visas for foreign employees
If you are going to hire homeworkers for the US branch, then you need to check the visa formalities. Temporary employment visas are among the types of visas required for foreigners wishing to work in the United States. There are several categories of dream jobs, depending on the type of job accepted. A good part of the formalities come to the attention of the employer, in this case, of the one who opens the US branch. But, for all the details and the necessary support in this direction, we invite you to talk to our specialists. We are here to provide the necessary assistance if you are interested in opening a branch in USA or any other type of business structure.
International investors can start a business in USA with simple formalities and with the help of our local agents. Among them are obtaining the EIN to identify the company as a taxpayer, and obtaining the business license and company seal. We have the necessary experience to help you form the company you want, in any American state you want. Contact us as soon as you decide on business development in USA.
C-corporations are other alternatives for branches in USA, however, one must consider the taxation which is made individually. In this sense, there are also double tax treaties signed by USA to avoid double taxation.
Advantages of branches in USA
Registering a branch in USA is quite easy, as long as you follow the rules imposed by the authorities. Being an extension of the parent company, the branch can be managed quite simply, without the need to appoint managers or directors. In addition, the registration process is quite fast, and the activities can start immediately. So, if you are interested in a branch in USA, do not hesitate to talk to our company formation agents in USA.
Why invest in the US
Without a doubt, the United States is one of the most appreciated and powerful business destinations in the world. The United States is the strongest economy in the world, closely followed by China, Japan, and Germany. The business possibilities are multiple, anyone can easily open a company, and the statement “land of opportunities” is definitely the first thought when you say USA.
With a skilled and productive workforce, strong support for innovation, well-developed infrastructure, and extremely attractive sectors, the USA is the country where you can open any type of business. Foreign investors continue to enjoy advantageous legislation and the opportunity to operate in the market in any area of interest, supported by great incentives and a well-developed tax system. Here are other interesting statistics about the USA:
- The USA ranked 6th out of 190 world economies in terms of quality and attributes of the business climate, according to the 2020 Doing Business report.
- The UK, Japan, Canada, Germany, and Japan are the main US investors.
- According to data for 2020, the total FDI was about USD 10.802 billion.
- Most foreign investments are absorbed by sectors such as manufacturing (over 40%), financial and insurance (over 12%), and wholesale trade (over 10%).
- In 2019, investments from Japan accounted for 15% of total FDI in the US.
- With more than 47 double tax treaties signed, the US offers profit protection to eliminate tax evasion and double taxation.
If you would like to know more about how to open a branch in USA, please contact our team of company formation representatives in USA.