How To Incorporate A Startup in the U.S.
Legalpad specializes in U.S. work visas and green cards for startup founders, and we’re here to help you and your team get proper work authorization quickly and easily. But first, let’s work on getting your startup officially incorporated in the U.S.!
First things first. You will need to incorporate your company to begin operating in the U.S.
There are some potential exceptions. You may not need to incorporate if your only U.S. operations will include selling goods to U.S. customers or wholesalers online. However, in most cases, incorporation will be necessary. If you are unsure about whether or not you'll need to incorporate, be sure to talk to a business attorney.
The second thing is good news for non-residents wanting to launch a startup in the U.S.: you do not need to be a citizen, green card holder, or work visa holder to launch a startup in the U.S. with most business structures. However, anyone who will be employed by the U.S. company and working from the U.S., including the founder, will need work authorization.
Types of business structures for startups
The most critical step in incorporating a U.S. company is determining what type of business structure to move forward with. Even if you have an idea of what option might be best for you, it is important to understand your options before making a decision. The type of business structure you select at the beginning will impact everything from taxes to personal liability.
Delaware C-Corp: the most common startup business structure
Nearly every large U.S. business, as well as most startups, are C corporations (C-Corps), and many choose to incorporate C-Corps in Deleware specifically. Nearly 66% of Fortune 500 companies incorporate in Delaware because of the advantages offered.
The primary reason that most startup founders choose C-Corps? C-Corps are highly attractive to investors. If you’d like to raise venture capital funding in the future, a C-Corp is a good choice. Further, a C-Corp is a formal business structure that protects founders from any financial liabilities.
Establishing and maintaining a C-Corp can be expensive compared to other options, but it is the route most startup founders choose!
Other business structures for startups
Limited Liability Company (LLC): After C-Corps, LLCs are one of the most popular business structures for startups. The cost to set up and maintain an LLC is significantly lower than for a C-Corp and LLCs have pass-through taxation. Some founders choose to start an LLC at the beginning and then incorporate it into a C-Corp in the future if needed.
S Corporation (S-Corp): S-Corps are designed to avoid some of the taxation that is typically required with a C-Corp. The downfall is that all owners of S-Corps must be U.S. citizens, making it a tricky option for international founders.
Benefit Corporation (B-Corp): B-Corps are for-profit corporations that are driven by both mission and profit. The company is held accountable by shareholders to produce not only profit but also a public benefit.
Nonprofit: Nonprofit corporations vary from other business structures in that they can receive tax-exempt status, but certain limitations and rules must be followed to remain a nonprofit corporation.
Sole proprietorship and partnerships: Sole proprietorships and partnerships are informal business structures that are easy to set up. The downside is that both have unlimited personal liability, making it very risky for the owners of the business. These can be good options for individuals exploring business ideas, but likely not the best solution for startups that want to raise, hire and scale.
How to incorporate your startup in the U.S.
In addition to deciding which type of business structure will be best for your startup, you’ll need to decide on a business name and location. These are the most basic details that will be required regardless of which business structure you choose.
You can always change the business name in the future, as well as the address. You don’t necessarily need a physical office space, but you will need some sort of mailing address. This could be a home address, co-working space, or virtual mailbox.
The process for filing for incorporation will vary based on which business structure and state you choose. Working with a business attorney may be necessary, and can certainly be very helpful. Companies like Firstbase and Capbase can help you incorporate easily, and Legalpad customers get discounts with both Firstbase and Capbase! They’ll also help with anything else that might be needed to get your startup running, such as applying for an EIN number or acquiring a local business license.
Establishing a startup in the U.S. can be challenging, but we hope this article helps you get your business started! Legalpad is here to support you as your startup grows by helping you secure visas and green cards for your employees, even yourself! Our team is here to chat about startup immigration if you ever need any assistance.