6 reasons why your startup should be incorporated in the US
Incorporating a US business can be a big step forward for any business owner. Even though incorporation isn’t necessarily a requirement to sell products, we still strongly recommend US incorporation to any business owner who’s thinking about operating in the American market.
In this article, we’ll take a look at some of the main benefits of incorporating your business in the United States. This might sound like a headache, but Firstbase makes incorporation easy by handling the entire company formation process and helping you manage ongoing compliance as your company grows.
1. Access to US payment providers
Stripe, PayPal, and many of the other leading payment gateways are based in the United States. If you want an American business account with one of these providers, you’ll need to start by incorporating your company in the US.
Payment processors are particularly relevant for ecommerce businesses and other companies that want to sell products or services online. Most American consumers expect providers to accept various payment methods including PayPal, Apple Pay, and more on top of debit and credit cards.
While incorporation may not be legally required, you’ll find it much more difficult to do business without access to these basic services. The sooner you file for US incorporation, the sooner you’ll be able to process payments and start generating scalable revenue in the American market.
Foreign businesses can legally sign American contracts without incorporation, but it’s easier to find partners if you’re incorporated in the United States. Businesses without US incorporation face an uphill battle when it comes to gaining the trust of other American companies.
Creating a formal business entity will show these potential partners that you're serious about creating a permanent US presence. Any disputes or other issues can be settled under US business law, and they won't have to worry about tracking you down overseas.
Incorporating in the US will help you connect with the right suppliers and other partners for your business. No matter where you’re located, our team can help you incorporate your business in either Wyoming or Delaware in a matter of minutes.
Similarly, access to the American consumer market is a significant benefit of US incorporation. While China has been closing the gap, the US continues to offer the largest market for consumer businesses.
According to the World Bank, the American consumer market is about as big as China, Japan, Germany, India, and the United Kingdom combined. Incorporation isn’t always necessary to sell products in the US, but it will make your brand look significantly more credible to American customers.
Furthermore, incorporation will pave the way to open offices or other facilities in the United States. If you wait to incorporate your business, your expansion could be held up as you wait for the incorporation application to process. It's a good idea to file for incorporation as soon as you start seriously considering US operations.
4. Venture capital
The same factors that make US incorporation ideal for American contracts and customers also make it ideal for venture capital. While there are obviously powerful VC firms around the world, the US is still the king for companies who are seeking funding.
In fact, the US is responsible for more than three times as much venture capital investment as the second-place country (China). A few countries can compete on a per-capita basis, but none of them offer the same dynamic market or overall opportunity. American venture capital firms are much more likely to invest in companies that are incorporated in the US, particularly in Delaware.
If you're planning to incorporate and get funding from outside investors, it's worth noting that LLCs are unable to issue equity. In this case, you'll need to create a C-Corp so that you can offer shares to investors and other stakeholders. Take our LLC vs. C-Corp quiz to get a better idea of which business structure is right for you.
5. Accelerators & incubators
Making a startup succeed is incredibly challenging, especially when you’re doing it on your own. Accelerators are a popular way for startups to move more quickly with the backing of an organization that can provide funding, mentorship, and other valuable resources. Naturally, American accelerators will want to see a US business entity before they invest in your startup.
Again, you can find accelerators operating outside the American market, but there’s no doubt that the US offers more than any other country. As you might expect, top accelerators are concentrated in the Bay Area, but there are also good options in other areas of the country. Incorporating in the US — especially in Delaware — will help you appeal to American startup accelerators.
If you’re interested in living in the United States, investing in an American business is one of the best ways to make it happen. The E-2 classification, for example, allows citizens of most other countries to enter the country “when investing a substantial amount of capital in a US business.”
A critical requirement for E-2 status is that the investor has either majority ownership or operational control over the business. This makes it an ideal option for foreign citizens who are interested in incorporating a company in the United States. Click here to learn more about moving to the US after starting a business.
Which state should I incorporate in?
Incorporating in the US offers a number of advantages compared to incorporating in other countries. However, each individual state has its unique taxes and regulations. Which state to incorporate in is one of the most important things to consider before launching a company in the US.
Delaware is the most common state of incorporation for several reasons, including tax and privacy benefits. However, Wyoming is another good option due to its strong asset protection laws and simplified LLC registration process. We generally recommend Delaware for C-Corps and Wyoming for LLCs, but there are many different variables to consider in each particular case.
We’ve helped more than 15,000 companies incorporate in Delaware and Wyoming. Learn more about the pros and cons of incorporating your business in each of these business-friendly states.
If you’re located outside the US, it might seem easier to simply incorporate in your home country. However, American incorporation comes with a number of advantages. Additionally, we can make this process much simpler so that you can focus on building your business.
Whether you're looking to sell to American customers, get funding from American investors, or open a US bank account, incorporating a business in the US is the first step toward growing your presence in the American market. Firstbase handles US incorporation for businesses around the globe. Click the link below to start your incorporation now.