Non-U.S. Delaware Corporation
How do I form a Delaware LLC or Delaware Corporation if I am not a U.S. citizen?
Neither U.S. citizenship nor residency are requirements for forming a Delaware LLC or Delaware corporation. You can start a business in Delaware from anywhere in the world.
In fact, many of our clients are not living in America. Delaware LLCs and corporations do need a local registered agent though, which is a service we offer from the building we own here in the state capital.
We do not charge foreigners more money for filings, however, we would encourage you to review our resources section to make the whole process easier for you, specifically checking our Delaware LLC and Delaware Corporation pages.
Steps to Starting a Non-U.S. LLC or Corporation in Delaware
In Delaware, an LLC or Corporation is formed with the Delaware Division of Corporations. That will be referred to as your “domestic state.” Your business will be considered a “foreign entity” in states outside your domestic state (America has 50 different states and a couple extra jurisdictions).
The process for starting a business in Delaware is nearly the same process that a U.S. citizen would go through:
Name the Company
Find a name for your business by performing a name search on the Division of Corporation’s website. Once you’ve found an available name, you are NOT required to reserve it. The name will automatically belong to your business entity once Delaware has recorded your company’s LLC or corporation filing.
Hire a Delaware Registered Agent
Delaware registered agents receive all official mail and service of process on behalf of your Delaware company. You must maintain a Delaware registered agent, which is what we do for $29 a year, to keep the Delaware company in good standing. They are required by law and must maintain a physical address and keep regular business hours in the state, which, since you do not live in the United States, are requirements you cannot meet. This is a necessary expense and you’ll need the registered agent’s name and address to complete the formation paperwork in the next step. You could try to list a relative or friend as your registered agent, but doing so might involve this person into your personal business notifications and put an unneeded burden on them to legally accept your legal documents.
File Certificate of Incorporation or Certificate of Organization
The name of the formation document will depend on what type of entity you are forming. Certificates of Incorporation are for corporations. Certificates of Organization are for Limited Liability Companies (LLCs). There are two ways to file these documents with the Delaware Division of Corporations: by mail or online at the Delaware Division of Corporation’s website.
Many foreigners choose a corporation because it aligns better with your home country’s rules and regulations. Also it is defaulted to a C corporation which is how you’ll have to pay your taxes to the IRS should you owe IRS taxes on income you derive from the U.S.
Obtain an EIN
In order to file and pay taxes in the United States, your Delaware company will need to obtain Employer Identification number (EIN). After the state sends verification that your articles of organization (for Delaware LLCs) or articles of incorporation (for Delaware corporations) have been processed, you can apply for an EIN by filing Form SS-4 with the Internal Revenue Service (IRS). The IRS accepts EIN applications online, by phone, or by mail. The form is one page and comes with plenty of instructions.
File a Beneficial Ownership Information Report
Most foreign businesses operating in the US must file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN) starting January 1, 2024. You’ll have 30 days to file this report after registering to do business stateside. (Though businesses formed in 2024 have 90 days to file.) You can file this free report online, and the information you provide is not available to the public. Your BOI report must include name, address, and tax or personal identification information for your company, anyone with substantial control over business decisions or who owns 25% or more of the company, and the person who files your registration documents.
We know it can seem like a hassle to form a business when you have to keep track of so many filings, but that’s why we’re here. As business formation experts, we’ll form your business and make sure you have all the tools you need to succeed in Delaware. For just $9, we’ll take care of your BOI report for you.
Differences between a Delaware LLC and a Delaware Corporation
If you choose a Delaware LLC, your ownership of the company is in the form of membership interests. The members are the owners of the Delaware LLC.
If you choose a Delaware corporation, your ownership of the company is in the form of shareholder stocks. These stock certificates do not need to be physically made. They can just be documented on paper as to how many each shareholder owns. The shareholders elect the directors of the corporation. The directors elect the officers such as president, treasurer, and secretary of the corporation. If you are doing a Delaware corporation, we ask you for all this information, and as the incorporator, we elect the directors and officers on your behalf, and you sign the corporate bylaws as the shareholders.
In order to keep your business entity active, you will need to file an annual report and pay a franchise tax to the Delaware Division of Corporations if you operate a corporation; LLCs only need to pay an annual tax of $300. Annual reports and Delaware Corporate Franchise Taxes (a minimum of $175) are due each year by March 1; the LLC tax of $300 is due each year by June 1.
Opening a bank account
One of the most commonly asked questions about forming a business in the United States from abroad is how to open a business bank account. Opening a U.S. bank account is difficult if you are not here. Most people that go to that much effort actually have to fly into the U.S. and physically walk into a branch. We recommend Wilmington Trust, HSBC, Wells Fargo, U.S. Bank, Chase, or Citibank. Wells Fargo banks in Las Vegas are particularly versed in setting up bank accounts for non-U.S. residents. A business bank account in the U.S. does not need to be “Started” in the state of your formation. We do not assist in setting up U.S. bank accounts. Frankly, no one can really help you do that very well. You will have all the legal documents relating to the formation of your Delaware company that you will need to set up a bank account, in your online account, at all times. You can read more about this: Setting up a bank account in Delaware.
Business owners also run into trouble trying to open an account in their own country for a foreign business. If your country is part of the Hague Convention, you will need an apostille (official certification of your business formation documents).
Paying U.S. taxes as a Nonresident
Non-U.S. citizens cannot be shareholders in an S corp, so this limits your taxable business entity choices. Mostly, non-U.S. residents will choose between LLCs and corporations taxed as C-corps.
If you form a corporation in Delaware, your corporation will be taxed as like any other U.S. corporation. The corporation will pay the same taxes that any other U.S. corporation would on all U.S.-sourced income and your Delaware corporation would also be taxed on all foreign earnings, in accordance with U.S. Treasury regulations. Since the corporation was formed in the United States, it is taxed as a domestic corporation and you will file Form 1120.
As a non-U.S. resident, your Delaware LLC will only be taxed in the U.S. on income from U.S. sources, meaning that income from other countries will not be taxed by the US. If you choose to form an LLC, any profits U.S.-sourced income will be taxed by 30%. This 30% goes to the IRS. At the end of the year, you will file your U.S. taxes on Form 1040-NR with the actual amount due. If the amount due is less than the 30% initially taxed, the IRS will issue a refund in the amount overpaid. To make sure the LLC is sending the proper amount to the IRS, the LLC must designate a tax withholding agent to calculate the proper amount that must be sent to the IRS before any of the money is released. Because of these difficulties, many non-U.S. residents choose to form corporations, unless they are forming the LLC to do business strictly outside of the U.S., in which case, the LLC would not owe any U.S. taxes.
Helpful Tips for U.S. Non-residents Starting a Business in Delaware
- With a Delaware LLC or Delaware corporation, you only need one person. There is no need for multiple people.
- There is no need to pay a company a high fee for nominee service.
- You get a federal tax ID yourself, or you can hire us to do it for you at the bottom of our sign up form.
- If you need an apostille, you can add that at the bottom of our sign up form.
- Most people do NOT need a corporate book and seal. If you ask us, it’s a waste of your money. But if you want one, you can add that to your order at the bottom of the sign up form.