Business Formation, Subsidiary Company, Uncategorized

11 Things you should know about incorporating a Subsidiary in the USA

There is much vibe in IOT space, startups are just banging this opportunity, which is super cool. Getting out the product in the tech-savvy market is strategic and a reasonable idea. You will agree with me, some of our Indian IOT startups, patenting in India (creating a solid competitive edge in home country), having the tech team over here in India, and the management team (may or may not) in the US. Incorporating a Subsidiary in the USA involves a system of procedures and eligibility criteria that business having plans to expand in the USA must know. 

1. For getting registered: You should inform the secretary of state’s office to register. Whether it is a company with limited liability or corporation, that will depend upon the nature of your entity.

2. Registration: You can either incorporate your entity as an incorporation or LLC. If at all you choose to incorporate in Delaware as a C Corp, You don?t have to be present in the USA for the incorporation. 

Quick checklist for incorporating in USA  Complete list of documents for incorporating your USA subsidiary
3. Along with Incorporation, get EIN: This is similar to the Social Security Number. Each business has a unique tax ID number called Employer Identification Number that you will have to register for. Having an EIN is essential to deal with banks and pretty much everything else in the USA.

4. You will need a US Address: To receive business documents(like billing and other stuff) and for tax compliance, it is mandatory that you have a US Address.

5. A US Bank Account: You would require a bank that allows remote processing of account opening and operations. Guys, before applying for a bank account, it’s mandatory you have an EIN.

6. A Business Credit Card: A secure credit card is nothing but a credit card with a spending limit secured by the money in your bank account/deposit.

7. A US Phone Number: You can either get a number for company or get a toll free number from any of the service providers like phone.com etc,

8. Set up a Distributor License: That assigns an exclusive license to the US company, to host and sell your products in the USA. The Indian entity now holds the entire Intellectual Property (IP), by providing a hosting and distribution license to US companies for a 20% price cut per customer.

9. Terms of Service owned by subsidiary: All the legal recourse should be made available to your US entity.

10. Earnings and transfer of money: You can retain 20% of the revenue earned by the US entity and transfer 80% of the revenue back to your parent company as a license fee.

11. Tax Compliance: You will be liable to pay taxes on the profit made on the 20% margin after all the operational costs are subtracted. Remember that you will have to pay other taxes such as State tax, etc., irrespective of the margin you make.

Wazzeer is trusted by Startups as a reliable Legal and Accounting partner, we would be glad to get you in touch with our Wazzeer Professional Network in the USA.

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