Many digital entrepreneurs or established businesses eye U.S. for company establishment for many reasons, for exampl: tax savings, entering the U.S. market and so on. However, one key aspect of running a business—opening a U.S. bank account—can be challenging for non-residents.
Why Do You Need A U.S. Bank Account For Your U.S. Company?
A U.S. business bank account is crucial for handling financial transactions, paying employees, receiving payments from U.S. clients or settlements from payment gateways such as Stripe or PayPal. Having a local account also helps you reduce currency exchange fees and maintain smooth operations in the U.S. market.
Without a U.S. bank account, your company may face difficulties processing payments or even delays in important business deals, which can limit your company’s growth and expansion.
Why It Is Hard To Open U.S. Bank Account For Non-Residents?
Opening a bank account for your U.S. company as a non-resident owner can be complicated, primarily due to regulatory measures imposed by U.S. financial institutions:
1. KYC Requirements: U.S. banks are required by law to verify the identities of individuals and businesses before opening accounts. This often includes a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), which non-residents may not have.
2. Proof of U.S. Presence: Many banks will ask for a physical U.S. address or proof of U.S. operations, which many non-resident companies do not have.
3. In-Person Requirement: Certain U.S. banks require the business owner to be physically present to open an account, which can be a challenge for non-residents who are based abroad.
Despite these challenges, there are practical solutions and alternative options to consider.
How To Open U.S. Bank Account For Your Non-Resident Company
Here’s a step-by-step breakdown of how you can open a U.S. bank account for your business as a non-resident owner:
1. Incorporate a U.S. Entity
The first step to opening a U.S. bank account is to establish a U.S.-based business entity. Common choices include forming a LLC or a C Corporation. The incorporation process involves selecting a U.S. state, registering your business name, and filing the required paperwork.
Some states like Delaware, Wyoming, and Nevada are particularly popular among non-residents due to their business-friendly regulations, tax benefits, and relatively simple formation processes.
2. Obtain an Employer Identification Number (EIN)
Once your company is incorporated, you will need to obtain an EIN from the IRS. The EIN acts as a federal tax ID for your company and is necessary for opening a U.S. bank account.
You can apply for an EIN online through the IRS website, and non-residents can do this even if they don’t have a SSN. The process is straightforward, though it may take a few weeks to receive your EIN.
3. Gather the Necessary Documentation
To open a U.S. business bank account, you’ll need to provide a set of documents. These typically include:
- Articles of Incorporation: Proof that your business is legally registered in the U.S.
- EIN Confirmation: The letter or document you received from the IRS confirming your EIN.
- Operating Agreement or Bylaws: This outlines the management structure and ownership of your company.
- Proof of Address: A U.S. business address is often required by banks. This can be a physical address where your business operates or a virtual address service.
- Personal Identification: A valid passport and possibly a second form of ID, such as a driver’s license.
Some banks may also request additional documentation depending on the state or type of business entity you’ve set up.
4. Find a Right Bank
Not all banks in the U.S. are equally willing or able to accommodate non-resident businesses. Therefore, it’s important to do your research before selecting a bank. Here are a few factors to consider:
- International-Friendly Banks: There several digital banks that cater specifically to international clients or startups with non-resident owners. These banks may offer more flexibility in terms of documentation and in-person requirements. If you would like to get a list of such banks, fill out our contact form with your details and we will send it to you by email.
- Account Fees and Services: Compare the types of accounts offered, monthly fees, wire transfer costs, and the availability of other business services such as currency exchange or international SWIFT transfers.
5. Use a U.S. Registered Agent
If you don’t have a physical address in the U.S., you can use a registered agent service. A registered agent is a third party responsible for receiving official correspondence on behalf of your company. Many of these services also provide you with a U.S. mailing address, which can satisfy your bank’s requirements for a physical presence.
Final Thoughts
Opening a U.S. business bank account as a non-resident can seem like a true mission, but it’s a manageable process with the right preparation. The key steps dsicussed in this article will help you to navigate account opening and get it done in several weeks time.