Delaware Company Formations for Non-Residents
FORM A DELAWARE CORPORATIONFORM A DELAWARE LLCAs an aspiring business owner, you may hear stories about the benefits of forming a Delaware company. Delaware’s Court of Chancery, flexible corporate structures, and robust privacy policies are all great reasons to start a Delaware business. And, believe it or not, these benefits are not limited to Delaware residents. In fact, you do not have to live in, or even visit, the State of Delaware to form a Delaware company. Except for residents of restricted countries (such as Cuba, Iran, North Korea, Syria, and Russia), anyone can establish a Delaware corporation or LLC as a non-resident and conduct lawful business activities from anywhere in the world.
Who Can Form a Delaware Company?
Just about anyone can start a business in Delaware. There are no citizenship or residency requirements for company owners, directors, or officers. This makes Delaware an appealing option for non-residents who want to conduct business in the U.S. or hold U.S.-based assets. However, Delaware does require every business to maintain a registered agent with a physical address in the state.
Reasons to Form a Delaware Company
Delaware is the most popular U.S. state for company formation, thanks to its business-friendly laws, a well-established legal framework, and the Delaware Court of Chancery, a specialized court that handles corporate disputes. Remember that there is no requirement to be a U.S. citizen or resident to incorporate in Delaware, so people from around the world take advantage of the state’s benefits. Non-residents that form a business in Delaware will be able to enjoy a straightforward incorporation process and generally will not pay U.S. income taxes if operating outside Delaware. Additionally, Delaware does not require the disclosure of owners, directors, or officers in public records, providing a high level of privacy.
How to Form a Delaware LLC as a Non-resident
Here is a simple step-by-step guide that outlines the U.S. company formation process for non-residents with Harvard Business Services.
- Choose a name for your LLC
- Provide the Communications Contact Person and basic general information
- Provide the Full Name of a Member/Owner (can be a person or a company)
- Harvard will prepare and file the Certificate of Formation and send approved documents (generally turnaround time is 3-5 business days)
- Obtain an EIN (approximately 7 - 45 business days depending on the IRS)
How to Form a Delaware Corporation as a Non-resident
If you’re more interested in forming a Delaware corporation, here is the process for non-residents through Harvard Business Services. You’ll see that this process has a few differences from the above LLC process.
- Choose a name for your corporation
- Provide the Communications Contact Person and basic general information
- Provide the number of authorized shares (Delaware Franchise Tax is based upon the number of authorized shares so clients generally keep them low
- Provide the Full Name of a Director/Directors
- Harvard will prepare and file the Certificate of Incorporation and send approved documents (generally turnaround time is 3-5 business days).
- Obtain EIN (approximately 7-45 business days depending on the IRS).
- Create your internal corporate documents (bylaws, stock certificates, etc.)
- Open a Business Bank Account
What Is a Non-Resident Company?
A non-resident company is a business that is registered in a country other than the one where it generates its income and conducts its primary operations. In the U.S., this typically refers to a company formed by foreign individuals who do not live in or hold legal residency status in the United States. For example, if someone lives in Canada and forms an LLC or corporation in Delaware, that business is considered a non-resident company.
While the owners are non-residents, the company itself is considered a U.S. domestic entity since it was formed under U.S. law. Non-resident companies are fully legal and enjoy many of the same rights and protections as those owned by U.S. residents. However, while forming a non-resident company is relatively easy, foreign business owners will still need to obtain an EIN, comply with U.S. tax laws, and work with a registered agent.
Can I Form an LLC in Delaware Without Living There?
Yes. Delaware's corporate law structure does not impose restrictions on the ownership or management of a Delaware company by a non-resident of the United States. This means that starting a corporation or LLC for a non-U.S. resident doesn't require an address in the State of Delaware or even in the United States.
However, every Delaware company is required to maintain a Registered Agent with a physical address in the state. The Registered Agent serves as your company’s official point of contact for legal and state correspondence, including service of process and Franchise Tax notices. They must be available during normal business hours and are responsible for forwarding important documents to your designated contact address.
As long as you retain the services of a Delaware Registered Agent, you can form a Delaware corporation, LLC, LP, benefit company, or non-profit corporation without being a resident of Delaware or the United States.
Your Registered Agent may offer mail forwarding services and/or a virtual office; however, you will not be able to use the Registered Agent's address as your company's "place of business" address. Your company's physical address will be the location of your office (or home office) in the country where you actually work.
Can a Non-U.S. Resident Get an EIN (Employer Identification Number)?
Yes. Non-U.S. residents are eligible to obtain an EIN from the IRS, even if they do not live in the United States and do not have a U.S. Social Security Number. As part of the Delaware company formation process for non-residents of the U.S., new businesses will need an EIN from the IRS. An EIN is mandatory for any company conducting lawful business activities, opening a bank account, or hiring employees in the United States.
You also need an EIN in order to file and pay taxes to the U.S. Treasury. If you have already filed your Delaware corporation or LLC with the Delaware Division of Corporations, you can apply for an EIN on this website or contact us for assistance.
Even if you don’t live in the United States or have a U.S. Social Security Number (SSN), you are still eligible to apply for an EIN. However, if you do not have either of these, you will be required to provide a copy of the passport or government-issued ID for the person listed as the responsible party.
You can learn more about this process in our blog about obtaining Federal Tax ID Numbers for Non-U.S. Citizens.
Can a Non-U.S. Resident Be an Officer or Director of a Delaware Corporation?
Yes, the State of Delaware permits foreigners who are registering for a U.S. company to act as officers, directors of a Delaware Corporation or members of a Delaware LLC. Right now, there are almost no restrictions on the citizenship or residency of a corporation’s directors or officers. This means that individuals from any country can legally serve as the president, secretary, treasurer, or a member of the board of directors of a Delaware corporation. This perk enables full control and legal governance of a company by foreign individuals, without requiring them to relocate or become U.S. residents.
Furthermore, Delaware does not require officers or directors to be publicly listed in the formation documents filed with the state. There is also no age restriction for officers, directors, corporate shareholders, or members of Delaware Limited Liability Companies.
How to Open a U.S. Business Bank Account
A bank account for your Delaware business can be opened with any bank of your choosing. Each bank has different requirements for opening a business bank account. Unfortunately for our international clients, one of the most common and inflexible requirements for opening a business bank account in the United States is showing up in person to do so.
While some international business owners are able to travel to the U.S. to open an account, this can cause problems for others trying to register a U.S. company as a non-resident. Some business owners appoint a manager (LLC) or director (corporation) who already lives in the U.S. as an authorized person to open and manage the business bank account. Some business owners have had success by finding a branch of an American bank that is located near them, and asking that branch to facilitate opening an account. It is generally not permitted for a friend or family member who is not an owner or authorized officer to open a bank account on the company’s behalf, as banks require formal authority and identity verification.
If none of these options are available, subject to eligibility requirements, you may consider working with Mercury. Mercury is a digital-first business banking partner and a popular choice among many of our non-U.S. clients. Just keep in mind that they are not a traditional bank and may have limitations compared to standard brick-and-mortar institutions.
Once you've decided on a bank, it's generally a good idea to call ahead to determine the requirements for opening an account as a Delaware LLC or corporation, as these requirements can vary from bank to bank.
The following are examples of what banks may ask for when opening a business bank account for a corporation or LLC for non-U.S. residents:
- Certificate of Formation/Incorporation
- Federal Tax ID Number (EIN)
- Photo ID (such as a valid passport)
- Proof of address
- Banking resolution document
- LLC Operating Agreement
- Corporate bylaws
At Harvard Business Services, Inc., we can help with Delaware company registration for non-residents and provide an approved Certificate of Formation/Incorporation within three to five (3-5) business days or less via email.
We offer a variety of international business formation packages for you to choose from.
We can also help you obtain a Federal Tax ID Number (EIN).
Either an LLC Operating Agreement template or corporate bylaws can be included in all our formation packages.
While we cannot assist you in opening a U.S. business bank account, we are here to help in any other way we can. If you have any questions, please reach out to our helpful customer service representatives via phone (302-645-7400), email, or live chat.
Apostille Documents
A non-resident company uses Apostille documents to help verify the authenticity of legal papers from a foreign company. A Delaware company may, if you are doing business with any of the countries that participate in the Hague Conference, need to utilize documents that have been certified by the state of Delaware and affixed with an Apostille by the Delaware Secretary of State. Apostille documents are often required when you need to prove your company's legal existence to foreign banks or government agencies.
We can provide you with an Apostille for any of your company's documents that were issued by the Secretary of State in Delaware.
Keeping a Delaware Company Compliant
As the owner of a Delaware company, it is important that you understand the State of Delaware's annual corporate compliance requirements. Even as a Delaware corporation or LLC without U.S. residents, your company must still remain compliant. The two major aspects of compliance you will be required to maintain are:
- Delaware Franchise Tax - All Delaware entities must pay an annual franchise tax. LLCs and LPs pay a flat annual franchise tax, while corporations pay franchise taxes based on either the authorized shares method or the assumed par value capital method.
- File an Annual Report (Corporations Only) - Delaware corporations are required to file an Annual Report each year in addition to paying franchise tax. Delaware LLCs do not file an annual report with the state.
- Delaware Registered Agent Fee - Every Delaware company must maintain a registered agent with a physical address in Delaware at all times. The registered agent receives legal notices and official correspondence from the state. Registered agent services are billed annually and must remain active to keep the company compliant.
Mail Forwarding Service
Many international business owners wish to establish a U.S. presence or need a U.S. address. To support that demand, Harvard Business Services, Inc. offers both a reliable mail forwarding service and a virtual office service. By signing up for our mail forwarding service, you can have mail for your company addressed to our office, where we will forward it to the address of your choice. We can receive important government notices, banking correspondence, and vendor mail while helping maintain professional credibility with U.S. clients and partners.
While this service provides a U.S. address for mail, it is not a substitute for a registered agent.
Taxes & Reporting
Choosing between an LLC and a C corporation can have significant tax and reporting consequences for non-U.S. owners. Usually, the optimal structure depends on the owner’s business activity and long-term goals.
Non-U.S. residents cannot own an S corporation in the United States, so their Delaware companies will be either an LLC or a C corporation. A Delaware LLC with non-U.S. owners is usually treated as a pass-through entity for tax purposes. This means the LLC itself doesn’t pay federal income tax. Instead, the members report U.S.-sourced income on their own returns (if applicable). Corporations, on the other hand, are typically taxed on total earnings, including U.S. and non-U.S.-sourced earnings.
Business taxation, especially for non-U.S. residents, is complicated and comes with a number of variables. At Harvard Business Services, Inc., we are not tax professionals and urge you to consult a qualified tax professional before forming a company in the United States. You should also consult the IRS publications U.S. Tax Guide for Aliens and Tax Treaties.
What Is U.S. Source Income?
In general, U.S. source income is any income earned inside the United States. This includes wages and any other compensation for services performed or goods sold in the United States. Companies that do business in the United States are typically required to pay taxes on income earned in the U.S., even if they are based abroad. However, U.S.-incorporated companies that are based overseas and earn no income from the United States are not required to pay U.S. income taxes.
Below is a brief primer on what does and does not constitute U.S. source income, per the IRS. For example, if a Delaware company based in India does business solely with clients in India and England, the business's income is typically not considered U.S. source income and therefore is not subject to U.S. income taxes. If that same company does business with clients in the U.S. as well, the income earned from those U.S. transactions is typically considered U.S. source income.
This is intended to be a general guide, with exceptions. Please consult a tax professional or accountant for more details.
|
Type of Income
|
How Source Income Is Determined
|
| Salaries, wages, and other compensation | Where services are performed |
| Business income on personal services | Where services are performed |
| Business income on sale of inventory purchased | Where goods are sold |
| Business income on sale of inventory produced | Where produced |
| Interest | Residence of payer |
| Dividends | Whether a U.S. or foreign company (exceptions apply) |
| Rents | Where property is located |
| Royalties: Natural resources | Where property is located |
| Royalties: Patents, copyrights, etc. | Where property is used |
| Sale of real property | Where property is located |
| SOURCE: Internal Revenue Service | |
Is Delaware Right for your Non-Resident Business?
U.S. company formation for non-residents is quite popular in Delaware, but it’s not automatically the best choice for everyone. Here is a quick summary of some of the benefits of forming a Delaware company as a non-resident:
- No residency or citizenship requirements
- Delaware has a strong legal system with business-friendly laws
- Business formations have an emphasis on privacy
- Flexible tax status as an LLC or corporation
Plus, with the right Delaware Registered Agent at your side, the registration process is easy, and you can have your mail forwarded to your doorstep.
Form a Non-Resident Company
Ready to form your new Delaware company? Harvard Business Services, Inc. can help with Delaware company registration for both U.S. residents and non-residents. Here is how you can get started.
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