Ibrahim Gardner
If you're an international student looking to start an S-corporation in Delaware, there are a few key things you should know. Firstly, Delaware is an attractive state for business formation due to its Court of Chancery, flexible corporate structures, and privacy. You don't need to be a resident or even visit Delaware to form a company there, and there are no citizenship or residency requirements for company owners, directors, or officers. However, you will need to obtain an Employer Identification Number (EIN) or Federal Tax ID Number for tax purposes and to open a business bank account. Additionally, you must have a registered agent with a physical address in Delaware. While you can form an S-corporation in Delaware, it's important to note that the shareholders must be U.S. citizens or residents, and S-corporations cannot be owned by other entities.
| Characteristics | Values |
|---|---|
| State | Delaware |
| Business entity type | Corporation, LLC, LP, benefit company, or non-profit corporation |
| Residency requirements | No citizenship or residency requirements for company owners, directors, or officers |
| Registered agent | Required; may be an individual resident or business entity authorized to do business in Delaware |
| Name reservation | Optional; guarantees name is held for 120 days for a fee of $75 |
| Federal Tax Identification Number (FEIN or EIN) | Required if hiring US employees |
| Apostille | Required to set up a business bank account in the home country; issued by the Delaware Division of Corporations |
| "Foreign Qualification" form | Required for corporations doing business in Delaware but formed in another state or jurisdiction, along with a Certificate of Existence |
| Fee for "Foreign Qualification" form | $245 |
| Annual Registered Agent Fee | $50 per company, per year |
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What You'll Learn
Requirements for international students
International students looking to open an S corporation in Delaware should be aware of the following requirements:
Firstly, Delaware is an appealing option for non-residents wishing to conduct business in the US, as there are no citizenship or residency requirements for company owners, directors, or officers. This means that anyone, regardless of their place of residence, may form a C corporation in Delaware. However, it is important to note that this does not apply to residents of restricted countries, such as Cuba, Iran, North Korea, Syria, and Russia.
Secondly, as a non-resident, you will need to retain the services of a Delaware Registered Agent. This is a mandatory requirement for all Delaware companies to remain in good standing within the state. The registered agent must have a physical street address in Delaware, and your company's physical address will be the location of your office or home office in the country where you actually work. The registered agent may offer mail forwarding services and/or a virtual office, but their address cannot be used as your company's "place of business".
Thirdly, you should consider obtaining a Federal Tax Identification Number (FEIN or EIN). This is mandatory for any company conducting lawful business activities, opening a bank account, or hiring employees in the United States. An FEIN is used by the US Internal Revenue Department to identify a company for tax purposes. When filing taxes or withholding federal taxes from employee paychecks, the IRS will use this number to ensure proper tax payment.
Fourthly, if you plan to set up a business bank account in your home country, you will likely need an Apostille from the State of Delaware. An Apostille is a certified document recognizing that your company legally exists in Delaware. It is issued by the Delaware Division of Corporations and is recognized by countries that attended the 1961 Hague Convention and signed the Apostille Treaty. If your country is not a part of the Hague Convention, you will need to inquire with your local bank about the specific requirements.
Lastly, while not a requirement, it is recommended that you seek advice from an Attorney or Certified Public Accountant familiar with Delaware law to determine the best business entity type for your needs. Corporations, Public Benefit Corporations, Limited Liability Companies (LLC), Limited Partnerships (LP), Statutory Trusts, and General Partnerships (GP) are among the business entity types available in Delaware.
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Choosing a business entity type
There are several types of business entities to choose from, each offering distinct legal, financial, and operational structures. The most common types of business entities in Delaware include:
- Limited Liability Company (LLC)
- General Stock Corporation (or C-Corporation)
- S-Corporation
- Close Corporation
- Non-Profit Corporation
- Limited Partnerships (LP)
- Statutory Trusts
- General Partnerships (GP)
When deciding on a business entity type, it is recommended to seek advice from an Attorney or Certified Public Accountant familiar with Delaware law. They can guide you in choosing the most suitable structure based on your specific circumstances, considering factors such as liability protection, tax implications, ownership structure, and future growth plans.
Additionally, it is important to understand the requirements and procedures for forming a business entity in Delaware. The Delaware Division of Corporations provides a step-by-step process to assist you in establishing your business. This includes registering your business name, obtaining a Registered Agent, and submitting the necessary formation documents and fees.
By carefully considering your business needs and seeking professional advice, you can make an informed decision about choosing the right business entity type in Delaware, ensuring compliance with legal and regulatory requirements and setting your venture up for success.
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Getting a registered agent
To open an S corporation in Delaware, you will need to appoint a registered agent with a physical office address in the state. This is a requirement for all entities doing business in Delaware. The registered agent can be an individual resident or a business entity authorised to do business in the state.
The registered agent is responsible for accepting the service of process and providing information for billing and tax obligations. They must be generally present at their designated location during normal business hours.
If your business is physically located in Delaware, your business can act as its own registered agent.
There are many companies that offer registered agent services in Delaware, and you can find a list of them on the website of the Division of Corporations of the State of Delaware. These include:
- A Registered Agent, Inc.
- Northwest Registered Agent Service Inc.
- Platinum Filings LLC
- Aero Incorporate Inc.
- Advance Corporate Service, Inc.
- Agents and Corporations, Inc.
- Agents of Delaware, Inc.
- Universal Registered Agents, Inc.
- USA Corporate Services, Inc.
- VALIS Group Inc.
- Vanguard Corporate Services, Ltd.
- John R. Weaver, Jr., P.A.
- Raymond R. Williams, III.
- A Better Registered Agent, Inc.
- Professional Corporation Agents, Inc.
- Resident Agents Inc.
- Registered Agents, Ltd.
- Registered Agent Solutions, Inc.
- RL&F Service Corp.
- Real-Corp Services, Inc.
The cost of registered agent services varies, but it can be as low as $29 per year. Some companies offer additional services such as mail forwarding or virtual office packages for an extra fee.
It is important to note that if you are forming an S corporation in Delaware as a non-US citizen, you may need an Apostille from the State of Delaware to set up a business bank account in your home country. This is a certified document acknowledging that your company legally exists in Delaware and is recognised by countries that are part of the Hague Convention.
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Getting an EIN
As an international student looking to open an S corporation in Delaware, one of the key steps in the process is obtaining an Employer Identification Number (EIN). An EIN, also known as a Federal Tax Identification Number (FEIN), is a mandatory requirement for any company conducting business activities, hiring employees, or opening a bank account in the United States. This unique number is used by the US Internal Revenue Service (IRS) to identify your company for tax purposes. When paying federal taxes or withholding taxes from employee paychecks, the IRS will use your EIN to ensure accurate tax reporting and compliance.
To obtain an EIN for your S corporation in Delaware, you can follow these steps:
- Determine Eligibility: Confirm that your business meets the requirements to obtain an EIN. As an international student forming an S corporation in Delaware, you are eligible to apply for an EIN as long as you have a registered business entity and comply with other legal requirements.
- Gather Information: Collect the necessary information required for the EIN application. This typically includes the business name, address, and details of the responsible party or parties, such as the owner, partner, or trustee.
- Complete the Application: You can apply for an EIN directly on the IRS website by filling out Form SS-4, "Application for Employer Identification Number." The form will request detailed information about your business structure, activities, and responsible parties.
- Submit the Application: Submit the completed Form SS-4 to the IRS. You can apply online, by fax, or by mail. The IRS prefers online applications, as they are processed immediately, while fax and mail applications may take several weeks.
- Receive EIN: Once your application is approved, the IRS will assign a unique EIN to your S corporation. You will receive a confirmation notice that includes your EIN and important information about your tax obligations and filing requirements.
It is important to note that there may be a fee associated with obtaining an EIN as a non-resident without a US address or Social Security Number. This fee is typically $95, and you can seek assistance from entities such as Harvard Business Services, Inc., in obtaining your EIN. They can guide you through the process and ensure your application is completed accurately.
Remember, the process of obtaining an EIN is a crucial step in establishing your S corporation in Delaware as an international student. It enables your company to comply with tax requirements, hire employees, and conduct financial transactions in the United States.
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Opening a business bank account
If you're an international student and want to open an S corporation in Delaware, you'll need to be aware of the specific requirements and procedures. While the exact process may vary depending on your specific circumstances, here are some general guidelines on opening a business bank account for your S corporation:
Choosing a Bank:
Firstly, you'll need to choose a bank that aligns with your business needs. Consider factors such as the bank's fees, the availability of online and mobile banking platforms, and the quality of their customer service. Some banks to consider include large, international banks like Wells Fargo, HSBC, JP Morgan Chase, Citigroup, and Bank of America. These banks have branches in New York City and are experienced in working with international clients.
Understanding Requirements:
Different banks will have varying requirements for opening a business bank account. It's essential to contact your chosen bank beforehand to understand their specific policies and procedures. Some common requirements include proper photo identification (such as a driver's license or passport), proof of address, and an Employer Identification Number (EIN) or Tax Identification Number. If your business is incorporated in Delaware, you may also need a Certificate of Incorporation or Certificate of Formation stamped by the Delaware Secretary of State.
In-Person Visit:
Most U.S. banks require an "in-person" visit by at least one signer or authorised person. This means that travel to the U.S. may be necessary to finalise the account opening process. Ensure that you have all the required documents with you when visiting the bank to avoid multiple trips.
Fees and Charges:
Be mindful of potential bank fees associated with business banking, such as wire transfer fees, excessive transaction fees, or minimum balance requirements. Understand all potential charges before committing to a particular bank to avoid unexpected costs.
International Banking:
If you prefer not to bank in the U.S., you can explore opening an international business bank account. Contact reputable international banks near your location to understand their requirements, which may include Articles of Incorporation, By-laws, Operating Agreements, and certified or legalised documents.
Remember, the process of opening a business bank account for your S corporation in Delaware may vary based on your specific circumstances and the bank you choose. Always consult with legal and financial professionals familiar with Delaware law to ensure you comply with all relevant regulations.
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Frequently asked questions
No, you do not need to be a US citizen or resident to open an S Corporation in Delaware. However, residents of restricted countries such as Cuba, Iran, North Korea, Syria, and Russia are prohibited from doing so.
Delaware is a leading domicile for US and international businesses due to its flexible corporate structures, separate court for business law, and privacy. Additionally, most US investors will not invest in foreign legal entities, so forming a US entity may be necessary to attract investment.
You will need to obtain a Federal Tax Identification Number (FEIN or EIN) and appoint a Registered Agent in Delaware. The Registered Agent can be an individual resident or a business entity authorized to do business in the state.
You can appoint yourself or your business as the Registered Agent if you have a physical street address in Delaware. Alternatively, you can hire a Registered Agent service, such as Harvard Business Services, Inc., which offers a fixed annual fee of $50 per company.
First, choose your business entity type and consult an attorney or certified public accountant familiar with Delaware law. Then, reserve your entity name online through the Delaware Division of Corporations for a fee of $75. Finally, submit the required documentation and pay the necessary fees.
