subject: How To Form A U.s. Company And U.s. Merchant Account [print this page] If your business is based outside the United States and you want to take advantage of the largest online consumer market in the world, it makes a lot of sense to form a U.S. company with a U.S. merchant account.
It is estimated that U.S. consumers will spend an enormous $153.8 BILLION online in 2010. If you are based in another country, like Australia, New Zealand, the UK...and you sell online, the key is to put the U.S. consumers in a position to trust you!
One of the best ways to develop trust in the U.S. market is to be a U.S. company. Now, when a U.S. online consumer is surfing the internet and comes across your product or service, if you are only based in your country, that means NO Recourse to the U.S. consumer, which means NO sale to you! Why does this happen? A U.S. consumer is thinking, if I have an issue with this company's product or service, how do I have recourse when they are located in another country? How do I go after you if I have an issue? Who do I file a complaint against?
With all that doubt, it is much easier for the U.S. consumer to simply hit the back arrow and go to the next web page that has a U.S. product or service that will solve their problem. You lose the sale; and you would have more than likely never known about it!
Imagine, if you form a U.S. company along with your company in your home country. Now, your business is multi-national and you are operating in two countries worldwide! The marketing value can be huge when promoting your company. Plus U.S. companies will be much more comfortable with any legal contracts or agreements with another U.S.-based company.
Now that this all makes sense, the key is the steps to properly form a U.S. company. The key is that there are many steps from forming the best entity (a corporation or Limited Liability Company), knowing the different tax issues, establishing a proper U.S. office to help with both the U.S. bank and merchant account. Yes, I said a U.S. merchant account. Almost impossible if you are a U.S. company with no recourse back to you. Meaning most U.S. merchant account providers will not work with you if there is not a U.S. partner.
NCP does have a solution for our clients (in most cases). When you work with NCP you will receive our support tools, with our CPA for U.S. taxes, and how to be compliant with the IRS (the Internal Revenue Service).
Benefits for forming a Corporation or LLC in Nevada for
U.S. Business:
* Worldwide presence (office in your home country and now an office in the United States).
* Gain more United States business and clients because of the comfort level of consumers doing business directly with companies in the U.S.
* Potential for more internet revenue from U.S. customers because of the U.S. presence. Check your internet traffic in the U.S. compared to your home country and compare sales percentages to see if you have an opportunity to gain more market share in the U.S.
* Here is an example of how Tom Hua and Brett McFall, Founders of the World Internet Summit, use this strategy to drive more people to powerful events. Go to www.WorldInternetSummit.com to see at the bottom of their site how to position two locations in two countries. You can do the same!
COSTLY MISTAKES TO AVOID WHEN FORMING A U.S. COMPANY
1. Blowing Your One Chance at Setting up a U.S. Merchant Account! Most banks or merchant account providers will NOT open up a U.S. Merchant Account for a U.S. company that is 100% foreign owned. Why? No recourse. Some banks may set it up but they require a large hold back of your sales to keep as a safety net. If you attempt to set up your merchant account and fail, it will show up as a bad mark in the merchant account data base. When you go to get it done right, you may have blown your only chance because the next merchant account company will know you already failed to set up a merchant account.
2. Inconsistency in Your U.S. Company Set Up! This happens when someone will set up a corporation in one state, a bank account in another state and a mail forwarding program only with a virtual U.S. phone number. You may get your bank account set up but this will back fire when it comes to developing trust in the U.S. market. Only having a U.S. P.O. Box as your U.S. address sends a strong message to the U.S. consumer, that you are a flake or you are attempting to hide something. Trust is the name of the game, don't get cheap to save a few dollars and lose out on sales and joint ventures because of it!
3. Costly Tax Mistakes with the U.S. Internal Revenue Service (IRS). There are many pitfalls, and hidden land mines that can cause you a lot of damage with your U.S. company if you do not have all the fact up front. You must know which entity is best and the U.S. tax ramifications if the entity is taxed as a C corporation vs an LLC. Both have very different U.S. tax structures. You must have an ITIN number, and an EIN number. You must file the proper tax returns the following year. Setting up your company in the wrong state may cause you to pay an extra 5-8% of unnecessary state taxes. An LLC can be taxed in different methods; one will result in a flat 30% withholding tax on all profits before they flow back to you in your home country. If you are planning to expense out profits to your home country, you must be familiar with IRS form 5472 with the IRS! Having the IRS auditing your U.S. company can be a fast way to go out of business with penalties and interest!
