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United States of America Company Formation Frequently asked questions (FAQs)

California (United States of America)

1. What is a foreign corporation in California?

A foreign corporation in California is simply a corporation that was established outside of California but has registered with the California Secretary of State to do business in California. To register a foreign corporation in California, you’ll need to appoint a California registered agent and file the correct form.

  • Most foreign corporations in California (including nonprofits) will file the Statement and Designation by Foreign Corporation (Form S&DC – S/N).
  • Foreign professional corporations that practice law or accountancy will need to file Form S&DC-PC.
  • Foreign corporations in California that provide insurance services should use Form S&DC-INS.
2. Do foreign corporations in California need a registered agent?

Yes. Any foreign business in California is required to appoint and maintain a registered agent. The registered agent must have a physical street address in California, keep regular business hours, and agree to accept legal mail on behalf of your corporation.

Registered Agents have a significant role in shaping the company's business in California, they will consult you in tax planning and legal matters, this may relate to supporting, maintaining and advising your company from time to time and dealing with matters during the lifetime of business. A foreign corporation in California must choose the best agent to serve and contribute to the growth of business.

3. What are the benefits of registering a business in California?

Registering a business in California is the first step of structuring your business towards success. Successful businesses are built through careful planning. A company registered in California would be beneficial in many ways, especially for small businesses in California:

  • Protect business against lawsuits.
  • Make your business become more credible to customers.
  • Expand business towards the biggest free-trade center of the world.
  • A California corporation provides anonymity to the owner.
  • Attractive tax regime in the state.
4. How to start a small business in California in 5 steps:

Step 1

Create a business plan.Start by doing market research and write a business plan including: marketing, finance, product or service then choose the most suitable company structure.

Step 2

Choose a location. When starting a small business in California, picking the right location is very important because each city/county has different laws and regulations.

Step 3

Get an Employer Identification Number (EIN). The company cannot open a bank account or file for tax without an EIN. One IBC service covers both EIN and also Individual Taxpayer Identification Number (ITIN).

Step 4

Apply for licenses. Company needs proper licenses to operate and many banks will ask for this during the application process. Consult One IBC licensing service for a full guidance on which type and how to apply.

Step 5

Open a bank account. OneIBC has a list of available worldwide banking partners ready to help any customer who wants to start a company in California.

5. How to incorporate a company in California?

Step1

Make a business plan. To start a company in California, it is not required but a proper plan will be of help later on. Banks and Investors will also want to read this plan when assessing the company.

Step 2

File Article of Corporation. This is the legal paper to register for a company in California. It includes basic information of the business and its board of directors and should be submitted to the Secretary of State.

Step 3

Submit Statement of Information. This has to be done within 90 days of the Article of Corporation.

Step 4

Apply for an Employer Identification Number (EIN). One IBC service assists with EIN and also helps with Individual Taxpayer Identification Number (ITIN).

Step 5

Apply for Licenses and Permits. Consult with One IBC to know which one is needed and how to apply correctly.

Step 6

Open a Bank Account. The business plan, incorporation documents and other papers that the bank wants have to be presented. Some banks also ask for a face to face interview during the application process.

Step 7

Fulfilling non-urgent requirements. After starting a business in California, the company should draft a bylaw, hold a company meeting, get a lawyer, etc.

6. How to register a name for your foreign business in California?

Step 1

Name availability check. When determining name availability, names are checked only against names of like entities registered with the California Secretary of State. A name can be reserved for 60 days.

Step 2

Name registration for foreign company. If a name is available for registration, businesses can register the corporate name with the Secretary of State by filing form Foreign Name Registration to protect it for further use. The registration is effective until the close of the calendar year in which the application for registration is filed.

Step 3

Renew the name for your foreign business in California. A corporation may renew its name registration by filing a new form between October 1 and December 31 of each year. The renewal, when filed, extends the registration for the following calendar year.

Step 4

Obtain a certificate by an authorized public official of the state or place of incorporation. To the effect that the corporation is an existing corporation in good standing in that state or place, must be attached to the Registration of Corporate Name by Foreign Corporation form by the time of filing with the California Secretary of State.

7. How much does it cost to start a corporation in California?

The numbers below are for reference and only at state level

  • Company name reservation: Minimum of US$10 and US$10 special handling fee.
  • Incorporation filing: Company Detailed Information report costs US$25 plus $75 service fee. Then there is the Incorporation Filing with US$100 fee and US$15 for handling.
  • Appoint a registered agent: doing business in California requires a registered agent to handle legal matters. As an authorized agent, One IBC can act as an agent for the customers.
  • Business License: The average for a small business is US$50-US$100. However, extra fees may occur based on your location and industry.
  • Ongoing Fee: Annual Report Filing Fee is US$25.
  • Annual tax: There is a minimum of US$800 no matter what for corporation and payroll taxes at US$100, which is compulsory even if the company is not hiring any employee.
8. How much does an LLC costs in California?

The numbers below are for reference and only at state level

  • Reserving Business Name: Minimum of US$10 and US$10 special handling fee.
  • Incorporation Filing: Company Detailed Information report’s fee is US$25 plus US$75 service fee. Then there is the Incorporation Filing with US$100 fee with US$15 handling fee.
  • Business License: The average for a business is US$50-US$100 but extra fees may occur based on location and industry.
  • LLC Fee: US$85 is the initial cost of starting a business. In California, the Statement of Information (US$20) is required to be submitted within 90 days of formation.
  • Ongoing LLC Fee: The annual US$800 fee is due within 3.5 months of forming and then every April 15th thereafter. This is the cost of doing business in California uniquely for LLC.
  • Other Ongoing Fee: Annual Report Filing Fee is US$25 and Annual Tax Fee is at US$800 minimum.

Texas (United States of America)

1. What is a good business to start in Texas?

Finance: Companies providing services such as bookkeeping, accounting, consulting, fundraising can be an ideal starting point. With Texas’s enormous economic scale, second only to California, there are several opportunities for financial services to thrive here. Specialized and affordable financial services are always in demand because small and medium startups cannot spare too much money hiring their own accountant.

Commerce: A shared border with Mexico and the NAFTA agreement significantly help booster trade. Mexico alone accounts for approximately two thirds of Texas’s exports. Commerce is a good business to start in Texas. A company acting as a commerce hub for products from all the other 49 states to gather there then ship to another country and vice versa, for products from South American countries to cross the border and be distributed all over the US is a very solid business.

2. How do I create an LLC in Texas?

Step 1:

Name the LLC. The name has to comply with the state’s regulations and has to not be taken.

Step 2:

Contact a Texas registered agent. One IBC is authorized to be a registered agent with a local office specializing in starting business in Texas by accepting any legal document and providing proper guidance.

Step 3:

File the documents. Send Form 205 - Certificate of Formation for a Limited Liability Company with a filing fee of US$ 300 to Texas Secretary of State. One IBC will provide the application along with detailed guidance on how to fill it.

Step 4:

Create an Operating Agreement. It is a legal document detailing the ownership of the LLC as well as how business will be conducted. To create an LLC in Texas, this is not compulsory but is strongly recommended.

Step 5:

Get an EIN or ITIN. One IBC’s service covers both of these tax ID numbers.

Step 6:

Open a bank account. A local bank account can greatly help the business but the application process is very difficult. With several partner banks, One IBC can help guide customers through this process.

3. How much does it cost to form an LLC in Texas?

A cost of US$ 300 (US$ 308 for online application) for filing fee is incurred when submitting the Certificate of Formation for a Limited Liability Company (Form 205) to the Texas Secretary of State. There is also a US$ 30 for a certified copy of Certificate of Formation and a US$ 5 for a Certificate of Status. Both of these are highly recommended after the Texas corporation formation.

Company name reservation in Texas costs US$ 40 per application. Then there are some service charges for registered agent services. As an authorized agent in Texas. One IBC can also provide the customers with such service with affordable prices.

One IBC offers creating an LLC in Texas with a service of only $ 599.

4. How long does it take to get an LLC in texas?

In Texas an LLC usually takes as long as 2-3 days for an online application and 7-10 days for postal applications. One IBC can submit the application to the Texas Secretary of State on the very same day the customers send in the required documents. It usually takes a day or two for all the papers to be checked by the government office. If the customers have already checked and reserved the company name beforehand, there will be no more waiting. The freshly stamped Certificate of Formation is available. This means the company is official. With One IBC’s service, starting business in Texas is very convenient and is only within just 2 days.

5. Texas corporate filing requirements

Texas corporate filing requirements are not complicated: some forms are one-time-only while others are required regularly. During Texas corporation formation, the Certificate of Formation for LLC or Establishment Certificate for corporation must be submitted to the Texas Secretary of State (SOS).

Annual forms consist of:

  • Annual Report
  • State Business Tax: In Texas, even LLC has to pay franchise tax. This is very complicated and it is advised to consult with One IBC specialist to understand and pay this tax properly.
  • State Employer Tax: If the company hires someone, employer tax has to be paid and state unemployment insurance (UI) tax.
  • Sales and Use Tax: If the company is doing business in Texas, it has to pay sales tax.
  • Registration in Other States: If the company is doing business in other states, it needs to register and file corresponding papers. Check One IBC 50 states guide for more details.
6. Does an LLC expire in Texas?

During formation, the owner(s) of the LLC can designate its lifetime in the Article of Incorporation. After said date, if the company is planning to continue its business activity due to any reason, a new date has to be set and notified with the Texas government. If no date is stated, the LLC does not expire but continues on. Additionally, Texas does not require an annual report so the expiry date can be set at the owner(s)’ leisure.

In the case that the owner(s) wants to end the LLC not by a specific date but by a specific event, occurrences that shall make an LLC expire in Texas such as bankruptcy or a member's death can also be agreed upon. Therefore, One IBC greatly recommends an LLC because it is very flexible for customers starting a small business in Texas.

7. Is an LLC the same as a business license?

The answer is no, it is not. An LLC provides the owner(s) with a legal business entity while a license allows the company to conduct business in specific industry or with specific product and service. Therefore, an LLC is not the same as a business license. The LLC has to be set up first then the owner(s) can apply for the required licences. If the customers need any help with business licenses, One IBC is happy to resolve any inquiry and help with the application process.

8. What are accounting services in Texas?

Accounting services in Texas will produce financial records, track revenues and expenses, and provide consulting on overall financial health. This will help the company plan ahead and make financially sound decisions.

Many accounting services in Texas also help with tax obligations. They can ensure any financial reporting practice is following IRS regulations, determine tax liability, and adhere to the filing requirements and deadlines. These include federal, state and local tax returns.

In addition, there are specialized areas depending on the customers’ needs such as:

  • Auditing (very important if the company is looking for a bank loan)
  • Business advisory (for financial planning, insurance, mergers or litigation)
  • Forensic accounting (for reviewing financial statements, computer systems and other accounting information to uncover embezzlement, tampering and other financial wrongdoing)

Obviously these will cost extra fees but overall they are much cheaper than hiring a full time specialist to handle these tasks.

9. What are bookkeeping services in Texas?

As the name suggests, bookkeeping services keep the accounting book in check. Their main task is to perform daily basic accounting activities. These are calculating, entering data and organizing payroll, accounts receivable, accounts payable and bank reconciliations in the key financial reports such as Income Statement, Balance Sheet, and Account Ledger.

The bookkeeper can also assist in implementing and operating the company’s accounting system. Or provide the company with said accounting system if there is not one available. This helps the owner(s) to better monitor expenses and revenues, identify trends and track budget items.

Without bookkeeping services in Texas, companies have to hire a full time bookkeeper to maintain and evaluate financial transaction records such as sales, purchase, cash journals, ledgers, preparing budget or income expenditure reports, profit and loss statements and trial balances. Not to mention paying for the licence of an official computerized accounting system.

10. Are accounting services required after Texas corporation formation?

Although the Texas Secretary of State does not require companies (both LLC and corporation) to file any annual report, the government does ask for a public information report, a No Tax Due report and a franchise tax statement. In addition, many businesses also require a periodic audit of their finances. This might be a requirement from the investors or was written into the bylaws of incorporation. One IBC also strongly recommends using accounting services in Texas to gain many benefits.

By outsourcing the financial tasks to accounting services in Texas, business owner(s) can save time and money, avoid any risk with the IRS, keep track of the financial health of the company and always be ready when the tax season comes.

11. How to get an ITIN number in Texas?

To get a ITIN number in Texas, there are three steps to follow:

  1. Complete Form W-7 (IRS Application for Individual Taxpayer Identification Number)
  2. Prepare the documentation substantiating foreign/alien status and true identity. There are 13 accepted documents (Passport works best)
  3. Submit the application to the designated address written in Form W-7
12. How to get itin number for nonresidents?

There are only 3 types of nonresident who can get an ITIN:

  • Nonresident alien who is required to file a U.S. tax return
  • Nonresident alien claiming a tax treaty benefit
  • Nonresident alien student, professor or researcher filing a U.S. tax return or claiming an exception

Also, ITIN number is available for nonresidents who do not have an SSN or are not eligible to get one and are required to furnish a federal tax identification number or file a federal tax return.

13. How to get an EIN number in Texas?

To get a EIN number in Texas, simply follow these 3 steps:

  1. Complete Form SS-4 (Application for Employer Identification Number)
  2. Prepare the documentation substantiating foreign/alien status and true identity. There are 13 accepted documents (Passport works best).
  3. Mail it to the IRS, EIN (International) Operation
14. How long does it take to get an EIN in Texas?

One IBC can get an EIN for customers in just 2 weeks. During these two weeks, the IRS has to process the application and permanently register the new number into their system. If there is no issue, One IBC will notify the company owner(s) after this period and the company can now conduct these two tasks:

  • Filing an electronic return or an electronic payment
  • Passing an IRS Tax Identification Number matching program

How long it takes to get the EIN card in Texas depends on where the customer is staying. Upon request, One IBC can send it through express postal service and this will usually take a few days to deliver the card.

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