There is no doubt that the USA can be a magnate for an Indian businessman wanting to spread his wings across the sea. The country has the distinction of being the world’s largest economy and has a business-friendly ecosystem which makes it very easy to do business in America.
Due to its prominence in the business sphere and the presence of vast resources, American businesses can provide their customers with the latest in technology and the finest infrastructure out there in the global market. For American businesses, Indian businesses expanding overseas will help them diversify their business and geographical boundaries greatly with the potential to further penetrate large markets.
Furthermore, the global business landscape also has its competition, and the question of brand prestige comes into play. To gain partnerships and investors while also gaining trust from world clients, it helps to already have established a US presence. Many Indian business owners trying to break the American market believe that generating revenue noise is secondary to the vision of organic and sustainable growth.
Benefits of Entering Indian Business in the USA
✅ A Vast and Diverse Consumer Base:
India with a staggering population of over 330 million can be used effectively to target several consumers with varying needs and purchasing. For Indian companies, this discrimination comes with opportunities to target niche markets and expand the customer base.
✅ A Resilient and Reliable Economy:
The USA is always among the top economies in the world with the highest stability and predictable market conditions. Companies established in the US can take advantage of its robust currency value, sound finances as well as dependable systems of law and order.
✅ American Market for Indian Entrepreneurs:
The US is the firm center for venture capital, angel capital, and private equity. Indian firms can seek funds from these sources and use them to take their businesses to the next level, create more products, or increase their operational scope.
✅ Possibility of Setting up Business and Collaboration:
All the leading tech companies, research centers, and schools are based in the USA. This enables Indian firms to gain the most up-to-date technologies as well as partner with the industry’s very best once they manage to set a base out there.
✅ Increasing Brand Value:
It’s often perceived that operating in the US tends to give one an upper edge in that one becomes credible and reputable. This can, however, help Indian business people tap into international markets and grow their presence back in India as well.
Opportunities for Indian Entrepreneurs
Indian business people have always been very good in whichever field they have been in, even outside India. The US offers a golden chance for Indians to do well in diverse fields, especially in areas like:
- Information Technology and Services: With Indian skills in IT, penetrating the US market plugs them with global companies large and small.
- Pharmaceuticals and Healthcare: Indian pharmaceutical companies are in an even better place to tap into the increasing demand for accessible effective drugs in the US market.
- Textiles and Apparel: Indian textiles have received a warm reception in the U.S. thanks to their quality and diversity. Their credibility is further improved by sustainability and ethical production.
- E-commerce and Retail: There’s an untapped potential for Indian businesses in the expanding e-commerce market in the US.
- Renewable Energy: The wind and solar energy companies from India can take advantage of the US clean energy targets.
Moreover, the US-India Business Council and chambers of commerce including Indian-Americans have been active in fostering networking and providing assistance which has made it smoother for Indian entrepreneur’s establishment in the US.
Understanding the Legal Requirements for Expansion
Setting one’s business up in the US calls for the understanding of several legal and regulatory structures. Inside the US legal framework, the illegal conduct may lead to delays, fines, or lawsuits. Preparation is therefore important.
1. US Business Laws
US laws have been established at federal, state, and local levels. Federal actions and laws concern general issues that impact laws which include business taxation and laws concerning copyright, state laws and issues that determine how a business has to be registered, and other operational issues.
2. Immigration and Employment Policies
Businesses that want to transfer employees to other places or outsource labor, should know policies regarding immigration. The types of visas include the following:
- L-1 Visa: For intracompany transferees.
- H-1B Visa: For highly skilled workers.
- E-2 Visa: For foreign investors from countries with which the US has a treaty, (currently, India is not on that list).
3. Trade restrictions
Trade restrictions relating to importation and exportation should be complied with by businesses as trade regulations. Territorial areas of trade restrictions include tariffs, licensing mechanisms, and product standards compliance.
4. Industrial Property Rights
To protect your inventions, trademarks, patents, and copyrights need to be registered in the US. It means that your business assets will not suffer infringement.
Choosing the Right Business Structure in the USA
It is said that when looking to expand to the US, the selection of the right structure is of utmost importance. Taxation, Liability, and Operational Flexibility are some of the repercussions associated with each structure.
1. Limited Liability Company (LLC)
This is a flexible entity that has limited liability features. Since its profits attract taxation once (pass-through taxation), it is considered by small to medium-sized businesses.
2. Corporation (C-Corp or S-Corp)
This is suitable for businesses that are looking to grow and raise cash or issue shares to the public.
- C-Corp: While folks do get taxed twice; once as a corporation and once on personal incomes, there is a preference by investors because of the C-corporation structure.
- S-Corp: While offering pass-through taxation, it has some restrictions.
3. Branch Office
As a foreign company, a branch office enables your Indian business to run in the US without having to form a separate entity. However, although it is less troublesome, it burdens the parent company with every lawsuit or liability.
Key Factors to Consider:
- The composition of ownership.
- The type of tax burdens and benefits that the synergies allow.
- The growth path and objectives.
Step-by-Step Guide to Registering Your Business in the USA
To start, it is worth noting that when entering the United States of America, locating and setting up a legal business entity that meets all compliance requirements is not simply a walk in the park. Below is the list of activities that aim to ease the registration of your business:
1. Obtaining a New Business Name
The process begins by first choosing a business name that will be appropriate to your brand and also available in the state of your intended operations.
Do a Name Availability Search: It is an obligation that every business name is different within that state. You may conduct such a search through the appropriate Secretary of State’s office or a webpage containing a database of businesses to check.
Trademark Your Business Name: If you would like to start doing business nationwide, you should probably register your business name with the United States Patent and Trademark Office (USPTO). That way, no one else can use that name and it will be your intellectual property.
Reserve Your Name (if necessary): In certain states, people can restrict a business name for some time before registration which helps one in taking care of a few more business setup procedures in such states.
2. Registering with the Secretary of State
After confirming Name availability the next step is ensuring that the business is registered with the state that you intend to conduct your business. Usually, every state regulates its requirements and procedures for filing business formation documents including:
For an LLC: You should file the Articles of Organization and submit them. This document provides the business name, address of the business, and employees’ or managers’ names and their signatures.
For a corporation: File the Articles of Incorporation divide a corporation’s structure including the number of shares the corporation has authority to issue, the purpose of the shares, and the director names.
Pay Filing Fees: All of the states charge a filing fee and this is dependent on the state in question. You can expect the range of fees to vary from $50 up to hundreds of dollars.
3. Getting an EIN (Employer Identification Number)
An EIN (Employer Identification Number) is a number that represents the business as a whole and primarily acts as an identifier to the business much like a Social Security Number does to a person. This number is needed for federal tax reporting, employment creation, and opening a US business bank account.
How to Apply:
- Often an allegation can be made verbatim though through various other people, therefore most efficient option available is to apply for EIN through the IRS online and apply through their website.
- Alternatively, fill out Form SS-4 and send it to the IRS using mail or fax.
Who Needs an EIN: Almost every agency is how close to operating there or outside is a corporation agency for the tax obligations both have, an EIN is a must.
Why It’s Important: Payroll management activities, tax obligations, business with vendors, and several other transactions of a legal or financial nature become easier with the use of EIN.
4. Preparing the Operating Agreement or the Bylaws
Your business has an internal structure and to be able to run smoothly, its components need to be systematically defined and these governing documents need to be created:
For the LLC:
The Operating Agreement governs the member’s duties, the arrangement of ownership, the decision-making process, and the settlement of disputes among members. I
For a Corporation:
The Corporate Bylaws include the management of the corporation, rights and privileges of shareholders, election of directors, procedures for meetings, etc.
Importance of Formal Documents:
- Enhances acceptability to bankers, partners, and investors.
- Acts as a manager’s tool to help secure peace amongst the stakeholders.
5. Establishing a Physical or Virtual Office
To enhance your base in the US markets, you will require a business address for legal communication and conducting business activities.
Physical Office:
If your activities necessitate that you sell in a brick-and-mortar, or need a warehouse or office, then lease a business space. The place needs to be zoning-compliant.
Virtual Office:
Where the business activity does not warrant the need for a physical location, the enterprise addresses such request by providing an address, where mail and legal notifications can be forwarded. Companies such as Regus and WeWork provide such services.
Requirement for Registered Agent:
You will be required to have a registered agent who maintains a physical location within the state of registration for most of the states. Such an agent accepts legal and tax documents on behalf of and in the name of the business.
6. Registering for State-Specific Requirements
State Tax Registration: Various types of state tax registrations will be required for various business activities. These include sales, payroll, and franchise taxes.
Licenses and Permits: The conduct of some industry’s activities is dependent upon the state’s license/permit. For instance, restaurants need health permits and doctors require some licenses to practice medicine.
Tax Considerations for Indian-Owned US Businesses
Taxes may be more complicated processes with foreign-owned businesses. Foreign-owned businesses can, though, reduce their tax liabilities through a careful process of planning.
✅ Federal, State, and Local Taxes:
There are federal taxes that a business entity has to pay in the form of income taxes, and these tax obligations may include state and local taxes if applicable to the nature of operations conducted.
✅ Double taxation treaties:
With regards to India and the US, the double taxation avoidance agreement provides the American and Indian general public and businesses with benefits of tax relief through which a person/entity will not be taxed twice on the same income in both nations. This is done through tax credits.
✅ Withholding Tax:
Payments to foreign entities may attract withholding taxes but these can be reduced or eliminated by the provisions of a treaty.
Obtaining the Necessary Licenses and Permits
Any business should be authorized with licenses as required by the industry or the location where the business resides.
✅ Industry-Specific Permits:
- A business dealing with foods and beverages must possess health and safety permits.
- A construction company needs a building permit issued by the local zoning authority.
- Businesses dealing with e-commerce may be required to acquire sales tax permits.
✅ State and Federal Licensing:
In some instances, due to your business activities, federal agencies like FDA, FAA, or EPA may have other requirements.
How to Open an American Bank Account for a Business
Opening a bank account in America makes business transactions easier as well as instilling confidence in the customers about the business.
✅ Choosing the Right Bank:
- Some banks specialize in non-resident business owners like Mercury and Brex or some major US Banks such as Chase or Wells Fargo.
✅ Required Documents:
- Documents of the business registration.
- Obtaining EIN from the IRS.
- A valid passport and proof of address.
- Operating Agreement or Bylaws (if applicable for Corporations or LLCs)
✅ Additional Tips:
- Due to a multi-currency account, instant transfers between India and the US may become more efficient.
Conclusion: Preparing for Mid to Long-Term Growth in the US
Taking your Indian business into the US market is a long-term strategy that has to be well thought about. The success of the business in the new market is dependent on the knowledge of the local markets, the business structure selected, and adherence to all tax and licensing regulations.
By leveraging solid operational processes, using technology, and creating effective relationships, you can grow successfully. Indian companies have a strategic advantage in the American market by prioritizing long-term flexibility and regulatory consistency, hence allowing for continued growth on a global scale.
Book a free consultation today with Easyfiling to expand your Indian Business in the USA legally within a few business days.
Nabin Adhikari
