You did it, and you even paid that eye watering legal bill that went with your Delaware flip...
We will make this as easy for you as possible as by now you are probably over this process and eager to get back to doing what you do best, building something people want.
Here's our cheat sheet for international startups that have set up a US Inc. as a holding company:
The IRS (the tax authority in the US) issues an Employer ID Number (EIN) to businesses to identify them for tax purposes. You will need this number for your tax filings, employing staff and to open a bank account.
If you are not a US citizen you can apply by completing this form. Leave section 7b blank. The IRS is slow to process these so plan accordingly.
If you have a US citizen as a founder, you can apply online here instead and use their social security number. This route does generate an instant EIN and the whole process takes under 15 minutes.
🌟 Top tip - ask if your US lawyer can join your board for a day. They will almost certainly be a US citizen, and so can help with the instant online application.
Your existing accountant most likely can't help you with your US reporting. They won't be registered or experienced enough to do this unless you're working with a large firm, but this can be expensive. Your new US accountant likely can't deal with your international accounts, so you will need one accountant in each jurisdiction.
Make sure to find an accountant who comes recommended for working with startups like yours. The international group dimension, on top of you being a startup, brings nuance that traditional firms will miss. The best ones are proactive; ours sends us friendly reminders for key dates long before they're due. Sadly this is not common and we hear of startups being told about filing deadlines when they get fined. We are happy to share our recommendations if you contact us directly.
Now that you have a new holding company, you will need to file a tax return in Delaware, in addition to the one you were filing in your home country. This needs to be done between January - April and relates to the prior year. You will need an accountant here, it's not like other countries where you can easily self-file. If needed, you can apply to extend this until October, but you will need to speak to your accountant ASAP to get this arranged.
There are both federal and state taxes which you may be subject to, and the US has rules about profits generated overseas (something called GILTI). It's worth discussing this with your accountant before you become profitable so they can help you plan this.
You will also have to complete something called an FBAR form, which is disclosure of all your overseas bank accounts, even if they are not in the name of the holding company. It's a pretty simple form and you just need to tell your accountants the details of the accounts, and the highest balance during the year. Here is a link to the FBAR form.
This is a fee that is paid yearly, for the privilege of being registered in Delaware. It varies company to company but expect to pay between $1,000- $8,000 USD per year. There are 2 methods to calculate it, most find it cheaper to use the 'par value method'.
You will need to complete a short form and pay the tax owed before March 1st each year. It's not hard to complete the form, you can most likely do it yourself - all you need is the prior year accounts for your US company, which you should have handy as they need filing. It will calculate the tax payable for you, and tell you what and how to pay. Here is a link to the Franchise tax website.
Moving funds between a US entity and your main company is not as simple as transferring funds between accounts. You have to write up intercompany agreements — we can automate that for you.
The US is a very litigious environment. The potential to become embroiled in a legal battle here is much higher than in Europe or other parts of the world. One way to mitigate this is to ensure your insurance provider is aware of your new corporate structure. Explain exactly what you are doing with your new company and ensure you obtain the appropriate business insurance.
If you intend to do business in the US, such as employing staff and getting customers, then you will need to register to do business in any relevant states. This will include more paperwork and potentially taxes, so do it on an as-needed basis.
Keep a spreadsheet that lists your shareholders, what their ownership is, and if you have any options issued. As you grow you can think about using cap table software, so it's good to get into the habit of recording this now.
Transferring money between your US holding company and subsidiary, called an intercompany transfer, comes with compliance requirements that few founders are aware of (yep, you can't just wire funds from your US bank back home). There are broadly three ways of doing this: