When to choose US incorporation

Published 3 July 2025 · ~7 min read · By Middle Earth Consulting AB

Forming a US entity unlocks banking, payment rails, sales channels, and hiring options. It also adds costs and filings. Here is how to decide if now is the right moment.

When to choose US incorporation

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Signals that it is time

  • US revenue is real: recurring sales or signed contracts from US customers that are slowed by foreign invoicing or wire transfers.
  • Payment rails: you need Stripe, ACH, checks, or US card presentment for trust and conversion.
  • Sales platforms: marketplaces, app stores, or vendor systems that require a US EIN and bank account.
  • Hiring: you plan to engage US employees or contractors who prefer W-2 or 1099 within a US legal framework.
  • Liability separation: partners or investors request a US limited liability structure with clean cap table and stock plan.

Common timing mistakes

  • Too early: forming without a plan for revenue creates annual costs with no benefit.
  • Wrong state: picking a state only by internet hearsay rather than where you have nexus, customers, or operations.
  • No tax map: ignoring sales tax, franchise tax, and federal filings until it becomes urgent.
  • Banking last: forming the entity then discovering the bank onboarding requires extra documents and time you did not budget.

Entity choices in simple terms

LLC

  • Flexible ownership and profit distribution.
  • Simpler compliance for single member foreign owners.
  • Good for services, consulting, small e-commerce, and early stage.

C-Corp

  • Preferred for venture funding and stock options.
  • Clear cap table, Delaware law familiarity.
  • Slightly higher admin, but clean for investors.

Where to register

Two simple paths work for most international founders.

Delaware for scale

  • Predictable corporate law and investor friendly.
  • Often chosen when you plan to raise or create stock plans.
  • You may still need to register to do business in the state where you operate.

Operating state

  • Register where you have employees, office, or primary customers.
  • Reduces foreign qualification steps up front.
  • Good fit for service businesses with a clear local base.

Banking and payments checklist

  • EIN issued and saved securely.
  • Company formation docs and operating agreement or bylaws.
  • US mailing address for statements and cards.
  • Responsible officer KYC pack ready for the bank.
  • Payment processor setup with clear refund and chargeback policy pages.

Taxes and compliance at a glance

  • Federal: annual return for the entity type and information filings for foreign owners.
  • State: franchise or minimum taxes may apply even with low revenue.
  • Sales tax: if you sell goods or taxable services, track thresholds and register in nexus states.

Decision framework you can apply today

  1. List US revenue sources, platforms, and contracts that are blocked by foreign status.
  2. Estimate one year of costs, including formation, registered agent, state fees, accounting, and tax filings.
  3. Choose entity type based on funding plans and ownership structure.
  4. Pick state using a simple rule: Delaware for scale and investors, operating state for local services.
  5. Prepare banking documents and open a US account before launch campaigns.

Want a straightforward setup?

We help you decide timing, form the entity, obtain EIN, open banking, and connect payment rails. Clear steps, transparent fees, and support after formation.

Request a US incorporation plan