International Founders Guide

The two most common choices for international founders are the Delaware C-corporation and the Wyoming LLC. Your choice depends on your business model, fundraising plans, and tax situation.

• You plan to raise venture capital. US VCs and accelerators (YC, Techstars, 500 Startups) require Delaware C-corps. They will not invest in LLCs or foreign entities.
• You want to issue stock options or equity grants. C-corps can issue Incentive Stock Options (ISOs), Restricted Stock Units (RSUs), and other equity compensation that employees and advisors expect.
• You’re building for an acquisition or IPO. US acquirers and public markets strongly prefer Delaware C-corps due to well-established case law, predictable governance, and clean cap table structures.
• You have US co-founders or employees. C-corps are the default for US-based teams; equity splits, vesting schedules, and 409A valuations are all designed around C-corp structures.

• You’re bootstrapping. No VC funding plans; you’re building profitably or funding with revenue, personal savings, or non-equity loans.
• You want lower costs and simpler compliance. Wyoming has no state income tax, no franchise tax, and minimal annual fees (~$60-$100).
• You value privacy. Wyoming does not publicly disclose LLC members or managers. Your name won’t appear in public filings (unlike Delaware corporate officers/directors).
• You need tax flexibility. Single-member LLCs are disregarded entities for US tax purposes (no separate tax return if no US-source income). Multi-member LLCs can elect partnership or S-corp taxation (if eligible).
• You’re forming a holding company. Wyoming LLCs are popular for holding real estate, IP, or other assets due to strong asset protection and favorable charging order provisions.

Nevada markets itself as privacy-friendly with no state income tax, but it has higher formation costs and annual fees than Wyoming. For non-US founders who won’t have Nevada-source income anyway, Nevada offers no meaningful advantage over Wyoming.

If you have a green card or spend significant time in a US state, your accountant might recommend forming in your resident state to avoid foreign qualification fees. But for fully remote international founders, home state formation is irrelevant.

Delaware LLCs exist but offer no compelling advantage over Wyoming for international founders. Delaware charges franchise tax on LLCs ($300/year minimum), while Wyoming charges ~$60. Delaware’s LLC case law is strong, but Wyoming’s is equally robust and cheaper.

US tax law for non-resident aliens (NRAs) and foreign corporations is complex, but the core question is simple: Do you have US-source income? If your US entity earns revenue from US customers, performs services in the US, or has a physical presence here, you likely have US tax obligations. If you’re operating entirely outside the US with no US-source income, your federal tax burden may be zero—but you still have filing obligations.

Effectively Connected Income is income from a trade or business conducted in the US. If your US entity has a physical office, employees, or operations in the US, that income is ECI and subject to US corporate income tax at graduated rates (up to 21% federal).

FDAP income includes dividends, interest, royalties, and rents from US sources—but not capital gains or business profits. FDAP income is subject to 30% withholding at the source unless reduced by a tax treaty.

Example: Your Delaware C-corp pays you a dividend. The US will withhold 30% unless your home country has a tax treaty with the US that reduces the withholding rate (often to 15% or 5%).

The US has income tax treaties with over 60 countries. These treaties typically:

• Reduce or eliminate withholding on dividends, interest, and royalties paid to residents of treaty countries.
• Define “permanent establishment” thresholds—if you don’t have a PE in the US, you may not owe US tax on business profits even if you have US customers.
• Provide foreign tax credits so you’re not double-taxed (once in the US, once in your home country).

1. Corporate-level tax: Your C-corp files Form 1120 and pays 21% federal tax on net income (after deductions).
2. Dividend withholding: When the corp distributes dividends to you (the foreign shareholder), the US withholds 30% (or lower treaty rate) on the dividend.
3. Result: Double taxation (21% corporate + 30% withholding on dividends = effective ~45% total), unless you defer dividends, retain earnings in the corp, or qualify for treaty relief.

If your Delaware C-corp earns revenue entirely from non-US customers and has no US operations, you may owe zero US federal income tax. However, you still must:

• File Form 1120 (even if reporting $0 income).
• Pay Delaware franchise tax (~$450/year).
• Comply with BOI (beneficial ownership) reporting under the Corporate Transparency Act.

If you’re the sole owner and you don’t elect corporate taxation, your LLC is a disregarded entity for US tax purposes. It’s treated as if it doesn’t exist—income and expenses flow directly to you.

• If no US-source income: No US tax return required. No US tax owed. (You report the income in your home country.)
• If you have US-source income: You file Form 1040-NR (individual nonresident return) and pay tax on ECI. The LLC itself doesn’t file a return.

If you have multiple owners, the LLC is taxed as a partnership. The LLC files Form 1065 (partnership return) and issues K-1s to each member.

• If no US-source income: File Form 1065 showing zero income. Members report their share in their home country.
• If US-source income: Each member files Form 1040-NR and pays tax on their distributive share of ECI.

An LLC can elect to be taxed as a C-corporation (Form 8832) or, if eligible, as an S-corporation. Note: S-corps require all shareholders to be US citizens or residents, so international founders cannot use S-corp election.

If you elect C-corp taxation for your LLC, it’s taxed just like a Delaware C-corp (21% corporate tax, dividend withholding, etc.).

The Foreign Investment in Real Property Tax Act (FIRPTA) imposes US tax on gains from disposition of US real property interests (USRPIs). If your US entity holds US real estate, you (as a foreign shareholder) may owe US capital gains tax when you sell the entity or the property.

If you have no physical presence in a US state (no office, no employees, no inventory), most states will not tax your income. Exceptions:

• Delaware: Charges franchise tax on C-corps (~$450/year) but no income tax on corps with no DE operations.
• Wyoming: No state income tax. No franchise tax. Just annual report fee (~$60).
• Nexus states: If you establish “nexus” (physical presence, employees, significant sales), you may owe state income tax and must register as a foreign entity.

If you have a foreign company (in your home country) and a US entity, and they transact with each other (licensing IP, providing services, etc.), the IRS requires arm’s-length pricing. If your US entity pays inflated fees to your foreign entity to shift profits out of the US, the IRS may re-characterize the transaction.

Opening a US bank account and staying compliant with US regulations used to require physical presence in the US. Not anymore. Modern fintech banks (Mercury, Wise Business, Brex) serve international founders remotely, and compliance tools make BOI reporting and annual filings straightforward—if you know what you’re doing.

Mercury (mercury.com) is the most popular choice for Delaware C-corps and Wyoming LLCs formed by international founders. No physical US presence required; you apply entirely online.

Application process: Provide your US entity formation documents, EIN (tax ID), proof of identity (passport), proof of address, and a brief description of your business. Approval typically takes 1-3 business days.

Wise Business offers multi-currency accounts with US banking details (ACH routing + account number). You can hold USD, EUR, GBP, and 50+ other currencies in one account and convert at low FX fees.

Good for: International founders who receive payments in multiple currencies, pay contractors globally, and need cheap FX conversion. Not ideal if you need traditional US banking features (checks, cash deposits).

Brex offers corporate cards, banking, and expense management for startups. Best for companies with VC funding or significant revenue. Brex underwrites based on your cash balance and revenue, not personal credit.

Pros: High credit limits, rewards, expense tracking, integrations with accounting software. Cons: Requires higher revenue or fundraising to qualify.

Chase, Bank of America, Wells Fargo, and other traditional banks generally require in-person visits to open business accounts. If you’re not in the US and don’t plan to visit, stick with Mercury or Wise.

Stripe is the gold standard for SaaS, e-commerce, and subscription businesses. To use Stripe, you need a US entity (Delaware C-corp or Wyoming LLC) and a US bank account (Mercury works).

International founder setup: Form Delaware C-corp → Get EIN → Open Mercury account → Apply for Stripe. You’ll need to provide identity verification (passport, proof of address). Stripe supports 135+ currencies and deposits to your US account in 2-7 days.

PayPal is easier to set up than Stripe but has higher fees and clunkier UX. Good for freelancers and e-commerce stores that need to accept PayPal payments from buyers. You can link PayPal to your Mercury account for withdrawals.

Stripe Atlas ($500) bundles Delaware C-corp formation, EIN, bank account intro (Silicon Valley Bank or Mercury), and Stripe account setup into one package. It’s marketed to international founders as a turnkey solution.

As of 2024, nearly all US entities must report their beneficial owners (individuals who own 25%+ or exercise substantial control) to FinCEN (Financial Crimes Enforcement Network). This is called BOI reporting.

Who must file: Delaware C-corps, Wyoming LLCs, and most other US entities—unless you qualify for an exemption (e.g., publicly traded companies, large operating companies with 20+ employees and $5M+ revenue).

What to report: Full legal name, date of birth, address, and government ID (passport) for each beneficial owner. Also, company applicants (person who filed formation docs).

Deadline: Entities formed before 2024 had until January 1, 2025 to file. Entities formed in 2024 have 90 days from formation. Entities formed in 2025+ have 30 days from formation.

Delaware: C-corps must file an annual report and pay franchise tax (~$450) by March 1 each year. LLCs pay an annual tax ($300) by June 1.

Wyoming: LLCs file an annual report ($60-$100 depending on assets) by the anniversary of formation. No franchise tax.

Your registered agent (the service you hire to accept legal mail in the state) will usually remind you of these deadlines, but you are responsible for filing and paying on time.

Even if you owe zero US tax, you likely must file a return:

• C-corps: Form 1120 (due April 15, or October 15 if extended).
• Partnerships: Form 1065 + Schedule K-1s (due March 15, or September 15 if extended).
• Single-member LLC (disregarded): No separate entity return if no US-source income; you report on your personal return (in your home country).

If your Delaware C-corp or Wyoming LLC does business in another state (has employees, office, or significant sales there), you may need to register as a foreign entity in that state. This triggers state tax filings, annual reports, and fees.

Example: You form a Delaware C-corp but hire remote employees in California. California may require you to foreign-qualify and file California corporate tax returns. I help you evaluate nexus thresholds and avoid unnecessary foreign qualifications.

Every US entity must have a registered agent—a person or service with a physical address in the state of formation who accepts legal notices, service of process, and state correspondence on your behalf.

Cost: ~$100-$150/year. Popular services: Northwest Registered Agent, Incfile, Registered Agents Inc.

If you use a formation service (LegalZoom, Incfile, etc.), they’ll often include the first year of registered agent service. After that, you pay annually. If you let your registered agent lapse, the state may dissolve your entity or you may miss critical legal notices.

Forming a US entity does not automatically grant you the right to live or work in the US. However, owning a US company can be a pathway to certain visas, and understanding the visa landscape helps you plan for future relocation, US hiring, or investor requirements.

The E-2 visa allows nationals of treaty countries to enter the US to develop and direct a business in which they’ve invested substantial capital.

Requirements:

• You must be a national of a country with an E-2 treaty with the US (60+ countries including UK, Germany, Japan, South Korea, Canada, Australia—but not India, China, or Brazil).
• You must invest a “substantial” amount in a US business (typically $100k-$200k minimum, though amounts vary by business type).
• The business must be a real operating company (not a passive investment or holding company).
• You must own at least 50% of the business and have control.
• The business must create jobs or have the potential to create jobs for US workers.

Pros: Renewable indefinitely (in 2-5 year increments), spouse can work in the US (EAD), children can attend school.

Cons: Requires active business operations and substantial investment. Not a path to green card (no dual intent). If business fails, visa ends.

The L-1 visa allows you to transfer from a foreign company (that you own or work for) to a related US entity (subsidiary, affiliate, parent).

L-1A (Managers/Executives): For founders or executives. Initial 3-year term, extendable to 7 years total. Dual intent (path to green card).

L-1B (Specialized Knowledge): For employees with specialized knowledge. Initial 3-year term, extendable to 5 years total.

Requirements:

• You must have worked for the foreign entity for at least 1 continuous year in the past 3 years.
• The US entity must be a qualifying related entity (parent, subsidiary, affiliate, or branch).
• You must be coming to the US in a managerial, executive, or specialized knowledge role.

Common structure for founders: You own a company in your home country (e.g., India). You form a Delaware C-corp as a US subsidiary. You transfer yourself to the US entity as CEO/founder. The US entity must demonstrate it can support your role (funding, business plan, etc.).

The O-1 visa is for individuals with extraordinary ability in sciences, arts, education, business, or athletics. Think: published researchers, award-winning artists, recognized industry leaders.

Pros: No cap, can self-petition (via a US agent or entity), renewable indefinitely, dual intent.

Cons: High bar—you must demonstrate sustained national or international acclaim. Requires extensive documentation (awards, press, recommendation letters, etc.).

Some startup founders with significant achievements (YC alumni, Forbes 30 Under 30, major press coverage, exits) qualify for O-1.

The EB-5 visa is a direct path to a US green card if you invest $800k-$1.05M in a US business (depending on location) and create 10 full-time jobs for US workers.

Pros: Green card for you, spouse, and children under 21.

Cons: Expensive, long processing times (2-10 years depending on country), requires job creation, and the investment must be “at risk” (no guaranteed return).

EB-5 is typically used by high-net-worth individuals, not early-stage founders.

The H-1B visa is for specialty occupation employees (requires bachelor’s degree or higher). It’s not a founder visa—you must be employed by a US company, and the company must sponsor you.

However, if you own a US entity, you can theoretically have your entity sponsor you for an H-1B, as long as:

• You don’t control the entity (tricky—ownership structure must show someone else has control over hiring/firing you).
• The job qualifies as a specialty occupation.
• You win the H-1B lottery (cap of 85,000 visas per year, heavily oversubscribed).

This is complex and rarely used by founders. E-2 or L-1 are better options.

Here’s the key point: You do not need any US visa to own a Delaware C-corp or Wyoming LLC. You can form, own, and operate a US entity from anywhere in the world without setting foot in the US.

What you cannot do without a visa:

• Live in the US. You can visit on a tourist visa (B-1/B-2) for short trips (conferences, meetings), but you can’t reside here.
• Work in the US. If your entity has US operations (office, employees), you can’t perform work in the US without a work visa (E-2, L-1, O-1, etc.).
• Employ yourself in the US. You can pay yourself as a foreign contractor or shareholder, but you can’t be a W-2 employee in the US without work authorization.

If you think you might apply for an E-2 or L-1 visa in the future, structure your entity correctly from the start:

• E-2: Maintain 50%+ ownership. Document all capital investments (wire transfers, receipts). Build a real business (not a shell company)—hire people, generate revenue, show growth.
• L-1: Establish a clear parent-subsidiary relationship between your foreign company and US entity. Document your role abroad (1 year minimum). Show the US entity needs you in a managerial/executive role.
• O-1: Build your public profile—awards, press, speaking engagements, published work. Your US entity can be the petitioner, but you must demonstrate extraordinary ability.

I’ve worked with dozens of international founders—from India, UK, Germany, Brazil, Nigeria, Singapore, and beyond. The same mistakes come up repeatedly. Here’s what to avoid.

The mistake: You form a Delaware C-corp or Wyoming LLC using a cheap online service. They give you bare-bones Articles of Incorporation or Articles of Organization—and nothing else. No bylaws (for corps), no operating agreement (for LLCs), no founder agreements, no IP assignment.

Why it’s a problem:

• If you have co-founders, you have no written agreement on equity splits, vesting, or what happens if someone leaves.
• If you raise venture capital, VCs will demand clean corporate governance docs. If you don’t have them, you’ll pay a lawyer $5k-$10k to draft them retroactively.
• If you built IP (code, designs, content) before forming the entity, and you didn’t assign it to the entity, you personally own it—not the company. VCs will not invest if the company doesn’t own its IP.

The mistake: You form your entity in 2024 or 2025 and never file the BOI report with FinCEN because you didn’t know it existed. Many formation services (Incfile, LegalZoom) don’t mention it.

Why it’s a problem: FinCEN can impose penalties up to $500 per day for failure to file. Criminal liability is also possible for willful violations.

The fix: File your BOI report within 30 days of formation (for entities formed 2025+) or immediately if you formed earlier. I help clients file BOI reports and set up reminders for updates when ownership changes.

The mistake: You form a Wyoming LLC because it’s cheap and private, then 6 months later you want to raise VC funding. VCs say “convert to a Delaware C-corp or we can’t invest.”

Why it’s a problem: Converting an LLC to a C-corp is expensive (legal fees $3k-$10k), time-consuming (60-90 days), and may trigger tax consequences. VCs hate delays.

The fix: If there’s any chance you’ll raise VC in the next 2-3 years, form a Delaware C-corp from the start. Yes, it costs more annually (~$450 franchise tax vs. ~$60 for Wyoming LLC), but it’s worth it to avoid conversion headaches later.

The mistake: You read online that “if you have no US-source income, you owe zero US tax.” You form a Delaware C-corp, earn $500k selling SaaS to US customers, and assume you owe nothing because you’re not in the US.

Why it’s a problem: If you have US customers or US operations, you likely have US-source income (ECI) and owe US corporate tax (21% federal + state tax if applicable). Failure to file returns can lead to IRS audits, penalties, and interest.

The fix: Understand the difference between ECI (effectively connected income) and FDAP (fixed/determinable income). If you’re selling to US customers, even if you’re abroad, you may have ECI. Consult a tax professional who specializes in international tax—don’t guess.

The mistake: You have a company in India (YourCo India Pvt Ltd) and a Delaware C-corp (YourCo Inc). YourCo Inc licenses software from YourCo India for $1M/year to shift profits to India (lower tax rate). You don’t document the license agreement or arm’s-length pricing.

Why it’s a problem: The IRS requires related-party transactions to be at arm’s length (market rate). If your intercompany pricing is inflated or deflated to shift profits, the IRS can re-characterize the transaction, disallow deductions, and assess penalties.

The fix: Document all intercompany transactions. Get transfer pricing studies if amounts are material. I help clients draft intercompany agreements that withstand IRS scrutiny.

The mistake: You use a cheap formation service that includes the first year of registered agent service. Year two, you forget to renew. The state sends legal notices to your lapsed agent. You miss critical deadlines (annual report, franchise tax, lawsuits).

Why it’s a problem: If the state can’t reach you, they may dissolve your entity or find you in default. If someone sues your entity and service of process goes to a lapsed agent, you may lose a default judgment.

The fix: Set a recurring calendar reminder to pay your registered agent annually (~$100-$150). Or use a reputable service (Northwest Registered Agent, Registered Agents Inc) with auto-renewal.

The mistake: You form your entity but don’t apply for an EIN (Employer Identification Number) because you’re not hiring employees yet. You try to open a Mercury account. Mercury asks for your EIN. You scramble to get one.

Why it’s a problem: You can’t open a US bank account, apply for Stripe, or file tax returns without an EIN. Getting an EIN can take 1-4 weeks if you apply by mail (common for international founders without SSNs).

The fix: Apply for an EIN immediately after formation. You can apply online if you have an SSN or ITIN. If not, file Form SS-4 by fax (same-day response) or mail (2-4 weeks). I help clients get EINs quickly by faxing Form SS-4 to the IRS.

The mistake: You pay $500 for Stripe Atlas. You get a Delaware C-corp, an EIN, and a Stripe account. You think you’re done. Six months later, you realize you have no operating agreement, no stock purchase agreements, no IP assignments, and no idea if you filed your BOI report.

Why it’s a problem: Atlas is a formation service, not a law firm. They don’t provide legal advice, custom documents, or ongoing compliance support. If your corporate records are incomplete, VCs will notice—and you’ll pay a lawyer later to fix it.

The fix: If you use Atlas, supplement it with attorney review. Or skip Atlas entirely and work with a lawyer who provides formation + custom docs + compliance guidance for the same or lower cost (see My Services tab).

The mistake: You form a C-corp but never hold board meetings, never issue stock certificates, never document major decisions. You treat the corp like a sole proprietorship.

Why it’s a problem: If you’re sued and the plaintiff argues you didn’t respect the corporate form (no formalities, commingling funds), they may “pierce the corporate veil” and hold you personally liable. VCs will also demand clean corporate records.

The fix: Hold annual board meetings (even if it’s just you as the sole director). Document major decisions (hiring, fundraising, IP assignments) in board resolutions. Keep corporate records organized (bylaws, stock ledger, meeting minutes).

The mistake: You build a successful business and get an acquisition offer. The acquirer does due diligence and finds: messy cap table, missing IP assignments, unresolved tax issues, BOI non-compliance. The deal falls apart or the price drops by 30%.

Why it’s a problem: Clean corporate records and compliance aren’t just for VCs—they’re essential for M&A. Acquirers will not buy a company with legal or tax liabilities lurking.

The fix: Treat your entity like it’s worth $10M from day one. Keep immaculate records. File everything on time. Assign all IP to the entity. When exit time comes, you’ll close the deal fast and maximize value.

I’m an attorney (California Bar #279869) who focuses exclusively on helping international founders form and maintain US entities. Unlike formation mills (LegalZoom, Incfile) or algorithmic services (Stripe Atlas), I provide personalized legal advice, custom documents, tax structuring, and ongoing compliance support.

• Annual compliance retainer: $1,200/year (annual reports, BOI updates, franchise tax filings, tax return prep coordination)
• Post-formation cleanup: $1,500-$3,000 (fix messy corporate records, missing docs, BOI non-compliance)
• LLC to C-corp conversion: $3,000-$5,000 (including tax analysis, state filings, new corporate docs)
• Foreign qualification: $800/state (register your DE/WY entity in another state)
• IP assignment audit & cleanup: $1,000 (ensure all code, designs, trademarks are properly assigned to entity)
• Tax treaty analysis & W-8BEN-E filing: $500 (claim treaty benefits, reduce withholding)