How to Register a Business in the US from Australia

Step 1: Benefits of starting your US business from Australia

Starting a US business from Australia opens up a world of opportunities for entrepreneurs. One of the primary benefits is the access to a much larger market. The United States is home to over 330 million people and has one of the world's largest economies. This vast consumer base provides Australian businesses with an unparalleled chance to expand their reach, increase sales, and enhance brand visibility on a global scale. Moreover, the US market is diverse and well-developed, presenting numerous niches and sectors ripe for innovation and growth.

Another significant advantage is the business-friendly environment that the US offers. The country boasts a well-established infrastructure, extensive resources, and a robust legal framework that supports entrepreneurship and protects intellectual property. Additionally, the presence of numerous venture capital firms, angel investors, and accelerators in the US can provide Australian entrepreneurs with greater access to funding and mentorship opportunities. Leveraging these resources can not only facilitate smoother business operations but also spur innovation and rapid growth for Australian businesses aiming to make their mark in the US market.

Step 2: How to start your US business from Australia

Starting a US business from Australia involves several important steps. First, it's crucial to determine the appropriate business structure, such as a Corporation (C-Corp or S-Corp), Limited Liability Company (LLC), or Sole Proprietorship. Each structure has its own benefits and requirements. It's advisable to consult with a legal expert to understand which option suits your business. Once you have decided on the structure, you need to choose a registered agent service with a physical address in the state where you plan to incorporate or form your LLC. This agent will handle legal and official documents on behalf of your business.

Next, you'll need to apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), which is essential for tax purposes and opening a business bank account in the US. Additionally, depending on the state, you may need to comply with specific state regulations, such as obtaining necessary licenses and permits. It's also advisable to set up a US-based business bank account to facilitate financial transactions. Understanding US tax obligations and seeking assistance from a tax professional can further help ensure compliance with local laws. By carefully following these steps, you can successfully establish a US business from Australia.

Step 3: Opening a Business Bank Account

A business bank account is a separate account that is used exclusively for business transactions. But why is it important to open a business bank account?

Keeping your personal and business finances separate is crucial. A dedicated business bank account allows you to do just that, making it much easier to track your business’s income and expenses. This clear separation translates to simpler tax reporting come tax season.

But the benefits go beyond bookkeeping. Having a separate account can provide legal protection. It establishes your business as a distinct entity from yourself. In the unfortunate event of a lawsuit or bankruptcy, this separation can help shield your personal assets from business liabilities.

Furthermore, a business bank account can boost your credibility and project professionalism.

It demonstrates to clients and vendors that you take your business seriously and are committed to maintaining accurate financial records. This can be especially important in establishing trust with potential partners.

Finally, a business bank account is essential for accepting payments, even if you utilize a merchant account. Whether you use doola or another service, funneling those customer funds into a dedicated business account is necessary.

doola partners with banks that allow you to open a bank account remotely from anywhere in the world, like Mercury. Shop around and compare different banks’ fees and services.

Look for a bank that offers the features you need, such as online banking, mobile banking, or overdraft protection.

You may also want to consider working with a bank that specializes in small business banking.

Step 4: Understanding Your Compliance Requirements in Australia

Understanding Compliance Requirements for Running a US Business in Australia

Expanding your US business into Australia can open up new markets and opportunities. However, it also means navigating a different set of compliance requirements. Below are key considerations to help ensure your venture adheres to Australian regulations.

Legal Structure

First, decide on the legal structure for your Australian operations. Options include establishing a subsidiary, a branch office, or a joint venture with a local partner. Each structure has distinct legal and tax implications.

Business Registration

Register your business with the Australian Securities and Investments Commission (ASIC). This includes obtaining an Australian Business Number (ABN) and registering for the Goods and Services Tax (GST) if your turnover exceeds the threshold.

Employment Laws

Australia has strict employment laws. Ensure compliance with Fair Work Act stipulations regarding minimum wage, working conditions, leave, and termination. Also, comply with superannuation requirements, which mandate employer contributions to employee retirement funds.

Taxation

• Corporate Tax: Australian corporate tax rates may differ from those in the US.
• GST: Similar to VAT, GST is a broad-based tax of 10% on most goods and services.
• Transfer Pricing: Adhere to both Australian and international guidelines on pricing transactions between related entities to avoid tax disputes.

Intellectual Property

Intellectual property (IP) laws in Australia differ from those in the US. Consider registering your trademarks, patents, and copyrights locally to ensure protection against infringement.

Data Privacy

Understand and comply with Australian Privacy Principles (APPs) to ensure you handle personal information responsibly and transparently. Non-compliance can result in severe penalties.

Consumer Protection

Be aware of the Australian Consumer Law (ACL), which provides guarantees on products and services, ensuring they are safe, durable, and fit for purpose. Misleading and deceptive conduct is strictly prohibited.

Environmental Regulations

Environmental compliance varies by state and territory. Familiarize yourself with relevant local laws governing waste management, emissions, and environmental impact assessments.

Industry-Specific Regulations

Certain industries, such as finance, healthcare, or food and beverages, are subject to additional, stringent regulatory requirements. Ensure you consult with industry experts to navigate these complexities.

By addressing these key areas, US businesses can set a solid foundation for successful operations in Australia, meeting all necessary compliance requirements while capitalizing on new opportunities.

doola offers a Total Compliance package, including bookkeeping services, to help you stay on top of your compliance requirements. This ensures your business operates smoothly and adheres to all legal and regulatory standards.

Step 5: Understanding Your Tax Obligations in Australia

Understanding Tax Obligations for Running a US Business in Australia

Running a US business in Australia involves navigating a distinct set of tax obligations. Understanding these considerations is pivotal to ensure compliance with Australian tax laws and to optimise your business operations. Below, we outline various key aspects to consider.

1. Australian Business Number (ABN)

Obtaining an Australian Business Number (ABN) is the first step for foreign businesses operating in Australia. The ABN acts as a unique identifier for all business dealings and is crucial for tax and regulatory purposes.

• Registering for an ABN: Ensure that your business is registered with the Australian Business Register (ABR).
• Using your ABN: Display your ABN on all business correspondence and invoices.

2. Goods and Services Tax (GST)

The Goods and Services Tax (GST) is a value-added tax applied to most goods and services sold in Australia. Understanding your GST obligations is critical.

1. If your annual turnover is $75,000 or more, your business must register for GST.
2. GST is currently set at 10% and needs to be included in the price of taxable supplies.
3. Business Activity Statements (BAS) must be lodged regularly to report and pay GST.

3. Income Tax

If you operate a US business in Australia, you may be required to pay Australian income tax on the profits earned within Australian borders.

• Permanent Establishment: Determine if your business activities constitute a permanent establishment (PE) under the Australia-US tax treaty.
• Taxable Income: Calculate your taxable income and apply the corporate tax rate, currently at 30% for large businesses and 25% for small businesses.
• Tax Return: Lodge an annual income tax return with the Australian Taxation Office (ATO).

4. Withholding Taxes

Withholding taxes apply to certain types of payments made to foreign entities, such as dividends, royalties, and interest.

1. Dividend Withholding Tax (DWT) is typically 30%, which may be reduced under the tax treaty.
2. Royalties are generally subject to a 10% withholding tax.
3. Interest payments may also have a withholding tax, commonly 10%.

5. Double Taxation Agreement

Australia and the US have a double taxation agreement to prevent businesses from being taxed twice on the same income.

• Tax Credits: Claim foreign tax credits under the treaty to offset taxes paid in Australia against US taxes.
• Exemptions: Utilize treaty provisions to exempt certain types of income from taxes in one of the countries.

By understanding these key tax considerations, US businesses can effectively navigate the Australian tax landscape and ensure compliance with local regulations.

It’s a good idea to consult with a tax professional or an accountant (or to hire these roles in-house) to make sure you’re not missing anything.

doola's Total Compliance package can handle your tax filings for you, ensuring you remain compliant with federal, state, and local tax requirements.

Step 6: How doola Can Assist

doola simplifies the incorporation and setup process for your company, ensuring you’re ready to charge customers, hire your team, and raise funds as quickly as possible.

Fill out your company details in the doola form in less than 10 minutes. Then, we’ll incorporate your company in any of the 50 US states, get your IRS tax ID (EIN) for you, and file your 83(b) tax election if needed. 

doola can also help you open a bank account and start accepting payments even before the IRS assigns your tax ID.

doola founders also gain access to exclusive discounts at leading software partners, one-click onboarding with select partners, and free CPA consultations.

The doola Application

It takes less than 10 minutes to fill out the details of your new company. You’ll choose your company structure (C corporation, limited liability company) and pick a company name.

Our instant company name checker will let you know if it’s available before you submit your application. You’ll add an address and phone number and review and sign your EIN SS4 letter in one click.

Forming the Company

doola will review your application and file your formation documents in the state within one business day. doola charges $297 for our Starter Plan and your first year of registered agent services (a state compliance requirement), and $297 each year thereafter to maintain your registered agent. 

You can also opt for our Total Compliance plan.

Getting Your IRS Tax ID (EIN)

After your formation in the state is complete, doola will file for your company’s IRS tax ID. Founders who provide a US Social Security number, US address, and US phone are eligible for expedited processing. All other users will receive standard processing. 

For standard orders, doola will fax your form SS4 to the IRS and then call the IRS to retrieve the EIN for you to expedite the process if we can, using real-time IRS data to determine when your filing is likely to be available.

Filing Your 83(b) Tax Election

Many startup founders choose to file an 83(b) tax election to potentially save on future personal taxes. doola can file and mail your 83(b) tax election in one click for both US and non-US founders — no trip to the post office required.

We’ll file it using USPS Certified Mail with tracking, and you’ll get a copy of your signed 83(b) election and proof of filing in your Dashboard.

Partner Perks and Discounts

doola partners with a range of third-party tools to offer special pricing or access to founders. We offer discounts on engineering, tax and finance, compliance, and operations tools, including Amazon Web Services.

doola also partners with Mercury to provide faster, automatic onboarding using your doola company information so you can get ready to bank and fundraise even faster.

Founders may also access discounts on other doola products, including up to one year of free credits toward payment processing.

Read our guides for startup founders, or learn more about doola and how we can help you set up your new business quickly and easily.

Turn your entrepreneurship dream into reality today!

We do our best to provide accurate and up to date information, however the information provided here are just guidelines. Please speak with a tax and compliance professional in your country