How to Register a Business in the US from Cyprus

Step 1: Benefits of starting your US business from Cyprus

Starting a US business from Cyprus offers a myriad of benefits, leveraging the strategic advantages of both regions. One of the most compelling benefits is the favorable tax environment. Cyprus is known for its attractive taxation policies, including low corporate tax rates and double tax treaties with numerous countries, including the United States. This allows entrepreneurs to maximize their profits while minimizing their tax liabilities. Operating a US business from Cyprus can also provide access to a diverse talent pool, as Cyprus boasts a highly educated and multilingual workforce, ideal for supporting various business operations such as customer service, IT support, and finance.

Moreover, Cyprus’s geographical location at the crossroads of Europe, Asia, and Africa positions it as a hub for international business, offering excellent connectivity and ease of travel. This strategic location can be leveraged for easier access to European markets as well as emerging markets in the Middle East and Africa. Furthermore, Cyprus provides a robust legal framework and a business-friendly environment, facilitating smooth company formation and operation. By starting a US business from Cyprus, entrepreneurs can take advantage of these unique benefits, driving growth and international success.

Step 2: How to start your US business from Cyprus

Starting a US business from Cyprus involves several steps, but it is a manageable process with the right information and resources. First, you must select the type of business entity you wish to form, such as an LLC (Limited Liability Company) or a corporation. Both structures have their advantages depending on your business goals. An LLC generally offers more flexibility and simplicity, whereas a corporation can be beneficial for raising capital and scaling your business.

Once you have chosen the business structure, the next step is to register your business with a US state. Delaware is a popular choice due to its business-friendly laws and straightforward registration process, though other states like Wyoming and Nevada are also favorable for foreign entrepreneurs. You will need to appoint a registered agent with a physical address in the chosen state to handle legal documents on your behalf. Afterward, you must apply for an EIN (Employer Identification Number) from the IRS, which is essential for tax purposes, opening a US bank account, and hiring employees.

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 Cyprus

Understanding Compliance Requirements for Running a US Business in Cyprus

Cyprus is a strategic location for businesses due to its favorable tax regime, strong legal framework, and membership in the European Union. For US businesses looking to establish operations in Cyprus, it's critical to understand the various compliance requirements. This article outlines key considerations for ensuring your business meets local regulations.

1. Legal Structure and Company Formation

US businesses must choose an appropriate legal structure before operating in Cyprus. Common options include:

• Private Limited Company (Ltd) – Popular for its limited liability and straightforward registration.
• Branch Office – Ideal if you want to establish a Cypriot presence without creating a separate legal entity.
• Subsidiary – Functions as an independent legal entity but may attract different tax implications.

2. Registration and Licensing

Registering your company involves several steps:

1. Choose a unique company name through the Department of Registrar of Companies and Official Receiver.
2. Submit the Memorandum and Articles of Association, outlining business structure and operations.
3. Obtain necessary permits and licenses based on your business activities. This may include trade licenses, health permits, or sector-specific approvals.

3. Taxation

Cyprus boasts an attractive tax regime. Key points include:

• Corporate Tax Rate – Generally set at a competitive 12.5% on taxable income.
• Double Taxation Treaties – Cyprus has agreements with over 60 countries, ensuring reduced tax liabilities for international businesses.
• Value Added Tax (VAT) – Standard VAT rate is 19%, with reduced rates for certain goods and services.

4. Employment Law

US businesses must adhere to Cypriot employment laws including:

• Employment Contracts – Should specify terms and conditions, complying with Cypriot labor standards.
• Work Permits – Required for non-EU employees, involving specific application procedures.
• Social Security Contributions – Employers and employees must contribute to the Social Insurance Fund.

5. Data Protection and Privacy

Compliance with data protection regulations is crucial:

• GDPR Compliance – As an EU member, Cyprus businesses must adhere to the General Data Protection Regulation (GDPR), ensuring proper handling and protection of personal data.
• Data Processing Agreements – Necessary for businesses managing data on behalf of others.

6. Banking and Financial Compliance

US businesses need to observe financial regulations, including:

• Anti-Money Laundering (AML) Rules – Strict measures are in place to prevent financial crimes.
• Bank Account Setup – Requires documentation like proof of incorporation and directors' identities.

Navigating compliance requirements is essential for the successful operation of a US business in Cyprus. Engaging local experts such as legal advisors and accountants can streamline this process and ensure adherence to all regulatory obligations.

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 Cyprus

Understanding Tax Obligations for Running a US Business in Cyprus

Running a US business in Cyprus requires adhering to both US and Cypriot tax regulations. Below, we outline key considerations to help you navigate tax obligations effectively.

1. Understanding Tax Residency

A critical factor in determining your tax obligations is the residency status of your business. In Cyprus, a company is considered a tax resident if it is managed and controlled from Cyprus. Tax residency can impact the type of taxes you owe and to which jurisdictions.

2. Double Taxation Treaty

Cyprus and the United States have a Double Taxation Treaty aimed at avoiding double taxation by allowing tax credits and exemptions. It’s essential to understand the provisions of this treaty, as it can significantly reduce your tax burden.

3. Corporate Tax Rate

The corporate tax rate in Cyprus is 12.5%, one of the lowest in the European Union. It's important to note this rate when planning your business’s financials and comparing it with the US corporate tax rate.

4. Value Added Tax (VAT)

Businesses operating in Cyprus may also be subject to VAT. The standard rate is 19%, but reduced rates of 9%, 5%, and 0% may apply to certain goods and services. Understanding the applicable VAT rate for your business transactions is crucial.

5. Transfer Pricing Rules

Both Cyprus and the US have transfer pricing regulations to ensure that inter-company transactions are conducted at arm's length. Compliance with these rules is important to avoid penalties and ensure accurate tax reporting in both countries.

6. Withholding Taxes

Cyprus imposes withholding taxes on certain types of income paid to non-residents, such as interest, dividends, and royalties. The rates may be affected by the Double Taxation Treaty between Cyprus and the US, potentially offering reduced rates or exemptions.

7. Social Security Contributions

If you employ staff in Cyprus, you will be required to make social security contributions for your employees. Both employer and employee contributions are mandatory and calculated based on employee earnings.

8. Reporting Requirements

Keeping accurate and up-to-date records is essential for meeting various reporting requirements in both Cyprus and the US. Ensure that you are in compliance with local bookkeeping standards and international financial reporting standards.

9. Professional Assistance

Given the complexity of international tax law, consulting with tax professionals who specialize in both Cypriot and US tax systems can be invaluable. They can provide tailored advice and ensure compliance with all relevant regulations.

By understanding these considerations, you can better navigate the tax landscape and ensure that your US business operates smoothly in Cyprus.

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