How to Register a Business in the US from Dominican Republic

Step 1: Benefits of starting your US business from Dominican Republic

Starting a US business from the Dominican Republic offers a myriad of benefits that can give entrepreneurs a competitive edge. One significant advantage is cost efficiency. The cost of living in the Dominican Republic is considerably lower than in many parts of the United States, allowing business owners to reduce their overheads on expenses such as rent, utilities, and labor. Furthermore, the Dominican Republic boasts a talented and growing workforce that can contribute to various business operations at a fraction of the cost, enhancing profit margins and operational efficiencies.

Another considerable benefit is the geographical positioning of the Dominican Republic, which provides strategic access to both North and South American markets. This location enables easier and faster shipping and logistics, reducing time and costs associated with the transport of goods. Additionally, the Dominican Republic enjoys favorable trade agreements with the United States, such as the CAFTA-DR (Central America-Dominican Republic Free Trade Agreement), which can facilitate smoother import and export processes. Leveraging these geographical and economic advantages can help businesses thrive and expand more swiftly in the competitive global market.

Step 2: How to start your US business from Dominican Republic

Starting a US business from the Dominican Republic involves several key steps. First, you'll need to decide on the type of business entity you want to form, such as a corporation or an LLC (Limited Liability Company). Each option has its own advantages and requirements, so it's important to choose the one that best fits your business needs. Additionally, you will need to select a state for your business. Delaware, Nevada, and Wyoming are popular options due to their business-friendly laws and policies, but you may choose any state that suits your market and operational preferences.

Once you have determined the type of entity and state, the next step is to file the necessary incorporation documents with the appropriate state agency. This will usually involve submitting articles of incorporation for a corporation or articles of organization for an LLC, along with paying the required fees. After your business is officially registered, you will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), which is essential for tax purposes and hiring employees. It's also advisable to open a US bank account to facilitate financial transactions and establish a local address or use a registered agent to handle official correspondence on your behalf. With these steps completed, you will be well on your way to successfully starting a US business from the Dominican Republic.

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 Dominican Republic

Understanding Compliance Requirements for Running a US Business in the Dominican Republic

Expanding a US business into the Dominican Republic presents unique opportunities and challenges. Ensuring compliance with local regulations is crucial for a smooth and successful operation. Below, we outline key considerations for understanding compliance requirements in the Dominican Republic.

1. Business Registration and Legal Incorporation

The first step for any foreign business is to legally register and incorporate in the Dominican Republic. This typically involves:

• Choosing a business structure (e.g., Corporation, Limited Liability Company)
• Registering the business name with the National Office of Industrial Property (ONAPI)
• Filing incorporation documents with the Chamber of Commerce and Production
• Obtaining a Tax Identification Number (RNC) from the General Directorate of Internal Taxes (DGII)

2. Labor Laws and Employment Regulations

Compliance with local labor laws is crucial. Businesses must adhere to Dominican labor standards, which include:

• Minimum wage requirements
• Social security contributions
• Employee benefits and rights, such as vacation days, severance pay, and maternity leave
• Health and safety regulations in the workplace

3. Tax Obligations

Foreign businesses must comply with the Dominican tax system. Key tax obligations include:

1. Income Tax: Corporate income tax is levied on the worldwide income of Dominican companies at a rate of 27%.
2. Value Added Tax (VAT): VAT is levied at a standard rate of 18% on the sale of goods and services.
3. Withholding Taxes: Withholding taxes on dividends, interests, and royalties paid to non-residents may apply.

4. Import and Export Regulations

Understanding import and export requirements is essential for businesses involved in international trade. Considerations include:

• Obtaining necessary licenses and permits from the National Directorate of Customs
• Complying with tariffs and customs duties
• Adhering to product standards and safety regulations

5. Environmental Regulations

Businesses operating in certain industries must meet environmental standards set by the Ministry of Environment and Natural Resources. This includes:

• Obtaining environmental permits for specific operations
• Implementing waste management and pollution control measures
• Conducting environmental impact assessments when required

6. Intellectual Property Protection

Protecting intellectual property (IP) is vital for foreign businesses. The Dominican Republic has laws in place to safeguard IP rights, including:

• Registering trademarks and patents with ONAPI
• Enforcing copyrights and trade secrets
• Taking legal action against infringement

Operating a US business in the Dominican Republic requires careful attention to compliance with local regulations. By understanding the legal landscape and meeting all necessary requirements, businesses can successfully navigate the complexities of this dynamic market.

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 Dominican Republic

Understanding Tax Obligations for Running a US Business in the Dominican Republic

Running a US business in the Dominican Republic requires a clear understanding of various tax obligations. Navigating the tax landscape can be complex, but being informed about local and international tax laws can help ensure compliance and optimize your business operations.

1. Corporate Income Tax

The Dominican Republic imposes a corporate income tax on all income generated within the country. The standard corporate tax rate is 27%. It's important for US businesses to account for this in their financial planning and budgeting.

2. Withholding Taxes

The Dominican Republic applies withholding taxes on certain types of payments to non-residents. These can include:

• Dividends: Subject to a 10% withholding tax.
• Interest Payments: Standard withholding rate is 10%.
• Royalties and Technical Services: Generally subject to a 27% withholding tax.

3. Value Added Tax (VAT)

Known locally as Impuesto sobre la Transferencia de Bienes Industrializados y Servicios (ITBIS), the VAT rate in the Dominican Republic is 18%. Businesses must collect and remit VAT on goods and services provided within the country.

4. Double Taxation Treaty

As of the current date, there is no tax treaty between the United States and the Dominican Republic to prevent double taxation. US businesses must carefully coordinate their tax planning strategies to avoid being taxed twice on the same income.

5. Permanent Establishment

If a US business operates through a permanent establishment in the Dominican Republic, the income attributable to that establishment may be subject to local taxation. This includes branches, offices, and any fixed places of business.

6. Social Security Contributions

Employers in the Dominican Republic must make social security contributions on behalf of their employees. These contributions fund various social programs, including healthcare and pensions. The employer's contribution rate is typically around 7.10% of the employee's salary.

7. Compliance and Reporting Requirements

US businesses must adhere to the Dominican Republic's tax reporting requirements, which include regular filings and payments. Keeping accurate financial records and staying up-to-date with tax filings are crucial for maintaining good standing with local tax authorities.

Understanding the tax obligations for running a US business in the Dominican Republic is essential for compliance and financial efficiency. Consulting with tax professionals who are knowledgeable about both US and Dominican tax laws can provide invaluable guidance and support.

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