How to Register a Business in the US from Italy

Step 1: Benefits of starting your US business from Italy

Starting a US business from Italy offers a unique set of advantages that can significantly benefit entrepreneurs. One of the primary benefits is access to the vast and diverse US market. With its large population and high consumer spending power, the US presents numerous opportunities for growth and expansion. By tapping into this market, Italian entrepreneurs can scale their businesses more rapidly compared to focusing on the domestic market alone. Additionally, the US has a favorable business environment with a well-established legal system, robust infrastructure, and a wide range of industry clusters, making it easier for entrepreneurs to find their niche and thrive.

Another notable benefit is the potential for innovation and collaboration. The US is home to some of the world's leading technology hubs, such as Silicon Valley, which provide access to cutting-edge research, advanced technologies, and a highly skilled workforce. Italian entrepreneurs can leverage these resources to drive innovation and gain a competitive edge. Moreover, the business culture in the US is highly collaborative, promoting networking and partnerships that can lead to new opportunities and growth. By starting a US business from Italy, entrepreneurs can enjoy the best of both worlds: the creativity and craftsmanship of Italian heritage combined with the dynamic, opportunity-rich environment of the US market.

Step 2: How to start your US business from Italy

Starting a US business from Italy can be an exciting endeavor, though it requires careful planning and understanding of both US and Italian regulations. Firstly, it's crucial to identify the type of business structure that suits your needs, such as an LLC, corporation, or partnership. Each structure has its own set of legal and tax implications. Researching the market and understanding the industry standards in the US can also provide a solid foundation for your business plan

Next, you'll need to register your business with the appropriate US authorities. This process usually involves obtaining an Employer Identification Number (EIN) from the IRS, which is essential for tax purposes. You should also be aware of any state-specific requirements, as these can vary significantly. Additionally, opening a US bank account can facilitate financial transactions, but this may require you to visit the US in person. Lastly, consider consulting with legal and financial experts who specialize in international business to ensure compliance with all relevant regulations on both sides of the Atlantic

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 Italy

Understanding Compliance Requirements for Running a US Business in Italy

Entering the Italian market can be a promising endeavor for US businesses, but understanding compliance requirements is crucial. Various legal, financial, and cultural considerations must be addressed for successful operations. Here we outline key aspects to consider:

Legal Structure and Registration

Businesses must choose an appropriate legal structure, such as a branch or a subsidiary. Each has different implications regarding liability, taxation, and reporting. After selecting the structure, follow these steps:

1. Register with the Italian Business Register (Registro delle Imprese)
2. Obtain a VAT number
3. Register with the Chamber of Commerce (Camera di Commercio)

Taxation

Understanding the Italian tax system is essential. Key taxes include:

• Corporate Income Tax (IRES): Standard rate of 24%
• Regional Tax on Productive Activities (IRAP): Generally around 3.9%
• Value Added Tax (VAT): Standard rate of 22%, with reduced rates for certain goods and services

Consider consulting with a tax advisor to navigate double taxation treaties and optimize tax obligations.

Labor Laws and Employment

Italian labor laws are stringent and protective of employees. Key laws to understand include:

• Employment Contracts: Various forms, including fixed-term, part-time, and apprenticeship contracts
• Working Hours and Conditions: Standard workweek is 40 hours. Rules on overtime, breaks, and annual leave apply
• Employee Benefits: Mandatory health insurance, social security contributions, and severance payments (TFR)

Intellectual Property Rights

Protecting intellectual property is crucial. Italy adheres to EU regulations regarding patents, trademarks, and copyrights. Key steps include:

1. Registering trademarks with the Italian Patent and Trademark Office (UIBM)
2. Applying for patents through either UIBM or the European Patent Office (EPO)
3. Ensuring compliance with EU and Italian copyright laws

General Compliance

Regularly review and update compliance measures related to:

• Data Protection: Adhere to GDPR requirements on data handling and privacy
• Health and Safety: Comply with Italian Occupational Safety and Health regulations
• Environmental Regulations: Abide by local and EU environmental guidelines

By understanding and adhering to these compliance requirements, US businesses can establish a firm footing in the Italian 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 Italy

Understanding Tax Obligations for Running a US Business in Italy

Expanding your US business to Italy can open up exciting new opportunities. However, it is crucial to understand the tax obligations to ensure compliance and avoid potential legal issues. Below are some key considerations when it comes to taxation for a US business operating in Italy.

1. Establishing Tax Residency

One of the first things to determine is whether your business will be considered a tax resident in Italy. A company is generally considered an Italian tax resident if:

• It has its legal seat in Italy.
• Its place of effective management is in Italy.
• It conducts its main business activities in Italy.

Being deemed a tax resident means your business will be subject to Italian corporate taxes on worldwide income.

2. Corporate Income Tax (IRES)

Corporate Income Tax, or Imposta sul Reddito delle Società (IRES), is a significant obligation. The standard IRES rate is 24%. This tax applies to income and gains obtained by the company within and outside Italy if the business is an Italian tax resident.

3. Regional Tax on Productive Activities (IRAP)

The Regional Tax on Productive Activities, or Imposta Regionale sulle Attività Produttive (IRAP), is another crucial tax. The standard IRAP rate is 3.9%, but it can vary by region. It is calculated based on the net value of production derived in Italy.

4. Value Added Tax (VAT)

Value Added Tax (VAT), known as Imposta sul Valore Aggiunto (IVA) in Italy, is mandatory for most goods and services. The standard VAT rate is 22%. Businesses need to register for VAT if they are conducting taxable activities in Italy.

5. Social Security Contributions

If your business employs workers in Italy, you will be responsible for social security contributions. These contributions cover public health, pensions, and other social welfare benefits. The total rate is usually shared between the employer and the employee.

6. Withholding Taxes

Italy imposes withholding taxes on certain payments to non-residents, which include dividends, royalties, and interest. These rates can vary but may be reduced by relevant tax treaties between the US and Italy.

7. Double Taxation Treaties

To avoid being taxed twice on the same income, the US and Italy have a double taxation treaty. The treaty aims to mitigate the financial burden by allowing credits for taxes paid in one country to be applied in the other.

8. Transfer Pricing Regulations

Transactions between related entities must conform to arm's-length principles. Transfer pricing regulations require businesses to justify their intercompany pricing strategies to ensure they align with market conditions.

Understanding these tax obligations is essential when running a US business in Italy. It's highly recommended to consult with tax professionals who can provide tailored advice and ensure your business complies with both US and Italian 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