How to Register a Business in the US from Montenegro

Step 1: Benefits of starting your US business from Montenegro

Starting a US business from Montenegro offers a unique set of advantages, combining the strategic benefits of the American market with the convenience and cost-efficiency of operating from a picturesque European nation. One of the key benefits is the relatively low cost of doing business in Montenegro, which includes lower labor costs and operational expenses compared to the US. This allows entrepreneurs to maximize their resources, invest more in their business, and maintain higher profit margins. Additionally, Montenegro's favorable tax regime, which includes low corporate tax rates and various incentives for foreign investors, can further enhance the financial viability of your US business.

The time zone difference between Montenegro and the US also provides a strategic advantage. Entrepreneurs can leverage this difference to ensure their businesses operate almost around the clock. While you work during Montenegro's daytime, your US-based employees or partners can seamlessly continue operations during the North American business hours, thereby improving productivity and responsiveness. Moreover, Montenegro's increasing internet infrastructure and connectivity make it easier to manage a US business remotely, ensuring that you stay connected with your American clientele and partners effectively. This global approach not only gives your business a competitive edge but also facilitates smoother international expansions in the future.

Step 2: How to start your US business from Montenegro

Starting a US business from Montenegro is a multi-step process that involves understanding and navigating both US and international regulations. Firstly, you need to determine the appropriate business structure for your needs, such as a Corporation, Limited Liability Company (LLC), or Sole Proprietorship. Each structure has different benefits and requirements, so careful consideration is essential. Registering the business typically involves filing formation documents with the Secretary of State in the chosen state of operation. Delaware, Nevada, and Wyoming are popular choices due to their business-friendly environments.

Next, you'll need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), which is necessary for tax purposes and to open a US bank account. Setting up a business bank account in the US is crucial for separating personal and business finances, and it also simplifies transactions and bookkeeping. Additionally, depending on the type of business, you might need specific licenses and permits to operate legally within the US. It’s advisable to consult with a legal or business advisor who specializes in international business startups to ensure all legal and regulatory requirements are met efficiently.

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 Montenegro

Understanding Compliance Requirements for Running a US Business in Montenegro

Operating a US business in Montenegro presents an array of compliance requirements that must be carefully navigated. Below are essential considerations that can guide business owners through this process:

1. Business Registration and Legal Structure

To operate in Montenegro, a business must be properly registered with the Central Registry of Business Entities (Centralni registar privrednih subjekata or CRPS). The legal structures available include:

• Limited Liability Company (DOO)
• Joint Stock Company (AD)
• Branch Office
• Representative Office

Each structure has specific requirements and implications for liability and taxation.

2. Taxation

Understanding the Montenegrin tax system is crucial for compliance. The key taxes to consider include:

• Corporate Income Tax: Currently set at a flat rate of 9%
• Value-Added Tax (VAT): Standard rate is 21%, with a reduced rate of 7% on certain goods and services
• Personal Income Tax: Includes a flat rate for earnings

It's important to stay updated on tax laws and ensure timely filings to avoid penalties.

3. Employment and Labor Laws

Compliance with labor laws includes several critical elements:

• Employment Contracts: Must meet legal standards and include specific terms of employment
• Minimum Wage: Adherence to national minimum wage requirements
• Working Hours and Conditions: Compliance with regulations on working hours, health, and safety conditions

4. Financial Reporting and Auditing

Businesses must maintain proper financial records and submit annual financial statements. Larger entities might be subject to external audits, especially publicly listed companies and those with significant revenue.

5. Data Protection and Privacy Laws

Montenegro's data protection regulations require businesses to safeguard personal data. This includes:

• Compliance with the Law on Protection of Personal Data: Align practices with local data protection laws
• Data Security Measures: Implement effective security protocols to protect sensitive information

6. Intellectual Property

Safeguarding intellectual property through registration and enforcement is critical. Businesses should ensure trademarks, patents, and copyrights are registered with the Intellectual Property Office of Montenegro.

7. Anti-Money Laundering (AML) and Anti-Corruption

Adherence to AML and anti-corruption regulations is essential. This involves:

• Implementing Internal Controls: Set up policies to detect and prevent money laundering activities
• Employee Training: Conduct regular training on AML and ethical practices

In summary, running a US business in Montenegro requires a comprehensive understanding of local legal, financial, and regulatory environments. By staying informed and compliant, businesses can successfully navigate the Montenegrin 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 Montenegro

Understanding Tax Obligations for Running a US Business in Montenegro

Running a US business in Montenegro involves a set of unique tax obligations and regulations. This article outlines the key considerations to help business owners navigate the complexities of the Montenegrin tax system while ensuring compliance with both local and US tax laws.

Corporate Taxation

Montenegro has a competitive corporate tax rate of 9%. This flat rate applies to all companies, including those owned by foreign entities. However, US business owners must consider the impact of this rate on their overall tax burden and how it interacts with US tax obligations.

Double Taxation Treaty

The United States and Montenegro do not have a double taxation treaty. This absence means US business owners may be subject to taxation in both countries. Understanding how to leverage foreign tax credits on your US tax return can help mitigate some of this burden.

Value Added Tax (VAT)

Montenegro imposes a Value Added Tax (VAT) at a standard rate of 21%. Certain goods and services may be taxed at reduced rates or exempt. US businesses should register for VAT if their taxable turnover exceeds 18,000 EUR annually. Compliance with VAT obligations is crucial for operating effectively in Montenegro.

Employee Taxation

If you employ staff in Montenegro, understanding local payroll taxes is essential. Employers must withhold personal income tax, health insurance, and social security contributions from employees' wages. These contributions are significant and can affect overall labor costs.

• Personal Income Tax: 9% for wages or 15% for annual income over 40,000 EUR.
• Health Insurance: Employer contributes 2.3%, and the employee contributes 8.5%.
• Social Security: Employer contributes 6.0%, and the employee contributes 15.0%.

Transfer Pricing

Transfer pricing regulations govern transactions between related entities to ensure they are conducted at arm's length. US businesses with related entities in Montenegro must comply with transfer pricing documentation requirements to avoid penalties and ensure transparency.

Reporting Requirements

US business owners must adhere to various reporting requirements in Montenegro. Annual financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS). Additionally, tax returns must be filed annually, and VAT returns must be submitted monthly or quarterly, depending on turnover.

US Tax Considerations

Despite operating in Montenegro, US business owners remain subject to US tax regulations. It's essential to understand how foreign income and expenses are reported on your US tax return. Utilizing Section 911 exclusions and foreign tax credits can help reduce double taxation.

Consulting with a tax advisor experienced in international and US tax law can provide invaluable guidance for managing your business's tax obligations effectively.

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