How to Register a Business in the US from Romania

Step 1: Benefits of starting your US business from Romania

Starting a US business from Romania offers a unique blend of opportunities that can significantly benefit entrepreneurs. One of the key advantages is the ability to tap into one of the world's largest and most dynamic markets from a cost-efficient base. Romania boasts a competitive cost of living and operational expenses, particularly when compared to the United States. Lower costs for skilled labor, office space, and general business overheads enable Romanian entrepreneurs to allocate more resources towards growth strategies such as marketing, product development, and customer acquisition.

Another significant benefit is the strategic position of Romania within the European Union. Entrepreneurs can leverage robust EU trade agreements and enjoy easier access to both European and American markets. Additionally, Romania's rapidly growing tech and startup ecosystem provides a fertile ground for innovation and collaboration. With a high proficiency in English and strong technical skills, Romanian professionals can easily integrate with US-based teams and clients, ensuring smoother communication and efficient project execution. By combining local expertise with the expansive opportunities available in the US, Romanian entrepreneurs can scale their businesses effectively while minimizing risks and maximizing returns.

Step 2: How to start your US business from Romania

Starting a US business from Romania involves several steps to ensure that you comply with both US and Romanian regulations. Firstly, you need to choose the type of business structure you want to establish in the US. Common types include a sole proprietorship, partnership, limited liability company (LLC), and corporation. Each has its own legal and tax implications, so it's essential to select the structure that best suits your business goals.

Once you've chosen your business structure, you'll need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number is crucial as it’s required for tax purposes and to open a US-based business bank account. After you have your EIN, you should register your business with the appropriate state authorities, which typically involves filing articles of incorporation or an equivalent document. It's also advisable to consult with a legal expert to ensure full compliance with US laws and regulations.

While these steps provide a roadmap, it’s important to perform due diligence and consider seeking professional advice to navigate the complexities of international business establishment. A strong understanding of both US and Romanian laws will help you avoid potential pitfalls and set your business up for success.

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 Romania

Understanding Compliance Requirements for Running a US Business in Romania

Operating a US business in Romania involves navigating a variety of compliance requirements that can be different from those in the United States. Understanding these considerations is essential for ensuring smooth operation and legal compliance. Below are key factors to consider:

1. Company Formation

Before establishing your business, you must choose a legal structure, such as a Limited Liability Company (SRL) or Joint Stock Company (SA). Each type has its own registration requirements and implications for liability and taxation.

1. SRL: Requires a minimum capital of 1 RON and at least one shareholder.
2. SA: Requires a minimum capital of 25,000 EUR and at least two shareholders.

2. Taxation

Romania has its own tax system that businesses need to comply with:

• Corporate Income Tax: The standard rate is 16%, though micro-enterprises can benefit from a lower tax rate of 1-3% based on turnover.
• Value Added Tax (VAT): The standard VAT rate is 19%, with reduced rates of 9% and 5% for certain goods and services.
• Social Contributions: Employers must contribute to health insurance, pension funds, and other social security systems.

3. Employment Law

Romanian employment law is comprehensive and protective of employees. Key considerations include:

• Employment Contracts: Written contracts are mandatory and must outline job responsibilities, salary details, and working conditions.
• Working Hours: The standard workweek is 40 hours, with overtime rules strictly governed.
• Minimum Wage: Businesses must comply with the national minimum wage, which is regularly updated.

4. Data Protection

Romania adheres to the EU’s General Data Protection Regulation (GDPR), which imposes strict guidelines on how businesses collect, store, and process personal data. Ensure your business:

• Obtains Consent: Explicit consent must be obtained from individuals whose data is collected.
• Ensures Data Security: Implement robust security measures to protect personal data from breaches.
• Provides Data Access: Individuals have the right to access their data and request corrections or deletion.

5. Local Permits and Licenses

Depending on the nature of your business, various permits and licenses may be needed. These could include:

• Health and Safety Permits: Required for businesses in sectors such as food service and manufacturing.
• Environmental Permits: Necessary for businesses that may impact the environment.
• Construction Permits: If you plan to build or modify physical infrastructure.

Conclusion

Successfully running a US business in Romania necessitates a thorough understanding of local compliance requirements, from company formation to employment laws. By paying careful attention to these factors, you can ensure your business operates smoothly and legally.

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 Romania

Understanding Tax Obligations for Running a US Business in Romania

Expanding your US-based business into Romania can offer great opportunities, but it is crucial to understand the various tax obligations involved. Below, we outline key considerations to help you navigate the Romanian tax landscape.

1. Corporate Income Tax

Romania imposes a corporate income tax (CIT) on the profits made by businesses operating within its borders. As of the most recent update, the standard CIT rate is 16%. Make sure to check the latest laws as rates can change.

2. Value-Added Tax (VAT)

Romania mandates a value-added tax (VAT) on most goods and services. The standard VAT rate is 19%, with reduced rates of 9% and 5% applicable to specific goods and services such as pharmaceuticals, books, and certain food products.

3. Withholding Tax

When a US business pays dividends, interest, or royalties to Romanian residents, it is subject to withholding tax. Rates vary depending on the type of income and applicable tax treaties, so consulting a tax professional for detailed calculations is recommended.

4. Social Security Contributions

If you have employees working in Romania, both employer and employee are required to contribute to social security. Employer contributions include components for health insurance, pension, and unemployment insurance.

5. Double Taxation Treaty

The United States and Romania have a double taxation treaty to prevent businesses from being taxed twice on the same income. This treaty outlines the specific scenarios where tax relief is applicable, helping to minimize your total tax burden.

6. Transfer Pricing

Rules on transfer pricing are crucial for businesses operating internationally. Ensuring that transactions between your US headquarters and Romanian branch adhere to market conditions is essential to avoid unnecessary tax scrutiny.

7. Registration and Compliance

Your business must be registered with the Romanian Trade Register, and you will need to obtain a taxpayer identification number (TIN). Staying compliant with filing deadlines for CIT, VAT, and other taxes is essential to avoid penalties.

8. Consulting a Local Tax Professional

Given the complexities of the Romanian tax system and its evolving nature, consulting a local tax advisor can be invaluable. A professional will help ensure compliance and optimize your tax strategy.

Understanding these tax considerations can significantly impact the success of your US business in Romania. Proper planning and compliance are key to reaping the benefits of this vibrant market.

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