How to Register a Business in the US from Rwanda

Step 1: Benefits of starting your US business from Rwanda

Starting a US business from Rwanda offers numerous advantages that can propel an entrepreneur toward global success. One of the foremost benefits includes the ease of accessing the US market, known for its vast consumer base and high purchasing power. Establishing a US business presence allows Rwandan entrepreneurs to operate within a stable and robust economic environment, fostering growth and innovation. Additionally, the US provides extensive resources and support for startups, including incubators, accelerators, and abundant networking opportunities that can be invaluable for business expansion.

Another significant advantage involves leveraging Rwanda's improving ICT infrastructure and cost efficiencies. Rwanda has made remarkable strides in building a tech-friendly environment, which means that entrepreneurs can capitalize on lower operational costs while managing a US business. Furthermore, Rwandan businesses can benefit from time zone advantages, facilitating effective round-the-clock operations and customer service. By starting a US business from Rwanda, entrepreneurs can enjoy the best of both worlds, merging Rwanda's competitive advantages with the expansive reach of the US market.

Step 2: How to start your US business from Rwanda

Starting a US business from Rwanda involves several key steps. First, you will need to determine the type of business entity you wish to establish, such as a corporation, limited liability company (LLC), or partnership. This choice will affect your legal obligations and tax responsibilities. You can consult with a legal advisor or an accountant to help you make the right decision. Researching US states and their specific regulations is also crucial since some states offer more favorable conditions for foreign entrepreneurs.

Once you have chosen a business structure and state, you will need to register your business with the appropriate US government agencies. This typically involves filing articles of incorporation or organization with the Secretary of State's office in your chosen state. You will also need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for tax purposes. Additionally, depending on the nature of your business, you may need specific licenses or permits to operate legally in the US. Engaging the services of a registered agent within the US can be beneficial, as they can handle official correspondence on your behalf.

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 Rwanda

Understanding Compliance Requirements for Running a US Business in Rwanda

Expanding a US business into Rwanda involves navigating various compliance requirements unique to the Rwandan regulatory framework. Here are key considerations to help ensure your business complies with local laws and operates smoothly:

Legal Structure and Registration

The first step is to decide on the legal structure of your business. In Rwanda, this could be a limited liability company (LLC), branch office, or representative office. Each structure has its own set of legal requirements and implications.

• Register your business with the Rwanda Development Board (RDB).
• Ensure compliance with the Companies Act, which governs corporate structures and operations.
• Obtain necessary licenses and permits based on your industry.

Taxation

Understanding the tax obligations in Rwanda is crucial. The Rwanda Revenue Authority (RRA) administers the tax system, which includes:

• Corporate Income Tax: Standard rate is 30% on net profits.
• Value Added Tax (VAT): Currently set at 18% on goods and services.
• Withholding Taxes: Applicable on certain payments such as dividends, interest, and royalties.
• Customs Duties: Obligations arise for imported and exported goods.

Employment and Labor Laws

Compliance with Rwandan labor laws ensures smooth operation and minimizes legal risks. Key considerations include:

• Adhering to the Labor Code, which includes employment contracts, working hours, and termination clauses.
• Ensuring minimum wage compliance and fair labor practices.
• Providing mandated benefits such as social security contributions and health insurance.

Local Compliance and Reporting

Maintaining ongoing compliance involves regular reporting and adherence to local regulations:

• Filing annual returns and financial statements with the RDB.
• Submitting periodic tax returns and financial reports to the RRA.
• Meeting sector-specific regulatory requirements and standards.

Environmental and Social Governance (ESG)

Rwanda emphasizes sustainable development and responsible business conduct:

• Compliance with environmental regulations, including waste management and pollution control.
• Adopting corporate social responsibility practices that align with local community development.

By understanding and adhering to these compliance requirements, US businesses can effectively navigate the regulatory landscape in Rwanda and foster successful operations.

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 Rwanda

Understanding Tax Obligations for Running a US Business in Rwanda

Operating a US business in Rwanda involves navigating a different set of tax obligations and regulations. It is crucial to understand these considerations to ensure compliance and optimize your financial responsibilities.

1. Corporate Income Tax

Corporate income tax is a primary consideration. In Rwanda, the corporate income tax rate is 30%. This tax applies to profits generated by corporate entities. It is essential to maintain detailed financial records to accurately report and remit this tax.

2. Value Added Tax (VAT)

Value Added Tax (VAT) is levied on the supply of goods and services. The standard VAT rate in Rwanda is 18%. Businesses must register for VAT if their taxable turnover exceeds the registration threshold. Regular VAT returns must be filed, and the tax must be remitted timely.

3. Withholding Taxes

Withholding taxes are applicable to various payments made by the business. These include:

• Dividends: A 15% withholding tax on dividends distributed to non-resident shareholders.
• Interest: A 15% withholding tax on interest payments to non-residents.
• Royalties and Management Fees: A 15% withholding tax on payments for royalties and management fees to non-residents.

4. Pay As You Earn (PAYE)

For businesses employing staff in Rwanda, Pay As You Earn (PAYE) must be considered. Employers are required to withhold employee income tax from salaries and wages. The tax rates are progressive, ranging from 0% to 30% based on income brackets.

5. Social Security Contributions

Businesses must also contribute to the Rwandan Social Security Fund (RSSB). Employers are responsible for contributing 5% of the employee's gross salary to the pension scheme, along with an additional 2% for occupational hazards insurance.

6. Double Taxation Agreements

Rwanda has double taxation agreements (DTAs) with several countries, including the United States. These agreements help prevent double taxation on income earned in both countries by defining tax obligations and credits. It is beneficial to understand the provisions of the DTA between Rwanda and the United States to mitigate tax liabilities effectively.

7. Local Government Taxes and Fees

In addition to national taxes, businesses may be subject to various local government taxes and fees. These can include business licenses, property taxes, and local service fees. Regularly check with local authorities to ensure compliance.

8. Professional Assistance

Given the complexities of the Rwandan tax system and its differences from the US system, it is advisable to seek professional tax advice. Engaging local tax consultants or accountants can provide valuable insights and ensure that your business remains compliant with all tax regulations.

Understanding and adhering to these tax obligations will help in smooth operations and avoid any legal complications while running a US business in Rwanda.

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