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You do not have to move to the United States to form a U.S. business entity. But incorporation is only one decision: first work out whether you need a U.S. entity at all, then match the structure and state to your ownership and actual U.S. activity. State registrations, federal tax classification, information returns and your European country’s rules can all matter afterward. An entity and an EIN also do not guarantee that a bank or payment provider will accept you.
Start with what the U.S. operation needs to do
A U.S. company is not a universal prerequisite for selling to U.S. customers. Before filing, identify the specific need: a separate legal subsidiary, registration of your existing European company to operate in a state, or a way to sell across borders without a U.S. entity. Those choices can have different legal and tax consequences.
The U.S. Department of Commerce’s 2021 SelectUSA investor guide describes representative offices, branches and subsidiaries as distinct approaches. It is useful for understanding the broad structural choices, not as a source of current tax rates or a substitute for advice about your business. Your customer, investor or provider may have its own requirements, so verify those before treating incorporation as the solution.
Choose the legal structure before choosing a formation state
An LLC is a state-law entity; its U.S. federal tax classification is a separate question. Under IRS guidance, a single-member LLC is generally disregarded as separate from its owner for federal income-tax purposes by default, while a multi-member LLC is generally treated as a partnership. An LLC may elect corporate treatment. The right classification depends on the facts and any elections made.
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A branch is the foreign company itself conducting business in the United States. A U.S. subsidiary is a separate entity owned by its parent or other owners. These are not interchangeable labels: they change which entity is operating and can affect the legal and tax analysis. A representative office is another approach identified in the SelectUSA guide; what it can do and whether it suits a particular operation need to be checked for that business.
| Structure | Who conducts the U.S. operation? | Key point to resolve |
|---|---|---|
| Branch | The European company itself | Assess the foreign company’s U.S. trade or business, income and filing obligations. |
| U.S. subsidiary | A separate U.S. entity owned by its parent or other owners | Choose the entity and federal tax classification, then assess the subsidiary’s state and federal filings. |
| Representative office | Not specified here; the SelectUSA guide treats it as a distinct approach | Confirm what activities are permitted and appropriate for the intended operation. |
The SelectUSA guide is dated 2021 and should not be used to assume current tax rates or a treaty outcome. Before deciding, map who will own the U.S. operation, where people and decisions will be located, whether there will be employees or inventory, and what customers or investors require. Also review the European parent company’s and founders’ tax and company-law position with advisers familiar with the relevant country.
Register where the business actually operates
Forming in one state does not automatically satisfy registration requirements in every state where the company does business. The U.S. Small Business Administration (SBA) says activities that may trigger registration can include physical presence, frequent in-person client meetings, a significant share of revenue from a state, or employees there. If the company operates in multiple states, it may have to form in one and foreign-qualify in others. Qualified businesses typically face taxes and annual-report fees in both the formation and qualification states; the rules and fees vary by state.
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Use the relevant state authority to check whether your specific activity requires registration and what filings, fees, taxes or reports follow. A state’s reputation as a business-formation destination does not by itself answer where the company must register. Delaware, for example, has its own agent and annual obligations, and activity elsewhere may create additional requirements.
What Delaware requires
Delaware requires a registered agent with a physical street address in the state. Its Division of Corporations says Delaware corporations must file annual reports and pay franchise tax, due by March 1. The Division’s formation guidance, reviewed October 3, 2026, lists corporation franchise tax from a $175 minimum to a $200,000 maximum. Delaware LLCs, limited partnerships and general partnerships do not file an annual report there, but pay an annual tax of $300. Check the state’s current requirements before relying on these amounts or deadlines.
Delaware’s Division of Revenue says corporations pay income tax on income allocated and apportioned to Delaware. The state has no state or local sales tax, but does impose gross-receipts tax and business-license requirements. “No sales tax” therefore does not mean “no state taxes.”
Understand what a registered agent and EIN do
Registered agent
A registered agent receives official papers and legal documents for a business in the state where it is registered. Delaware requires a physical street address and availability during normal business hours. A commercial registered agent can receive documents for a founder living abroad, but that service does not, by itself, provide a staffed business office, a bank account, a general mailing solution or legal advice.
Employer Identification Number
An Employer Identification Number (EIN) is a federal business tax identifier. The SBA says it is free to apply for and identifies common uses including federal tax, hiring, opening a bank account and obtaining licenses. The fact that an application has no government fee does not establish how quickly an applicant will receive an EIN.
An EIN is not required in every situation. IRS guidance says a single-member disregarded LLC without employees or excise-tax liability may not need its own EIN for federal income-tax reporting. It can still apply for one if needed to open a bank account, and state law may require one. LLCs with employees or specified excise-tax obligations need an EIN.
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Plan for U.S. tax and information reporting
Foreign ownership and management from Europe do not, on their own, settle whether a U.S. filing is required. The IRS says a foreign corporation may have to file Form 1120-F if it is engaged in a U.S. trade or business and has effectively connected income (ECI). Whether a foreign corporation is engaged in a U.S. trade or business is fact-dependent and not straightforward; employees working in the United States and U.S. branch operations can create exposure. U.S.-source income connected with that business is generally ECI.
A tax treaty may affect the result, but treaty eligibility and any required disclosures must be considered for the particular facts. The 2021 SelectUSA guide discusses potential U.S. taxation, withholding and state-level exposure, but its historical rates should not be treated as current. Get advice on current federal and state rules rather than carrying over figures from an older guide.
Foreign-owned U.S. disregarded entities
There can also be an information-return requirement even when a foreign-owned U.S. disregarded entity does not file an income-tax return as such. IRS Form 5472 instructions say that, when the reporting rule applies, the entity must attach Form 5472 to a pro forma Form 1120. This is a technical reporting rule: check the current IRS instructions and consult a qualified tax adviser about whether it applies to your ownership and transactions.
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Check the current beneficial-ownership reporting position
As of October 3, 2026, FinCEN’s current beneficial-ownership information (BOI) page says U.S. companies are exempt from BOI reporting under its interim final rule. It describes the reporting-company definition as entities formed under foreign-country law and registered to do business in a U.S. state or Tribal jurisdiction. This area can change; check FinCEN’s current guidance before acting, rather than relying on older general advice that every newly formed U.S. LLC must file a BOI report.
Verify banking and payment access before you incorporate for it
Forming a U.S. entity and obtaining an EIN do not guarantee that a U.S. bank or financial-technology provider will open an account. Eligibility, in-person requirements and accepted proof of address and ownership can vary by provider and by the European country where the founder resides. Confirm the provider’s current geographic eligibility and onboarding requirements before choosing an entity or paying formation costs for the purpose of accessing its services.
Quick Recap
A practical decision sequence
- Write down the business need. Identify whether a U.S. legal entity is actually required, or whether registering your European company or selling cross-border could meet the need.
- Map ownership and operations. Specify who will own the operation, where its people, inventory, clients and decision-making will be, and whether the U.S. activity involves employees or a branch.
- Compare branch and subsidiary consequences. Determine which company will conduct the business, what legal separation is intended, and what federal tax classification and reporting follow from the ownership and elections.
- Check state registration obligations. Identify states where the company’s activities may require registration, then verify filing, tax and annual-report requirements with each state authority.
- Confirm professional and provider requirements. Review U.S. and home-country tax and company-law issues with qualified advisers, and check bank or payment-provider eligibility before treating incorporation as a route to an account.
- Calendar ongoing obligations. Track applicable state reports and taxes, federal tax returns and information reporting, and re-check volatile rules such as BOI reporting against current official guidance.
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