If you’re starting a business in the US as a foreigner, opening an LLC is just the first step. The second step is opening a business bank account in the States. Keep reading to find out how to open a US bank account as a foreigner for your LLC.
Although you probably know how to do that in your home country, the process in the US is different. On top of that, choosing a bank as a foreigner is no easy task. If this is your first US-based business, you probably know nothing about their financial market. And to make things worse, there are thousands of banks to choose from in the US.
That’s why we decided to write this guide to help other nonresidents open a US bank account for their LLC. In this article, we’ll list everything you need to go through the process, how to choose the right bank for your business, and a few things you should consider before opening an account.
But first, let’s start with why you’d want to open a US bank account as a foreigner …
Why Do Foreigners Open US Business Bank Accounts?
Most who want a US business bank account do so because they want to start a US-based or global business. And one of the primary reasons they choose America to open an LLC is the tax benefits.
The laws for nonresidents in America allow them to avoid paying taxes for all non-US-sourced income. That means you pay lower taxes if you operate your business from offshore or your income falls into passive income (e.g., real estate investing).
And since most foreigners’ primary source of income lies elsewhere (in their home country), they can offer different types of services without having to pay taxes (e.g., IT services, dropshipping).
Besides the above, having a US-based company comes with several other benefits:
- Access to the American financial system;
- A business entity in one of the most lucrative global markets.
- Access to various payment services and providers unavailable in most parts of the world (e.g., PayPal, Amazon, Stripe, Wise);
- The ability to invest in US real estate.
So if your business can benefit from opening a US business bank account, here’s how you can do it as a nonresident.
Can Foreign Entities Open a US Business Bank Account?
Unlike private bank accounts, one (i.e., foreign entities) cannot open a US business bank account as a foreigner without being registered in the States. That is because you need an Employer Identification Number to open one, but we wrote an entire article about getting an EIN without SSN. So if your business is registered abroad, you won’t be eligible for a US bank account.
However, there is an easy way around this problem…
Can You Open US Business Bank Account as Foreigner?
There are no residency requirements for opening a US business bank account. That means you don’t need to live in the States to open one. However, you need a registered LLC in the country to do so.
So the way you get a US business bank account as a foreigner is by opening a US LLC first.
- Choose a name for your LLC;
- Appoint a registered agent;
- File the Articles of Incorporation with your local state;
- Define your managing member and prepare an Operating Agreement;
- Get your EIN (from the federal governing body).
After officially opening an LLC and getting your EIN, you’ll become eligible to open a business bank account in the US.
Do You Need an SSN or ITIN to Open a US Business Bank Account?
However, it’s better to have these numbers as well since having them gives you much more options.
Can You Open US Business Bank Account As Foreigner Online?
The best part about wanting to open a US business bank account as a nonresident is that you can do it online. However, there’s a catch.
If you want to open a US business bank account online, you’ll need to do it with an online bank. Most traditional brick-and-mortar banks (e.g., Bank of America, JPMorgan Chase, Wells Fargo) require you to do that in person. So you’ll have limited options if you want to do everything from abroad.
There’s nothing wrong with opening an account through an online bank, though. However, online banks have several pros and cons that you should be aware of before deciding:
- They have state-of-the-art e-banking applications;
- Everything you need is one click away (opening an account, transferring funds, etc.);
- You can do the entire process remotely.
- Online banks don’t hand out loans;
- They aren’t operated by the biggest players in the market, so you should never keep all your money in them;
- Most online banks are new players in the market, meaning they come with greater risks than traditional banks;
- Some online banks limit the amount of money you can keep in them.
As you can see, some of these disadvantages are quite significant. That is especially the case if you want to build a business by relying on a loan. In that case, you’ll need to travel to the States and open an account at a local brick-and-mortar establishment. The same applies if you plan to scale your business.
But if you just need a legal presence in the US (like many independent IT contractors or small real estate investors), opening an account in an online bank will do the trick for you.
So Which Bank Should You Choose?
If you decided to go with an online bank for your LLC, the three best options are:
These banks allow foreigners to open a US business bank account without much hassle. They also come with easy-to-use apps that allow you to manage your finances while living overseas.
Although these three providers aren’t legally considered banks, they are regulated as such. That means your funds will be safe, just like with a brick-and-mortar institution.
Another option is flying to the US to open a business account with a traditional bank. If you opt for this option, we advise you to open an account with a smaller, local bank in your state.
That applies to both IT professionals and real estate investors. And there’s a good reason for that.
Smaller banks usually specialize in different fields or industries, so finding one that works with clients from your niche can get you many benefits. Some include lower fees, a more personalized banking experience, and better customer service.
Unfortunately, there are too many local banks to list them here, so you will need to do your research if you go with this option. Alternatively, if you need help finding the best local bank for opening an account for your LLC, our team at NRI can help you.
We’ve helped dozens of clients and investors open a US LLC and business bank accounts across dozens of States. So, if you need advice on choosing the best bank for your business or need someone to handle the grunt work, give us a call.
How to Open a US Bank Account for Your LLC
Opening a US business bank account as a foreigner is relatively straightforward if you’ve opened your LLC. Here are the documents you’ll need to provide to the bank (online or brick-and-mortar) to complete the process:
- Photo of the person who is opening the account (company director);
- Your LLC certificate and Articles of Incorporation/Organization (you get them when opening a US LLC);
- EIN confirmation letter (as provided by the IRS);
- Your LLC’s Operating Agreement;
- A form of identification (e.g., passport, driver’s license);
- Proof of personal address of the person opening the account (company director);
- A minimum deposit (some banks require this, while others do not).
The above requirements are mostly universal for all US banks. However, some banks may also ask for additional information, like a US phone number for your LLC. That’s why you should still double-check the required paperwork with each bank before submitting anything.
If you’ve already opened an LLC, you’ll have most of the above documents already at hand, so all you’ll need to do is fill in the missing pieces and submit a request with your desired bank.
Bonus Tips to Keep in Mind (From a Seasoned Real Estate Investor)
Before we wrap up, we wanted to share some advice from our CEO, Luka Malkovich, who has been investing in US real estate through an American LLC for years. His investment strategy is based on operating a US-based business while living overseas, so he’s been through this process himself.
Here are four nuggets of advice he has for you regardless of whether you’re an investor yourself or are opening a different type of business:
1. Find a Bank That Specializes in Working With Clients From Your Industry
This advice is particularly handy for real estate investors, as many small banks specialize in dealing with these types of clients. You’ll get better-tailored service and easier investment loans for future (since real estate is great collateral). However, this advice can also apply to IT professionals and other industries.
2. It’s Wise to Have Several Bank Accounts for Your Business
Having more than one bank account for your business is always smart. And they don’t have to be in the same bank or state. In fact, it’s better if they’re not! There are several reasons having multiple accounts can be beneficial:
- You have more room for negotiation when looking for loans (different banks offer different rates);
- You never keep all your money in a single place (even in the worst-case scenario, you’ll always have access to some of your funds);
- You’ll have access to several local markets.
Just make sure not to overdo it — three to four accounts should be more than enough to give you the necessary flexibility.
3. Have an Account With Both an Online and Brick-And-Mortar Bank
Opening an account (or several) at both an online and brick-and-mortar bank gives you much flexibility as a foreigner. Online banks usually have more intuitive applications and faster online transfers than physical ones. On the other hand, brick-and-mortar banks have no account limits.
That’s why having access to both gives you the best of both worlds.
4. Always Ask About International Transfers Before Opening a Bank Account as a Foreigner
Different banks have different transfer fees and conversion rates, especially for international wire transfers. Since you’re a foreigner, these will be most of your transactions, and you don’t want to waste precious money on unreasonably high fees.
Always keep that in mind when choosing a bank (be it online or brick-and-mortar).
Need Help to Open a Bank Account as a Foreigner for Your LLC?
If you’re unsure how to choose the right bank for your LLC or don’t know if you can go through the entire procedure yourself, you can always get professional help.
Here at NRI, we helped dozens of entrepreneurs and investors start a business in the US through their own LLCs. Our team has opened dozens of companies and business bank accounts across many US states for clients worldwide. Whether you want to invest in US real estate, open an IT company, or start any other global business, our team of professionals can lead you through the process with minimal hassle.
Get in touch if you need help finding the best bank for your LLC or want someone to help you start one.
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