If you’re an international business looking to expand into the US market or open a US Dollar business account, registering a US entity is a crucial first step. Without the proper registration, you may face banking restrictions, legal issues, and even financial penalties. Adro can help you with both registering in the US and opening your first US business account.

This article will walk you through why you need to register, the steps involved, and what happens if you don’t. Whether you’re a startup or an established company, understanding this process will help you operate smoothly in the US and avoid unnecessary risks.

Understanding Foreign Registration and Nexus Requirements

Before we talk about the steps, we have to understand what foreign registration and nexus requirements are.

Foreign registration is the process where a business registered in one country (or US state) seeks legal recognition to operate in another jurisdiction. For instance, if a company incorporated outside the US wants to conduct business within a US state, it must register as a foreign entity in that state. This ensures the business complies with local laws and is authorized to operate there.

Nexus requirements determine whether a business has a sufficient connection to a state, obligating it to collect and remit sales tax. A nexus can be established through:

• Physical Presence Nexus: Having a tangible presence, like an office, warehouse, or employees in the state.
• Economic Nexus: Reaching a certain level of sales or transactions in a state, even without a physical presence.

Each state has its own criteria for what constitutes "doing business" within its borders, so it's essential to understand and comply with these regulations to avoid potential legal and financial penalties.

The Importance of Registering

Suppose your business operates outside the US but plans to do business here, such as selling to US customers, hiring employees, or opening a US-dollar business account. In that case, you may need to register as a US entity.

Who Needs to Register?

You may need to register your business if you meet the following criteria:

• If you want to open a US business account or process USD transactions.
• Has a physical presence in the US (office, employees, or warehouse).
• Sells products or services to US customers and meets state-specific economic thresholds.
• Has contracts with US clients or suppliers that require legal recognition.
• Wants to establish credibility and legal protection in the US market.

Why Registering Matters?

• Access to US Banking: Many banks require businesses to be registered in the US before opening a USD account.
• Legal Compliance: Avoid fines, penalties, and restrictions when doing business in certain states.
• Better Business Opportunities: US clients and partners may prefer working with a registered entity for trust and security.

Without registration, your business may face difficulties opening business accounts, processing payments, and securing partnerships with US companies. Whether you're a startup, or a small to medium enterprise, registering a US entity helps build credibility, ensure compliance, and positions your business for long-term success.

Steps to Registering a US Entity

Registering a US entity may seem a bit complicated, but the process is straightforward when broken down into key steps. Whether you're forming a corporation or an LLC, each step ensures your business is legally recognized and compliant with US regulations. Here are the steps:

1. Choose a Business Structure: Based on your business needs, decide between a limited liability company (LLC) and a corporation. LLCs offer flexibility, while corporations may be better for raising capital.
2. Select a State for Registration: Choose the best option based on taxes, legal requirements, and where you plan to operate.
3. Obtain a Certificate of Good Standing: This document proves your business is legally compliant and active in its home country, which some US states require for registration.
4. File an Application for Authority: Submit this application to the Secretary of State in the US state(s) where you plan to operate, providing basic business details such as your name, address, and company officers.
5. Appoint a Registered Agent: Your business must appoint a registered agent, who can be an individual or a company offering agent services. The agent must receive legal documents on your behalf.
6. File Formation Documents: Submit Articles of Incorporation (for corporations) or Articles of Organization (for LLCs) with the Secretary of State in your chosen state.
7. Obtain an EIN (Employer Identification Number): Apply for an EIN from the IRS to handle tax reporting and open a business account.
8. Comply with State and Local Requirements: Some states require business licenses, permits, or annual reports to maintain compliance.

The steps given ensure that your business is legally set up and ready to operate in the US. Missing a step or choosing the wrong business structure can lead to unnecessary costs and legal hurdles. Be sure to take the time to register properly, as it will make it easier for you to open a US account, process transactions, and expand your business in the US market. If you’re not sure what to do, Adro can help with setting up a US entity.

What Happens if You Don’t Register?

Failure to register your business in the US can lead to serious legal and financial issues. Many states require foreign businesses to register before operating, and skipping this step can result in fines, penalties, and restrictions on business activities. 

The following can happen to your business if you don’t register:

• Legal Penalties: States may impose fines or back taxes for unregistered companies operating within their jurisdiction.
• Inability to Open a US Business Account: Most banks require a registered US entity to approve business accounts.
• Limited Legal Protections: Unregistered businesses may struggle to enforce contracts or take legal action in US courts.
• Reputational Damage: Potential clients and partners may view your business as unreliable or non-compliant.
• Risk of Business Shutdown: Authorities can block unregistered businesses from continuing operations in certain states.

Operating without the proper registration creates unnecessary risks that can disrupt business growth and financial stability. Registering a US entity not only keeps your business compliant but also opens doors to banking, legal protections, and credibility in the US market.

Registering a US entity is a crucial step for businesses looking to operate in the US, open a US business account, and stay legally compliant. It ensures smoother transactions, protects your business from legal risks, and builds credibility with US partners and customers.

If you're ready to expand your business globally, open a Business Account with Adro. With Adro, managing your US finances becomes even easier. Sign up today and start seamlessly handling USD transactions.

This article is intended for general informational purposes only and does not constitute professional advice. While we strive to provide accurate and up-to-date information, it may not apply to your specific circumstances. We recommend consulting with a qualified professional for personalized advice tailored to your unique situation.