Once you have decided that a US entity is appropriate for your business, the principal steps involved in establishing a new US entity are as follows:

Initial determinations:

Determine the appropriate form of US entity, which is likely to be a corporation or a limited liability company (LLC).

Corporations are similar to UK limited companies and have shareholders and directors. LLCs have a “flatter” structure and are owned by members and managed by members or managers. LLCs have fewer record-keeping requirements but may not be the appropriate choice for a UK parent company.

Determine the appropriate state of formation for the US entity. Entities are formed at state (rather than federal) level. An entity may be established in the state where the principal business will be conducted or in a “business friendly” state such as Delaware or Nevada.

Determine the capitalization of the corporation (how many shares will be issued, at what price, whether any loans will be made and how much each shareholder will contribute to the corporation as its capital contribution). Similarly in the case of an LLC, determine the membership interests to be issued and the amount of any loans. The US entity should be adequately capitalised and the financing structure between the UK and US entities put in place.

Determine who will be the shareholders, officers and directors of the corporation, or members and managers in the case of an LLC.

Determine the roles and responsibilities of the corporation’s officers and directors (or LLC’s members and managers).

To form the US entity:

File Articles of Incorporation (or equivalent) in the appropriate state.

You don’t need a US address to incorporate a business in the US but you will need to name a registered agent in your state of incorporation with a physical address in the state of incorporation (and any states in which the entity is registered to do business). The registered agent is responsible for important legal and tax documents on behalf of entities.

Once a new entity has been formed, the next steps include:

Hold an organizational meeting, appointing the officers and directors, issuing shares to the shareholders and taking such other actions as necessary. In the case of an LLC, appoint manager(s) as appropriate.

Issue corporate stock or LLC interests in compliance with, or exemption from, federal and state securities laws.

Obtain federal employer identification number (EIN) or taxpayer identification number (TIN). This is required to open a US bank account.

Open a bank account.

Buy, lease or rent office space, hire employees, market the products, etc.

Determine states and cities in which to do business. File registrations and any fictitious business names (DBAs). Obtain appropriate county and city business licenses.

Prepare bylaws and shareholders agreement (for corporations) or operating agreement (for LLCs).

Inter-company agreements may be appropriate between the UK and US entities regarding financing, licensing and the provision of services.

Ongoing Filings

Corporate records and minute books should be maintained up to date and annual meetings or written resolutions prepared recoding corporate actions.

On an annual basis from the anniversary of its incorporation a corporation is generally required to make annual filings with the Secretary of State. LLCs typically require less formal record-keeping but state filings are required.

In general, the public disclosure requirements are generally less than in the UK For example, details are not generally required of a corporation’s shareholders or members of an LLC.

Private businesses are not required to publicly disclose the results of their financial operations. Based on their own requirements, banks and other lending institutions may require financial statements.

Additional filings may also be required. For example, the US Department of Commerce, through the Bureau of Economic Analysis requires certain US entities (such as investment funds or their portfolio companies) to file annual reports of foreign direct investments with the BEA.