How to Establish a U.S. Business Bank Account

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If you’re not a U.S. resident, opening a U.S. bank account for your U.S. business entity can be a challenging task. We’ve covered the many advantages of having a U.S. entity in past articles, but once you’ve cleared that hurdle, the next big step in establishing trust with U.S. buyers is having a credible physical presence for your business inside the United States.

While there may be a few exceptions on certain high demand items, U.S. consumers will generally feel safer choosing an online seller that appears to be based inside the U.S. before they’ll buy overseas. This awareness and the huge rise in U.S. online sales has created a dramatic increase in the number of foreign marketers establishing a U.S. LLC or Corporation.

Here are the critical elements of a credible U.S. business presence:

  1. A U.S. LLC or corporation (compliance and tax advantages) Nevada is a preferred state.
  2. A physical U.S. office address (consumer trust and banking credibility)
  3. A U.S. bank account (payment processing and merchant fee advantages)

Whether you think of them as legs on a stool or spokes in a wheel, it’s immediately apparent that having all three securely in place will send a much stronger marketing message and give your U.S. income stream a lot more stability. It’s relatively easy to form a corporation and obtain the requisite “EIN” number without being physically present in the U.S. but opening a U.S. bank account from outside the country is nearly impossible. U.S. banks have a fiduciary responsibility to know the client AND to have met with them BEFORE opening a U.S. account.

Here’s what banks require from non-residents to open a U.S. account (some requirements will change slightly from bank to bank):

  1. Articles for the U.S. entity or the name of the sole proprietorship or general partnership
  2. EIN (Employer Identification Number) for the business (obtained though the IRS)
  3. Lease agreement for a physical office address (highly preferred over a P.O. box)
  4. Your business address in your home country
  5. Color copies of passport and driver’s licenses for all persons on the account
  6. Reference letter from a bank officer in your home country verifying the following:
    1. How long you’ve been a customer
    2. That they’ve viewed your current identification, noting ID type and number
    3. Your current home and business addresses
  7. Your home, business and cell phone numbers.
  8. Your occupation and employment information
  9. $100 – $500 opening deposit wired to the account (generally deposits of $1500 – $2500 are recommended to avoid minimum monthly fees)

The big question is; do YOU have to be in the U.S. in person to open the account?

99% of the time, the most reliable answer is YES. As noted earlier, banks consider it part of their fiduciary responsibility to meet with you in person when opening a U.S. account, especially in the “post-patriot act” regulatory environment.

For example, Bank of America requires you to be here in person AND have an ITIN number before opening a U.S. account.  Citibank® has an option to establish an account without coming to the U.S., but ONLY for personal accounts and last year they raised their minimum balance requirement to $50,000.00. The simplest strategy is to plan ahead, allow some extra time and make opening a business bank account part of your next routine trip to the United States. Many of my international clients have had good results with Citibank® which has an established global presence and a wide variety of service options for international customers.

Earlier I said that opening a U.S. account is “nearly” impossible without being physically present inside the country, but there are some limited exceptions. If travel to the U.S. is not a viable option for you right now, there are a few options worth trying, but keep in mind that this information changes frequently. Both banks and governments are constantly revising their bureaucratic procedures and regulatory practices.

At first glance, online fund transfer portals like PayPal™ and their many competitors may look like an easy way to get around the cost and hassle of establishing a face to face banking relationship in the U.S. As it turns out, PayPal™ has begun checking the ISP address of the person who is withdrawing funds in the past few months. They’ve become as wary of government regulatory entanglements as the bankers and started freezing accounts for ISPs outside the U.S. and requiring a U.S. bank account for fund transfers. This is an especially important consideration for businesses that rely heavily on ACH transactions.

So what viable options do you have?

Some of my readers and clients report that HSBC may be able to establish a U.S. account for you after you’ve had an HSBC business account in your home country for at least 3-6 months. The time requirement may vary from one country to another and you can find out if they operate in your home country at http://www.hsbc.com. The local branch officer in your home country will walk you through the steps required to facilitate opening a U.S. account on a case-by-case basis. In general, just remember that preference for U.S. account approval is most often given to customers who already have an established business banking relationship with a branch in their home country.

As of this writing, HSBC has branches in California, Connecticut, the District of Columbia, Delaware, Florida, Maryland , New Jersey, New York (their corporate headquarters), Oregon, Pennsylvania, Virginia and Washington. The state we recommend is Florida which, like Nevada, has no personal state income taxes. Keep in mind that many states, including Florida, require separate state registration for your business once your bank account has been established. We routinely guide our NCP incorporation clients through frequently overlooked compliance matters like these to help them avoid costly mistakes when they set up their U.S. operations.

When we checked with HSBC, they told us that opening an account in this manner requires a site inspection of the account holder’s U.S. office. In our hypothetical Florida example, you would need to establish a physical executive office address in Florida. Costs for this vary and are separate from any banking or incorporation fees but may average around US$ 3,000 per year. We would only recommend taking this step once your home country HSBC branch has confirmed that you can establish a U.S. account through your home country. To make this process faster and more cost effective, we recommend comparing prices and features on complete U.S. office packages such as the ones we provide for NCP clients.

It’s important to remember this key distinction:

Even if you’re operating in your own name as a sole proprietorship, you’re setting up a business account, not a personal account. With most banks, the rules for business accounts are significantly different from the ones for personal accounts and requirements can also vary from country to country. Before opening a U.S. account with any bank, pay especially close attention to their wiring policies (including holds, fees and tax implications) and how they affect your ability to control and access the funds in your U.S. account.

The challenge with most U.S. banks is that local branches may appear to operate like individual “franchises” even though in reality they’re not. Because they all have local targets to hit for new accounts and other market-specific performance metrics, you’re likely to get different answers from branch to branch on their business account rules and procedures. We encountered this with Wells Fargo, certainly not a small-time boutique operation, where a couple of eager local branch managers said “yes” but later got  overruled with a “no” at the district level.

In the final analysis, virtually all banks agree that coming to the U.S. in person is the best way to ensure a smooth and convenient start for your U.S. business account. Compliance rules and enforcement practices are changing constantly. Contact Nevada Corporate Planners at 1-702-367-7373 for the latest updates AND options for establishing a U.S. bank account.