How to Register a Business in the US from France

Step 1: Benefits of starting your US business from France

Starting a US business from France presents a unique array of benefits, particularly for entrepreneurs seeking to expand their market reach. One of the most compelling advantages is access to the vast and diverse consumer base that the United States offers. With a population exceeding 331 million, the US marketplace provides enormous potential for business growth and customer acquisition. French entrepreneurs can leverage this opportunity to tap into various niches and industries that are burgeoning in the US, from technology and e-commerce to health and wellness.

Moreover, launching a US business from France enables entrepreneurs to take advantage of favorable business regulations and a relatively straightforward incorporation process. The United States is known for its relatively low barriers to entry, encouraging innovation and competition. Additionally, many states offer attractive tax incentives and support structures for new businesses, which can significantly reduce operational costs. For French entrepreneurs, this transatlantic venture also serves as a strategic gateway to further international expansion, providing a solid foundation for global business endeavors.

Step 2: How to start your US business from France

Starting a US business from France involves several steps and requires a solid understanding of both French and American regulations. Firstly, you will need to decide on your business structure, which could range from a Limited Liability Company (LLC) to a Corporation (C-Corp or S-Corp). Each structure has its pros and cons, particularly concerning taxation and administrative complexity. Once you've chosen a structure, you will need to register your business with the appropriate US state authorities, which usually involves filing articles of incorporation or organization and paying a registration fee.

Another crucial step is obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), which you'll need for tax purposes. Additionally, consider opening a US bank account to facilitate financial transactions. While navigating through these processes, it's advisable to consult with legal and financial experts who are well-versed in both US and French business laws. This ensures that you're compliant with all relevant regulations and helps smoothen your business operations across borders.

Step 3: Opening a Business Bank Account

A business bank account is a separate account that is used exclusively for business transactions. But why is it important to open a business bank account?

Keeping your personal and business finances separate is crucial. A dedicated business bank account allows you to do just that, making it much easier to track your business’s income and expenses. This clear separation translates to simpler tax reporting come tax season.

But the benefits go beyond bookkeeping. Having a separate account can provide legal protection. It establishes your business as a distinct entity from yourself. In the unfortunate event of a lawsuit or bankruptcy, this separation can help shield your personal assets from business liabilities.

Furthermore, a business bank account can boost your credibility and project professionalism.

It demonstrates to clients and vendors that you take your business seriously and are committed to maintaining accurate financial records. This can be especially important in establishing trust with potential partners.

Finally, a business bank account is essential for accepting payments, even if you utilize a merchant account. Whether you use doola or another service, funneling those customer funds into a dedicated business account is necessary.

doola partners with banks that allow you to open a bank account remotely from anywhere in the world, like Mercury. Shop around and compare different banks’ fees and services.

Look for a bank that offers the features you need, such as online banking, mobile banking, or overdraft protection.

You may also want to consider working with a bank that specializes in small business banking.

Step 4: Understanding Your Compliance Requirements in France

Understanding Compliance Requirements for Running a U.S. Business in France

Operating a U.S.-based business in France involves navigating a complex landscape of legal, financial, and cultural considerations. Compliance with French regulations is crucial to ensure smooth operations and avoid potential penalties. This article outlines key considerations when it comes to compliance requirements for U.S. businesses in France.

Legal Structure

The first step is to determine the legal structure of the business. Popular options include:

• Branch Office: Operates as an extension of the U.S. company. Simpler setup but subject to French corporate tax.
• Subsidiary: A separate legal entity incorporated in France. Provides liability protection and can benefit from local tax incentives.
• Representative Office: Limited to non-commercial activities, such as market research. Not subject to corporate tax.

Employment Law

France has stringent labor laws that protect employees. Key considerations include:

• Adhering to the 35-hour workweek and overtime regulations.
• Providing a minimum of five weeks of paid annual leave.
• Complying with rules on employee termination, which often require justification and severance pay.
• Ensuring proper contracts and registration with social security agencies.

Taxation

Tax compliance is a critical aspect of operating a business in France. Consider the following:

• Corporate Tax: The standard rate is 25%, but small businesses may benefit from reduced rates.
• Value-Added Tax (VAT): The standard rate is 20%. Businesses must register for VAT and comply with quarterly or monthly filings.
• Social Security Contributions: Both employers and employees contribute, with rates varying based on salary and benefits.
• Engaging a local accountant can help navigate these complex tax requirements.

Data Protection and Privacy

Complying with the General Data Protection Regulation (GDPR) is crucial. This regulation mandates:

• Securing explicit consent from individuals before collecting personal data.
• Allowing individuals to access, correct, or delete their data.
• Implementing robust security measures to protect data.
• Reporting data breaches within 72 hours.

Business Culture

Understanding local business culture can facilitate smoother interactions. Key points include:

• Building strong relationships and trust with French partners and clients.
• Adopting a formal communication style in business settings.
• Recognizing the importance of work-life balance for employees.

In summary, U.S. businesses operating in France must navigate a range of compliance requirements, from legal structure and employment law to taxation, data protection, and business culture. Engaging local legal and financial experts can help ensure adherence to French regulations and contribute to the success of the business.

doola offers a Total Compliance package, including bookkeeping services, to help you stay on top of your compliance requirements. This ensures your business operates smoothly and adheres to all legal and regulatory standards.

Step 5: Understanding Your Tax Obligations in France

Understanding Tax Obligations for Running a US Business in France

Establishing and operating a US business in France involves navigating complex tax regulations. Below are key considerations to help you understand your tax obligations.

1. Corporate Income Tax

In France, companies are subject to corporate income tax (CIT), known as Impôt sur les Sociétés (IS). The standard CIT rate is currently 25% for most businesses. However, certain small and medium-sized enterprises (SMEs) may qualify for a reduced rate of 15% on a portion of their taxable income. It is crucial to determine the applicable tax rate based on your business profile.

2. Value Added Tax (VAT)

France imposes a Value Added Tax (VAT), referred to as Taxe sur la Valeur Ajoutée (TVA), on the sale of goods and services. The standard VAT rate is 20%, but reduced rates of 10%, 5.5%, and 2.1% may apply to specific goods and services. As a business, you are required to register for VAT, charge it on your sales, and file periodic VAT returns.

3. Social Security Contributions

Employers in France must pay social security contributions on behalf of their employees. These contributions cover various aspects such as health insurance, pension schemes, and unemployment insurance. The total contribution rate can be substantial, so it is essential to factor in these costs when budgeting for employee compensation.

4. Transfer Pricing

If your US business engages in transactions with related parties in France, transfer pricing regulations will apply. These rules require that cross-border transactions are conducted at arm's length prices. Proper documentation and compliance with transfer pricing laws are necessary to avoid potential penalties and adjustments.

5. Double Taxation Avoidance

The United States and France have a double taxation treaty which aims to prevent the same income from being taxed in both countries. This treaty provides relief through tax credits or exemptions. Understanding the provisions of this treaty can help optimize your tax position and ensure that you are not disproportionately taxed.

6. Local Tax Obligations

In addition to national taxes, businesses in France may also be subject to local taxes, such as the contribution économique territoriale (CET), which includes the cotisation foncière des entreprises (CFE) and the cotisation sur la valeur ajoutée des entreprises (CVAE). These taxes are based on factors like property ownership and added value generated by the business.

Conclusion

Operating a US business in France involves a thorough understanding of various tax obligations. Seeking professional advice from tax consultants who are well-versed in both US and French tax laws can help ensure compliance and optimize your tax strategy.

It’s a good idea to consult with a tax professional or an accountant (or to hire these roles in-house) to make sure you’re not missing anything.

doola's Total Compliance package can handle your tax filings for you, ensuring you remain compliant with federal, state, and local tax requirements.

Step 6: How doola Can Assist

doola simplifies the incorporation and setup process for your company, ensuring you’re ready to charge customers, hire your team, and raise funds as quickly as possible.

Fill out your company details in the doola form in less than 10 minutes. Then, we’ll incorporate your company in any of the 50 US states, get your IRS tax ID (EIN) for you, and file your 83(b) tax election if needed. 

doola can also help you open a bank account and start accepting payments even before the IRS assigns your tax ID.

doola founders also gain access to exclusive discounts at leading software partners, one-click onboarding with select partners, and free CPA consultations.

The doola Application

It takes less than 10 minutes to fill out the details of your new company. You’ll choose your company structure (C corporation, limited liability company) and pick a company name.

Our instant company name checker will let you know if it’s available before you submit your application. You’ll add an address and phone number and review and sign your EIN SS4 letter in one click.

Forming the Company

doola will review your application and file your formation documents in the state within one business day. doola charges $297 for our Starter Plan and your first year of registered agent services (a state compliance requirement), and $297 each year thereafter to maintain your registered agent. 

You can also opt for our Total Compliance plan.

Getting Your IRS Tax ID (EIN)

After your formation in the state is complete, doola will file for your company’s IRS tax ID. Founders who provide a US Social Security number, US address, and US phone are eligible for expedited processing. All other users will receive standard processing. 

For standard orders, doola will fax your form SS4 to the IRS and then call the IRS to retrieve the EIN for you to expedite the process if we can, using real-time IRS data to determine when your filing is likely to be available.

Filing Your 83(b) Tax Election

Many startup founders choose to file an 83(b) tax election to potentially save on future personal taxes. doola can file and mail your 83(b) tax election in one click for both US and non-US founders — no trip to the post office required.

We’ll file it using USPS Certified Mail with tracking, and you’ll get a copy of your signed 83(b) election and proof of filing in your Dashboard.

Partner Perks and Discounts

doola partners with a range of third-party tools to offer special pricing or access to founders. We offer discounts on engineering, tax and finance, compliance, and operations tools, including Amazon Web Services.

doola also partners with Mercury to provide faster, automatic onboarding using your doola company information so you can get ready to bank and fundraise even faster.

Founders may also access discounts on other doola products, including up to one year of free credits toward payment processing.

Read our guides for startup founders, or learn more about doola and how we can help you set up your new business quickly and easily.

Turn your entrepreneurship dream into reality today!

We do our best to provide accurate and up to date information, however the information provided here are just guidelines. Please speak with a tax and compliance professional in your country