How to Register a Business in the US from Malawi

Step 1: Benefits of starting your US business from Malawi

Starting a US business from Malawi offers numerous advantages, particularly in terms of cost efficiency and market access. Malawi, with its relatively low operating costs, provides a fertile ground for establishing a robust back-office operation. Entrepreneurs can capitalize on the lower cost of labor and real estate while ensuring that their business remains competitive on the international stage. This cost advantage allows businesses to allocate more resources toward research, development, and marketing initiatives in the US market, ultimately accelerating growth and expansion.

Moreover, leveraging the technological advancements and internet connectivity available in Malawi, businesses can seamlessly integrate into the global market. The ability to operate virtually bridges the gap between geographical confines, enabling entrepreneurs to manage their US operations in real-time. Additionally, Malawi's strategic location within the African continent provides the potential for future market expansion into other African countries, offering a dual benefit of accessing both US and African markets. These strategic advantages make Malawi an ideal location for starting and nurturing a US business.

Step 2: How to start your US business from Malawi

Starting a US business from Malawi involves several key steps that can help navigate both Malawian and US regulations. Initially, you will need to determine the type of business you want to start and select an appropriate business name. It is essential to conduct a thorough search to ensure the name is unique and not already in use. You will also need to prepare a detailed business plan outlining your goals, strategies, and financial projections. This plan will be critical in securing potential investment or loans.

Once you have a solid business foundation, you must register your business with the relevant US state authorities. Most likely, you will form a Limited Liability Company (LLC) or a Corporation, which can provide significant benefits, such as liability protection and potential tax advantages. Obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) is a crucial step, as it will allow you to hire employees, open business bank accounts, and manage tax obligations. Additionally, opening a US bank account is recommended to facilitate financial transactions. Many banks offer the ability to open accounts remotely, making it easier for international entrepreneurs.

It is important to consider legal and tax compliance to ensure your business operates smoothly. Consulting with legal and financial experts who specialize in international businesses can help you understand the specific requirements for non-residents. Lastly, leveraging online platforms and digital marketing can be highly effective in reaching your target audience and growing your US-based business from Malawi.

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 Malawi

Understanding Compliance Requirements for Running a US Business in Malawi

When venturing into the Malawian market, compliance with local regulations is crucial for the success and sustainability of your business. Below are key considerations that can guide US businesses in ensuring they meet the necessary compliance requirements in Malawi.

1. Business Registration

Businesses must be registered with the Registrar General’s Department under the Ministry of Justice. This process includes:

• Submitting the company's proposed name for approval
• Filing incorporation documents along with the company's charter
• Paying the requisite registration fees

2. Regulatory and Licensing Requirements

Depending on the industry, various licenses and permits may be required. Key regulatory bodies include:

• Malawi Revenue Authority (MRA): For tax registration and compliance
• Reserve Bank of Malawi: For financial services and currency regulations
• Malawi Energy Regulatory Authority (MERA): For energy sector businesses

3. Tax Compliance

Businesses must adhere to Malawi’s tax laws, which include:

1. Corporate income tax, usually around 30% of taxable income
2. Value Added Tax (VAT) at 16.5%
3. Withholding taxes on dividends, interest, and royalties

4. Employment Laws and Practices

Comply with local labor laws that govern employment practices, including:

• Minimum wage requirements
• Employee benefits and entitlements such as leave and social security
• Health and safety regulations in the workplace

5. Environmental Regulations

For industries that impact the environment, adherence to environmental laws is essential. The Environmental Affairs Department oversees compliance with:

• Environmental Impact Assessments (EIA)
• Waste management regulations
• Pollution control measures

6. Cultural and Social Considerations

Understanding local culture and social norms is key to managing a successful business. Important factors include:

• Engaging with local communities
• Participating in Corporate Social Responsibility (CSR) initiatives
• Respecting local customs and traditions

By thoroughly understanding and adhering to these compliance requirements, US businesses can effectively navigate the regulatory landscape in Malawi, fostering sustainable growth and community goodwill.

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 Malawi

Understanding Tax Obligations for Running a US Business in Malawi

When operating a US business in Malawi, it is crucial to understand the local tax obligations to ensure compliance with Malawian laws. Below are some key considerations for US businesses to keep in mind:

1. Corporate Income Tax

Malawi imposes a corporate income tax on the profits earned by businesses registered within its jurisdiction. The standard corporate tax rate is 30%. However, companies listed on the Malawi Stock Exchange enjoy a lower rate of 27.5%.

2. Value Added Tax (VAT)

Malawi applies a Value Added Tax (VAT) on the sale of goods and services. The standard VAT rate is 16.5%. Businesses are required to register for VAT if their annual turnover exceeds MWK 10 million. Once registered, companies must file periodic VAT returns and remit the tax collected to the Malawi Revenue Authority (MRA).

3. Withholding Tax

Withholding tax is applicable on various types of payments made by businesses in Malawi. Some common types of payments subject to withholding tax include:

• Dividends: 10%
• Interest: 15%
• Royalties: 20%
• Fees for technical services: 20%

It is the responsibility of the US business to withhold the appropriate tax amount before remitting the payment to the recipient.

4. Employment Taxes

Employers in Malawi are required to withhold Pay As You Earn (PAYE) tax from employees' salaries. The PAYE rates are progressive and vary based on income levels. Employers must also contribute to the Malawi Pension Fund on behalf of their employees.

5. Double Taxation Avoidance Agreement (DTAA)

The United States and Malawi do not currently have a Double Taxation Avoidance Agreement (DTAA). This means that US businesses operating in Malawi may be subject to taxation in both countries. It is recommended to consult with a tax advisor to explore possible credits or reliefs available to avoid double taxation.

6. Tax Compliance and Filing

Maintaining proper financial records and timely filing tax returns are critical for compliance. US businesses must adhere to Malawi's tax filing deadlines and reporting requirements to avoid penalties. Engaging a local tax advisor can help ensure all obligations are met correctly.

Understanding these tax aspects can help US businesses navigate the Malawian tax landscape effectively and ensure full compliance with local regulations.

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