Expanding into the U.S. is a milestone for foreign businesses. With the world’s largest consumer market and investor-friendly climate, setting up a subsidiary can open the door to growth and credibility. But without proper tax planning, compliance, and structure, it can quickly become overwhelming. This step-by-step guide breaks down the essentials of U.S. subsidiary setup and explains why having the right partner makes all the difference.

How to Set Up a U.S. Subsidiary: At-a-Glance

Entering the U.S. market is easier—and safer—when you operate through a properly formed subsidiary. In this overview, you’ll learn the essentials to launch with confidence: picking the right entity (LLC vs. C-Corp), choosing a state, appointing a registered agent, securing an EIN and U.S. bank account, and meeting tax, payroll, and compliance obligations. We’ll also flag intercompany agreements, transfer pricing, and IP protection so your structure scales cleanly as you grow.

Step-by-Step Guide to Setting Up a U.S. Subsidiary

Step 1: Choose the Right Entity Structure

• Foreign companies can typically register as a C-Corporation or LLC. Each has different tax treatments, reporting obligations, and investor appeal.

Step 2: Register With the Secretary of State

• Your subsidiary must be registered in the state where it will operate. California, Delaware, and New York are common choices depending on business goals.

Step 3: Obtain an Employer Identification Number (EIN)

• The EIN is your business’s tax ID, required for filing returns, payroll processing, and opening U.S. bank accounts.

Step 4: Open a U.S. Business Bank Account

• A dedicated bank account keeps business and personal finances separate, ensuring smooth compliance and reporting.

Step 5: Stay Compliant With Federal & State Regulations

• Foreign-owned subsidiaries must comply with IRS regulations, state taxes, and corporate filings. Failing to maintain compliance can result in penalties or loss of good standing.

Why We Are the Best for U.S. Subsidiary Setup

At Bay Area Accounting Solutions, we don’t just set up subsidiaries — we help businesses thrive. Here’s why global businesses trust us:

• California-Based, Global Reach: Expertise in local, state, and federal compliance while serving clients across the globe.
• End-to-End Services: From incorporation, EIN registration, and bookkeeping to payroll and tax filing.
• Proactive Tax Planning: Ensure your U.S. subsidiary maximizes deductions and avoids unnecessary penalties.
• Compliance Defense: We manage IRS correspondence, franchise tax, and audit defense.
• Dedicated Consultation: One-on-one tailored strategy for smooth expansion into the U.S. market.

Conclusion: Build Your U.S. Subsidiary on a Solid Foundation

Setting up a U.S. subsidiary as a foreign business isn’t just a legal formality—it’s a strategic move that can define your long-term success in the American market. With the right structure, tax planning, and compliance framework, your company can confidently expand operations, protect assets, and unlock new revenue opportunities. Whether you’re opening a small representative office or launching full-scale operations, taking a thoughtful, well-advised approach now will save time, money, and stress later.

Ready to get started? Partner with experts who understand the complexities of cross-border business formation. From entity selection and EIN registration to bookkeeping, payroll, and IRS compliance, we’ll guide you through every step—so you can focus on growing your business, not decoding U.S. regulations.

FAQs: U.S. Subsidiary Setup

Q1: What’s the best state to register a U.S. subsidiary?

Delaware and California are popular. Delaware offers business-friendly laws, while California is ideal if your operations are based locally.

Q2: How long does it take to set up a U.S. subsidiary?

Typically 2–4 weeks depending on the state and documentation requirements.

Q3: Do foreign owners need to be present in the U.S. to set up a subsidiary?

No, but you’ll need a registered agent and proper documentation.

Q4: What taxes must a U.S. subsidiary pay?

Subsidiaries must comply with federal corporate tax, state taxes, payroll tax, and sales tax (if applicable).

Q5: Can Bay Area Accounting Solutions manage ongoing compliance?

Yes! We handle bookkeeping, tax filings, payroll, and compliance so you can focus on scaling your U.S. operations.