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Guide to opening a US bank account for non-resident aliens.

Discussion in 'Business & Tax Advice' started by AutomationSorcerer, Apr 26, 2015.

  1. AutomationSorcerer

    AutomationSorcerer Registered Member

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    It seems many people here are under the impression that it is not possible for a non-resident alien (foreigner) to open a US bank account. Being involved in start-ups/small businesses for as long as I have, I found this a little hard to believe. So I decided to do a little research to write up this how-to for anyone interested in jumping through the hoops required.

    First, yes the Patriot Act has made things a little difficult. The biggest hurdle is a high burden of verification of identity. However there are US banks that operate internationally. Most of my research seemed to indicate HSBC was the best route to go. One site I found that has guides for various banks, and how to get US address services (like EarthClassMail, etc) is Goopen, but I don't know if these apply to business accounts or personal accounts. I can't post links due to new account status, so just google it.

    Not all of the following steps might be necessary, but due to the banks having the right to refuse service for any reason it would be best to follow them all. I tried to rely on guides/information posted in the past year, since there were some changes a few years ago related to LLCs and the IRS.

    a. My research showed the absolute simplest way is to have enough money to open a brokerage account. They operate under different regulations, and my Merrill Edge Cash Management Account functions identically to a bank account, except I can trade various stocks/bonds/securities!

    b. The second easiest way is to take a trip to the US and open an account in person. Make sure you have your passport, and complete step 2 below before hand just in case.

    1. Ensure you have all the documentation you will need to begin the process. Have a passport that isn't expired, a local bank account that you have history with that can provide a reference letter, proof of residency of your actual physical address in the form of a utility bill or if renting a signed contract that can certify your address. Ideally already own a business in your country as well, as this can help alleviate some tax liability depending on circumstances.

    2. Apply for an Individual Taxpayer Identification Number from the IRS if you don't have one already. For non-US citizens this is the equivalent of an SSN for tax purposes.

    3. Acquire a US based phone number and mail forwarding service such as EarthClassMail, to be used for the US business you will be registering. I personally prefer Travelling Mailbox, but there's several others as well. Just ensure they are willing to offer address verification services to the bank, and require you to fill out USPS Form 1583 so they can legally accept mail on your behalf.

    4. Register a Delaware LLC and obtain a Registered Agent for the business. To avoid being classified as a disregarded entity by the IRS for being a single member LLC, have someone from your family or a friend also be listed as a member of the LLC.

    5. Apply for an EIN for your LLC.

    6. Contact the US bank of your choice that has branches in your country (Bank of America, HSBC, etc). Depending on their policies, you may either need to go to the local branch for identity verification, or provide reference letters from your bank along with proof of residency, identity, etc. This process is the most time consuming part according to my research. It's also the most critical that you follow all their instructions carefully as well as be honest and forthcoming. Any ounce of suspicion might lead them to invoking their right to refuse service. On that note however, try to appear as a legitimate business providing services (such as consulting) or physical products. Don't end up getting denied due to being labeled a potential fraud risk by saying you need the account to verify your Paypal to sell your digital goods.

    7. If luck is not on your side and you have been denied by the banks you've applied to, here's where your Delaware LLC can assist you. Temporarily appoint someone who is currently in the US as a Director for the LLC for the purposes of representing your business to open an account at a US branch.

    8. Once you have your shiny new US bank account, ensure you keep cash coming into the account and try to keep a decent minimum balance to prevent account closure. Also be sure to consult a CPA/tax adviser to ensure you properly file and pay any taxes. This is where having a business in your country can assist as taxes paid by your business to your country's government can reduce tax liability to the US government. Don't ruin your bank account or future vacations to America by failing to fulfill all your tax obligations.

    Disclaimer: Standard IANAL (I am not a lawyer) applies; however I've worked in many businesses that were in the process of doing several of the above steps. I've also been fortunate enough to have worked closely with a lawyer specializing in incorporation/merger law on his document generation service, hence my strong recommendation for a Delaware LLC. Delaware is very popular for business registrations due to various reasons beneficial to businesses, and due to that their courts are very experienced in dealing with corporate law.

    If anything I've stated above is wrong and you can refer me to the correct information, I will update this post accordingly. Good luck on your future endeavors!
     
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    Last edited: Apr 26, 2015
  2. enriquevlz7

    enriquevlz7 Newbie

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    Interesting thanks for sharing mate
     
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  3. RuthSam

    RuthSam Jr. VIP Jr. VIP Premium Member

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    This is one of the most true "guides" I have read for a very long time. It seems to be the only valid way to get a US Bank account for non US citizens if it's possible, I don't know that but for sure I will try it.

    The key here may be that you go through your own bank that either is a branch of an US located bank or has a branch in the USA, that may possibly be the door opener.

    Thanks for sharing OP!
     
  4. kiluax

    kiluax Newbie

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    amazing guide, in my opinion for a foreigner is better not to rely on services like payoneer or neteller but also see another alternatives like these important steps. Thanks for sharing.
     
  5. GrahamCrackers

    GrahamCrackers BANNED BANNED

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    Also, look for Registered Agents (neutral party to handle everything) Thank you for taking the time to write this all out for people to see that it is indeed possible to get an account.
    Best of luck to everyone. Be careful as that should be a given. Most banks with business accounts often times want you to keep a higher balance than normal accounts. Plus once you set these accounts up. You are able to get merchant accounts, easier. A PayPal. There are several positive benefits to having a US bank accounts.
    Good luck!
     
  6. feler

    feler Junior Member

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    thank you, perfect article for me.
     
  7. srb888

    srb888 Elite Member

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    I'll have to study the latest rules about this topic extensively, but all those points look to be quite legit to me. The hardest part would be to actually be in the USA! I don't know if being a tourist, one can open a bank account there, I am almost sure it's not possible. In my case, I have worked in the USA as a sw professional on H1B visa, and it was almost 20 years back....

    Incidentally, I had a Chase Manhattan account and also the SSN. I had about 500+ USD in that account which was about to be deposited by Best Western as refund but it didn't got deposited before I returned to my country for the last time. I had requested information from the bank later, but got no response, and during those days, sending a fax was the only option but it was expensive, but calling to USA was more expensive, so I stopped communicating as I was spending a lot without any response from the bank.... I guess the US still owes me some money, and someday, the Hon. Pres, very thankfully, will make that refund possible :).

    Many times I wonder what's the current status of my SSN...

    Thank you for that good information though, I may soon be able to come back there and this sort of knowledge about the US banking system, especially for "aliens" has always been quite close to one alien's heart, especially! :)
     
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    Last edited: Apr 28, 2015
  8. netcelal

    netcelal Senior Member

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    Wow, thank you for this awesome share mate !
     
  9. elviswong

    elviswong Senior Member Premium Member

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    Thanks a lot! I'm in Orlando right now. Trying to figure out a way to live in FL 6 months a year LOL ! f*CK Québec and it's shitty weather !
     
  10. SimpleSiteSolutions

    SimpleSiteSolutions Jr. VIP Jr. VIP

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    Excellent guide. It's not a problem I personally have but I know many members here struggle with this and will be very thankful that you took the time to share this information
     
  11. infoasian

    infoasian Supreme Member

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    Most info is wrong. All you need is to walk into a bank branch in the US with 2 forms of identification. It's good to show them you have credit or debit cards available. There is no need for a SSN or anying else. It's great to have a local US address of a friend to use as a billing address. Tourists can open up a bank account as NRAs without a problem. No visa needed. Just had a friend open up a checking account in Orlando last week with Wells Fargo. Zero problems. Most banks will ask you to complete IRS form w8 for thrir records in case you wish to earn interest so they can calculate withholding taxes in such an event.
     
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    Last edited: Apr 28, 2015
  12. AutomationSorcerer

    AutomationSorcerer Registered Member

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    That's why I wrote:

    I only suggested having an ITIN because I wasn't positive whether one was needed or not. I know you can't deposit more than $10,000 into an account with filling out some forms that get reported to the IRS, which would require an SSN or ITIN I'd imagine, but I had an SSN when I had to do that so it wasn't a big deal.
     
  13. infoasian

    infoasian Supreme Member

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    No problem in depositing larger sums at all (wires and checks) unless the bank limits your account. The bank may ask for source of funds for due dilligence. And they are known to ask other very superficial questions, i.e. "what is your line of business?". It's a bad idea for a foreigner to deposit cash in the US when funds exceed 3 digits. They may feel the need to report you as they assume you have obtained funds from illegal work. They just don't like that much cash. Many forms of income in the US are non taxable for NRAs, hence having a SSN could cause big problems for those who do not need one.

    Another thing to consider: does one really need a LLC or corporation in the US? Since passive income , ie.e affiliate business or consulting are not taxable, it would be rather counter productive, expensive and a large legal burden.
     
  14. AutomationSorcerer

    AutomationSorcerer Registered Member

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    No, but it will be reported to the IRS due to laws aimed at catching people engaged in money laundering/tax evasion if $10,000 or more.

    My research showed that no, it's not needed. However this guide is primarily targeted at those unable to come to the US to open the account; and while opening one from another country is still possible, I'd imagine having a business registered in the US would lead to less suspicion due to maintaining a legal presence in the country thus increasing chances of success. That is speculation however.

    As far as expensive, that's what a CPA is for; to tell you how to legally reduce tax liability. I know that taxes paid to foreign governments are taken into account when paying US income taxes. When I worked overseas in 2007, I did the research and that as a US citizen I had to pay income taxes even if living and working abroad. However only on income exceeding $80,000, and if I was paying taxes in the country I was working it would reduce the taxes I owed the US.

    I'm not a tax expert by any means, but I do know that people who are, are able to do some pretty amazing work due to knowing all the exceptions/exemptions/write-offs, etc. More than likely anyone using this guide could also apply for "Minority Owned Business" status with the SBA. I don't know what all the benefits of that are, but I know one company I worked for was given extra consideration when bidding on government contracts.

    As I've said, I've been involved with start-ups/small businesses my entire career, so I might simply be biased; but if done correctly and taken advantage of, there are few downsides to having an LLC. Paying taxes on income you otherwise might not need to pay taxes on is a concern for foreigners, but I'm not able to research the answers for that. Don't know enough.
     
  15. RuthSam

    RuthSam Jr. VIP Jr. VIP Premium Member

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    Just for the general understanding, what both of you say is that it is possible to open an account without visiting the USA / Bank or only with personal visit?

    And you can confirm no, SSN, EIN or other number is required to open an account, regardless if you visit them or open the account online?

    If that is the case I simply don't understand why the Indians who I see primary seeking for an US account and all other just do it?
     
  16. Cyriac

    Cyriac Junior Member

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    Helped me a lot thanks :) =))
     
  17. AutomationSorcerer

    AutomationSorcerer Registered Member

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    A personal visit is required (doesn't have to be in the US if the bank has branches in your country) or a lot of documentation is needed according to my research (a local bank you have a history with essentially vouching you + proof of residency /etc).

    Everything I read indicated you don't require an SSN, EIN or ITIN; unless you will be earning an income from business occurring in the US, which without an LLC means you're physically in the US when you earn it.

    It's complicated, a major pain, takes a lot of time talking on the phone or filling out forms, and even if you do everything correctly you still might be denied for any reason.

    The part about being denied for any reason, is why I recommended the Delaware LLC ITIN/EIN route; because you'll appear more legitimate and most likely fall under a different risk category for money laundering/tax evasion/etc.
     
  18. RuthSam

    RuthSam Jr. VIP Jr. VIP Premium Member

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    Okay, thank you for clarification.. will have to try this through my local bank.. will be exciting to see the outcome.
     
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  19. infoasian

    infoasian Supreme Member

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    It is up to the bank to file reports. The size of transactions does not matter. It should not be a problem either way if you use your account in legitimate ways. I get multiple wires a month exceeding 10k each and never ran into any questions by either banks or the IRS. You know how many customers get more than 10k payments a day? It must be millions of American bank customers .... every single day. Unless a person is flagged as a potential risk there is nothing to worry about from the IRS/bank for non-residents.

    Other than that I think your guide is pretty good. I did not mean to critique too harshly. Just pointing out the differences between what is written and reality. At the end having a personal relationship with a bank and visiting in person while on vacation is the the best way imho.
     
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  20. AutomationSorcerer

    AutomationSorcerer Registered Member

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    This does not align with my personal experience. I had to have an employer write me a check for $9500 once because the person at the bank said that the $10,000 I had in my hand would require me to fill out a form for the IRS. I've also had another friend who was a bank manager who dealt with this situation frequently with small businesses and would advise his clients to space out $5000 deposits over time to avoid anything getting flagged. Same reason Casino's will require you fill out paperwork and must keep a portion of your winnings if over a certain amount. In Biloxi, there were a lot of slot machines with payouts of $1495 to prevent them from having to come make you fill out the paper work / give them part of the money for tax reasons, which was triggered at $1500 or more in winnings in a single bet. That was a state income tax requirement though.

    Wire transfers or checks from businesses with a good reputation might be exempted in some form or fashion I suppose.

    This is probably done automatically on the back-end at most banks who already have all your information.

    All of the above apply to US citizens, to curtail tax evasion/money laundering. Unless for some reason non-residents are perceived as less of a risk for that, or due to some legal loophole are not subject to the same regulations US citizens are... should still apply.

    Perhaps my experiences are due to changes that have occurred since you've had to deal with these situations. It was in 2008 I had the bank advise me to ask for a $9500 check instead of the $10000 (my boss was with me at the time, so could easily do so). My friend who was a manager at a bank specialized in business accounts, and told me this back in 2012.

    I don't know for a fact any of this information is accurate, but it came from people I considered reliable as far as the information went.

    Truth.
     
    Last edited: Apr 29, 2015