A decade ago foreign entrepreneurs with no ties to the U.S. could open a bank account for their corporation via an e-mail. Opening an American bank account made doing business in the U.S. more convenient and avoided the hassle of foreign currency exchange. It was a simple process that did not require an extensive background check, reference letter, or many of the other documentation that is needed today. However, now it has become nearly impossible to open a bank account in the U.S. for any types of foreign business because of new regulations.
Unless the foreign company is a public company, opening a U.S. bank can only be done by a corporate entity that has incorporated in the U.S.
But, what about foreigners who have accounts in the U.S. under an offshore company? Thousands of companies are already structured this way and now they are being told to switch to a U.S. entity or get out.
So then, what are the possible ways you can open a bank account in the U.S. for a foreign citizen? Here are some possible solutions for you to speak with your counsel about.
A trip to America
If you have the ability to do so, taking a trip to the US may be your best solution. Opening a bank account in the United States requires a long list of documents, both personal and business related. Therefore, it’s always ideal to contact an attorney to assist you in preparing the documents. Appearing in person allows for you to oversee the process, ensuring that things are done correctly and in a timely manner.
Partner with Someone in the US
Do you have friends or family in the US that would be willing to assist you in opening a bank account? If so, this may be an easier alternative for you to take. However, this solution does come with its own risk. Keep in mind that the person you use will have access to all company funds. If you are not listed as a co-signer on the account, this person will have exclusive authority to perform any actions pertaining to the account. Choose carefully.
Hire a US Manager/Executive Officer
If you do not want a partner and want to keep the ownership to yourself, an alternative would be to hire a manager or executive officer for your company. This person would represent your company at the bank. For example, LLCs may require you to list the manager on company’s Articles of Organization (depending on the state you live in). However, this alternative is quite similar to the previous solution in that this person would have exclusive authority in questions of managing the bank account, so choose carefully. However, here you will compensate the manager with a salary, while in the previous solution you compensate them with shares or member interest. To grant this person an authority to represent your company you might need to issue them a Certificate of Incumbency. A Certificate of Incumbency is a document confirming the identity of officers, directors or members/managers. Please note that you will be required to provide a passport image, or government issued ID for natural persons and evidence of good standing/existence for entities that you request be listed on the certificate.
Articles of Incorporation/Organization
To open a business account in the U.S., a company must be registered in one of the 50 US states, and a representative would need to submit proof of this entity formation to the selected bank. The type of documentation required depends on the type of entity formed and the bank you select. Overall, a corporation must submit their Articles of Incorporation and an LLC must submit Articles of Organization. Some banks, but not all, may accept the filing receipt, but a majority require a copy of the Articles.
EIN Confirmation Letter
The federal Employment Identification Number (EIN) Confirmation Letter (Form SS4) is required by ALL banks to open a business account. This EIN is your permanent number and can be used immediately for most of your business needs, including; opening a bank account, applying for business licenses, and filing a tax return. Why is this EIN Confirmation letter required? The banks (and yourself) have tax reporting requirements to the Internal Revenue Service (IRS) based on your account information, and the EIN is required as the reporting identification number.
Most banks typically require two pieces of identification for the company representative opening the account. A passport, drivers license, Employment ID, State-issued ID or College ID would work just fine, but make sure that none are expired.
Proof of Address
Similar to the process required by many Motor Vehicle Commissions, banks require the company representative (applicant) opening the account to submit a personal proof of address. Examples of eligible documents include utility bills, tax bill, housing agreements/rent, motor/home insurance certificate, or foreign bank account statements (preferred). Keep in mind – the document MUST be in English. Make sure if these documents are in a language other than English that they are officially translated and notarized. Some banks have multilingual bankers, authorized to accept documents in the language they are certified for. But don’t count on that, always be prepared.
U.S. Business Address
Most U.S. banks will not open a business account without a physical address for your business. The bank may accept the street address of a Registered Agent, otherwise known as a Registered Office. Banks are usually accommodating on this requirement, especially if your type of business is one in which having a physical branch is not crucial or impractical, for example, a company that does business mostly online. Some banks may further require that the address of your business be within a certain distance (e.g. 10 miles) of the bank branch at which you open the business account.
This one is the easiest. Minimum deposits vary from bank to bank, with many “brick-and-mortar” banks requiring as little as $100 (some banks might even have $0 deposit requirements). Check with your bank what would be their minimum deposit requirement for foreigners.
Letter from your Business Attorney or CPA
If you choose a bank that is located in a state other than the state of registration, your corporate attorney or certified public accountant have to prepare a letter for you. If you register a New Jersey LLC and want to open an account in a New York bank, the bank would want to see a statement, written by your business attorney or CPA, stating that your company does not do business in their respective state (in our example, New York). This letter would go something along the lines of, “I am [Name of Attorney/CPA], confirming that company [Your company’s name], formed under the laws of New Jersey, does not and has no immediate plans to conduct business in the state of New York…” The letter must be signed, dated and notarized.
Certificates of Good Standing
A Certificate of Good Standing (also known as a “Certificate of Existence” or “Certificate of Authorization”) is often required by banks to prove that your company are incorporated and authorized to transact business in a certain state (or “jurisdiction”). The “good standing” status signifies an entity is current with the filing requirements of that jurisdiction’s secretary of state’s office, as well as being current with any corporate franchise taxes in that jurisdiction. Banks will often require a Certificate of Good Standing from a business both when opening bank accounts as well as when obtaining financing, so most people make sure and order one at the time they incorporate so they can immediately open their business bank accounts upon receipt of their filed formation documents.
Certificate of Incumbency
As previously stated, a Certificate of Incumbency (also called “Incumbency Certificate”, “Register of Directors”, or a “Secretary Certificate”) is an official document that lists the names of incumbent directors and officers in an organization, and their corporate position within it. An Incumbency Certificate is used as confirmation of the identity of the signing authorities of a company and to prove that they are authorized to enter into legally-binding transactions on the company’s behalf. This certificate can be drafted on demand (there are plenty of samples online) and must be signed by the company secretary and sealed by a company seal.
Banking Resolution is a company document issued by the Board of Directors (for corporations) or by Members (for LLCs), giving certain individuals the authority to open a bank account on behalf of the company. Some banks may require specific language on the resolution and would often supply you with a sample. Other banks may accept resolutions issued by the company, as long as it clearly presents and identity of the individual(s), and the extent of the authorization. Make sure to contact the bank to see whether this is a requirement.
Operating Agreement / Bylaws & Minutes
The OA (perhaps with additional documentation, such as an Action of the Members) will permit bank personnel to confirm that the individual opening the account on behalf of the LLC is a Manager (or, perhaps, an officer) of the LLC and is authorized to take such action. An operating agreement is an agreement among LLC Members governing the LLC’s business, and Member’s financial and managerial rights and duties. This is the easiest (perhaps the only practicable) way to obtain this information. Corporate bylaws are generally concerned with the operation of the corporation, setting out the form, manner or procedure in which a corporation should be run. Bylaws come with minutes of meetings (in the beginning they would include the initial meeting, where bylaws are adopted by the board of directors). Some banks would require a company representative to present the bank with a copy of those documents (operating agreement for LLC, and bylaws with minutes to corporations) when opening a bank account.
Banks to Try
How will you decide which is the right bank from you? In the current banking market, there is a plethora of different banks. You can choose a brick-and-mortar banks, a big national banks with numerous local branches throughout the country, or Internet-only banks.
The advantage of brick-and-mortar banks, such as: Citi Bank, Wells Fargo, Chase, Bank of America, or HSBC, is that they have a multitude local branches throughout the world where you can visit and speak to representatives in person. On the other hand, the main advantage of Internet-only banks, like Silicon Valley Bank, EverBank, ING Direct and HSBC Advance, is that they take away the overhead expenses of operating local branches, and therefore can afford to offer their customers better rates on their accounts.
Internet-only banks might be more flexible in terms of accepting applications of foreigners, however many of those banks reject applications without Social Security Number.
It is a great idea to contact several banks and see which options they have available for foreigners. If you have the option of traveling to America, it will certainly be easier for you to open the account in person by visiting a branch, provided you are equipped with all the documents when you show up at the bank. A corporate lawyer can further help you navigate through the legality of opening a bank account.