Disclaimer
The information of this document is provided ‚“AS IS‘, with no warranties whatsoever, excluding
in particular any warranty of merchantability, fitness for any particular purpose, or any warranty
otherwise arising out of any proposal, specification, or sample. This document is provided for
information purposes only.
1. Introduction
The document collects my own experience when establishing US bank account for aliens
(non-resident foreigners or foreign companies) from home country. The Patriot Act has made
this much more difficult and sometimes impossible to conduct non-resident accounts. Some
banks even kicked of all existing non-resident clients (e.g. BankCorp).
It’s easy, open Google, enter “bank account USA”, press ENTER and many pages appear – in
right column or as highlighted unfortunately – isn’t it? Some of such companies will establish
account for you, of course, but prepare to pay many hundreds of dollars and prepare yourself
that you will be pushed to particular bank that may not fit your requirements perfectly – you
may dislike to pay monthly fees, bank credit card, generally not to have similar conditions as
the U.S. residents.
2. Personal account
The following banks allow non-resident accounts to be setup for individuals:
Charles Schwab
http://www.schwab.com/
Charles Schwab allows non-resident accounts to be setup. The minimum opening balance is
$10,000. Once opened, this can be reduced to $2,500. You will receive a free check book, and
ATM card which can be used worldwide. The account is primarily intended to be to make use
of Schwab’s stock-trading service, but it can be operated as a regular checking account as
well. You will be required to send a copy of your passport, a bank statement and home utility
bill as proof of identity.
E-Trade
https://us.etrade.com/e/t/home
E-Trade, like Charles Schwab also has an account available to non-residents. This provides an
ATM card, but does not pay interest on the credit balance.
Wells Fargo
https://www.wellsfargo.com/
The bank is helpful to establish account but it’s not possible (not legal) to income funds from
business sources like PayPal and no internet banking is possible for aliens. But checking
account is for free if minimal daily balance exceeds $1000. Credit card is for free, ATM
withdrawal up to $500 per $2.50, free check card. The bank has offices in northwestern
states only. They communicate very promptly via email, send mail to overseas and don’t
establish foreign business account.
Pacific National Bank Miami
http://www.pnb.com
The Ecuadorian bank can establish account but minimal ATM cash withdrawal ($50)
is allowed for at least for first 6 months and is expensive. They response on email but
next communication is headed to voice. Fees are relatively high, minimal balance
$1000.
Eastwest bank
http://www.eastwestbank.com
Chinese owned bank, minimal deposit $5000.
Asia-Europe-Americas bank
http://www.aea-bank.com
Minimal deposit $10000.
HSBC
http://us.hsbc.com
I expect similar conditions as for business accounts, see below.
Mt Morris Saving & Loan, Illinois
http:// www.mtmorrissavngs.com The bank cooperates with http://www.valisinternational.com,
monthly fees $10 or minimal balance $5000, $30 for Mastercard, $300 ATM withdrawal limit.
3. Business account HSBC
http://us.hsbc.com
Hong-kong worldwide “local” bank has national branches in many countries. There are
extensive branch network in northeastern states. Quick email communication, 2 days
response time (Europe-USA). After 2 rounds they did send us an Opening package via DHL
(3-4 days) containing all required documents. We had to indicate which U.S. HSBC branch we
wish account to be opened, provide local incorporation documents and bank letter reference
at local HSBC desk that will notarize them and send documents to HSBC, N.Y., Buffalo. The
bank offers famous checking accounts, BIB (Business Internet Banking), EFT services, credit
cards and more. See bank’s web site.
Term explanation
• ACH transfer US domestic transfer via Automated clearing house (USD)
• Bill pay US domestic transfer similar to ACH (USD)
• Money order check payable at US post office (USD)
• Wire transfer transfer in USD or other currency to US or foreign bank
4. IRS
Although it seems that the bank policies when they do not allow income from potential
business (PayPal) is useless harassment it’s in compliance to U.S. law. All information may
be found on IRS (Internal Revenue Service) site (http://www.irs.gov). The IRS is government
organization responsible to federal taxes.
4.1. Tax withholding
Foreigners are subject to 30% tax of all gross income unless income tax treaty was
established between the USA and foreigner’s home countries and proper documentation is
provided. It means that the bank is required to withhold 30% of your income unless
regulations are fulfilled.
The bank will send report of your income to the IRS therefore a unique identification is
required for your company. The identification – Employer Identification Number (EIN) – is
passed on the W8-BEN form (Certificate of Foreign Status of Beneficial Owner for U.S. Tax
Withholding). You must pass on fulfilled the W-8BEN form to the bank (and to customer who
will transfer funds to you) before any income arrive to your account!
Note the EIN is not required for some kinds of income like interest, dividends, see W-8BEN
Instructions. To take benefits of U.S. business account it is essential income tax treaty and
the EIN.
If you prefer studying income tax treaty in your native language, look in law of your country –
the same treaty must exist in both laws.
If income tax treaty exists then reduced or zero tax is subject of withholding according
to purpose of payment, see IRS Publication 515 how withholding agent treats.
4.2. EIN
You can apply the EIN via an intermediary (e.g. http://www.get-your-company.com/) quickly
for approx. $100 or you can do it by yourself if you call directly to Philadelphia’s IRS branch
that is responsible for foreigner persons. First download the SS-4 form (Application for EIN)
and read instructions. When are you ready, call to +1-215-829-4933 or +1-800-829-4933, see
SS-4 Instructions.
Note that you can call to toll free numbers +1-800-xxxx from abroad if you have a US operator
prepaid call card or via internet call (e.g. http://fwd.pulver.com) for free. I personally did not use
internet call because quality and delay makes speech badly understandable to me because I
do not speak English or Spanish well, as you can read, can’t you. The call took approx. 30
minutes for approx. $10.
Operator will ask you for legal name, mailing address, name of principal, foreign country,
reason, date of business started and closing month of accounting year. SS-4 items 1, 4a, 4b,
7a, 8a, 8b, 9 are mandatory, 3, 5a, 5b, 7b are optional. Note that you do not need 7b
ITIN/SSN if you need EIN for compliance with income tax treaty. If you have not valid
personal SSN (or ITIN?) operator can’t tell you generated EIN by phone but you’ll receive it by
email up to 4 weeks.
4.3. Entity classification
Study how will be you company classified according U.S. law, e.g. Form 8832 Instructions.
You can sometimes change default classification, i.e. eligible entity, using the 8832 form
(Entity Classification Election).
Generally C-Corp classes are taxed as company, S-Corp classes and LLC are taxed
individual persons (they must have allocated ITIN/SSN).
You can for example change status of your association (ltd.) from the default C-Corp to the
S-Corp. Do not send the 8832 form unless you need change default classification.
4.4. ITIN
ITIN is Individual Taxpayer Identification Number connected to individual. It is equivalent of US
resident’s SSN (Social Security Number). Foreigner cannot acquire the SSN but can apply the
ITIN. The ITIN/SSN is required for some kind of companies (e.g. S-Corp, LLC) when taxed is
an individual like shareholder or owner. Apply for the ITIN using the W-7 form (Application for
IRS ITIN). It seems that you must apply by mail or personally at a U.S. or abroad IRS office or
via acceptance agent.
4.5. Tax return
As you have applied EIN you will have post yearly tax report using the 1120-F form (U.S.
Income Tax Return of a Foreign Corporation). If you do not have any U.S. establishment you
can fill only cover page and tag W. It simplifies requirements but you must disclose income
classification on the 8833 form (Treaty-based Return Position Disclosure Under section 6114
or 7701(b)).
5. Notes
IRS helpdesk +1-215-516-2000 IRS
http://www.irs.gov
6. Paperwork Reduction Act Notice
Purpose of the tutorial is time reduction needed to complete ISR forms and approach to the
average times that I highly exceeded:
Bank Research: 2 months, 1 day, 7 hr., 1 min.
Recordkeeping, 4 days, 11 hr., 41 min.
learning about the law or the form, 2 days, 6 hr., 5 min.
Preparing and sending the form to IRS, 3hr., 1min.
International call 29 min.
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