A Complete Guide to Setting Up a U.S. Subsidiary Step-by-Step Process and Key Considerations

How to Successfully Establish a U.S. Subsidiary A Comprehensive Step-by-Step Guide

As globalization continues to deepen, an increasing number of Chinese companies are choosing to expand overseas. Among international destinations, the United States stands out as a top choice for setting up a foreign subsidiary due to its mature business environment, strong consumer market, and open investment policies. However, establishing a U.S. subsidiary is not a simple process-it involves legal, tax, registration, and banking procedures that require careful planning and preparation.

Drawing on recent news reports and practical experience, this article offers a detailed guide to help Chinese companies navigate the establishment process smoothly.

1. Determine the Company Structure and State of Registration

The first step in setting up a U.S. company is selecting the appropriate legal structure. Common options include

C Corporation C Corp

S Corporation S Corp

Limited Liability Company LLC

Each structure has different implications for taxation, liability, and regulatory compliance. Companies should choose based on their business nature and long-term strategic goals.

In addition, each U.S. state has its own regulatory framework and tax system. For example

Delaware is popular for its well-developed corporate law and business-friendly judiciary.

California, while offering a large market, comes with high taxes and strict compliance requirements.

According to a Wall Street Journal report from early 2025, more tech startups are now choosing Texas for incorporation due to its lack of personal income tax and favorable business climate.

2. Complete the Company Registration Process

Registering a company in the U.S. typically involves the following steps

1. Choose and Check the Company Name

Verify name availability through the official website of the selected state to avoid legal conflicts.

2. File Articles of Incorporation or Articles of Organization

These documents officially establish the company and include details such as the company name, registered address, shareholder information, and business purpose. After submission, the state will issue a certificate of formation or equivalent.

3. Apply for an Employer Identification Number EIN

Similar to China’s Unified Social Credit Code, the EIN is a unique identifier assigned by the Internal Revenue Service IRS for tax reporting, opening bank accounts, and other official purposes. It can be applied for online via the IRS website.

4. Draft Bylaws or an Operating Agreement

While not always mandatory, these internal governance documents help define roles, responsibilities, and decision-making processes, reducing potential disputes among shareholders or members.

3. Open a U.S. Bank Account

Establishing a U.S. bank account is essential for conducting local operations and managing financial transactions. Historically, non-residents faced challenges opening accounts, but platforms like Mercury and Silicon Valley Bank SVB now offer remote account-opening services.

Some traditional banks may still require the company’s representative to visit the U.S. in person. Required documents typically include

Certificate of Incorporation

EIN confirmation letter

Corporate bylaws or operating agreement

ID and passport copies of the authorized signatory

In early 2025, several Chinese firms successfully opened U.S. bank accounts remotely after setting up branches in Silicon Valley, reflecting increased openness within the U.S. financial system toward Chinese enterprises.

4. Ensure Compliance and Tax Arrangements

After incorporation, it's crucial to comply with U.S. laws, particularly in taxation and labor regulations.

1. Federal and State Tax Registration

Depending on the entity type, companies may need to register with the IRS and relevant state tax authorities. This includes filing income tax, sales tax, and employment tax returns. Engaging a professional accounting firm is highly recommended.

2. Employment Considerations

If hiring U.S. employees, businesses must understand and follow federal and state labor laws, including minimum wage standards, social security contributions, and workers’ compensation insurance. The U.S. Department of Labor enforces these rules to protect employee rights.

3. Intellectual Property Protection

The U.S. places great emphasis on intellectual property rights. Before entering the market, it’s advisable to register trademarks with the U.S. Patent and Trademark Office USPTO to prevent brand infringement.

5. Obtain Necessary Licenses and Permits

Certain industries require specific licenses before commencing operations in the U.S. Examples include

FDA certification for food and pharmaceutical products

HIPAA compliance for health-related services

CCPA compliance for data privacy in California

Additionally, some cities or counties impose local licensing requirements-such as health permits for restaurants or alcohol sales licenses.

It is strongly advised to consult with local government offices or hire legal counsel to ensure full compliance before launching operations.

6. Build a Local Team and Establish Partnerships

Setting up a U.S. subsidiary is not just a legal formality-it requires cultural adaptation and market understanding. Hiring local staff familiar with both Chinese and American business practices can greatly ease the transition.

Building strong relationships with local partners-such as suppliers, distributors, and legal advisors-is also critical. A robust local network can reduce operational costs and improve responsiveness to market dynamics.

For example, in Q3 2025, a leading Chinese electric vehicle brand successfully entered the U.S. market by partnering with a local dealership and established a research center, significantly enhancing its brand presence and technical localization.

Conclusion

Establishing a U.S. subsidiary is a complex but rewarding endeavor that tests a company’s strategic vision, execution capability, and risk management skills. From initial research and registration to banking and ongoing compliance, every step demands careful attention.

With deepening economic and trade ties between China and the U.S., more Chinese enterprises are expected to establish a presence in America. With thorough preparation and adherence to U.S. laws, the American market can serve as a powerful launchpad for global expansion.