Using Banks and Bank Accounts/Opening US Bank account for BVI Company
QUESTION: I have been trying to open a bank account in the US for a BVI registered corporation. I am a director of the company and a US citizen. I contacted the IRS and used the SS4 form to get a tax ID for the BVI company but this has not been enough to allow us to open an account. What do we need to open an account? Do you have any suggestions as to banks that have experience with accounts of this type?
ANSWER: It is just about impossible to open a US bank account for a foreign entity. The simpler solution is to have the foreign entity establish a US LLC. An LLC owned by a single entity will be "disregarded" by the IRS. But it is still a separate entity for banking purposes.
Best of all, if you are not doing business in the US (no US Source Income), then neither the US LLC or the foreign entity will owe any taxes, nor will they even need to file tax returns.
This is what I do for my clients who are mostly foreigners with foreign business entities.
If you would like more information, see: www.connex-services.com
I must admit I think you are going about this backwards, and may regret how you are doing it. But of course that does depend upon what your goals are. I just cannot imagine how you could benefit from using a Bahamas company to open a US bank account, even if you were allowed to do so.
Also, you need to be thoughtful about how you choose to own the Bahamas company. If you are not careful, you will end up owing more taxes and getting less asset protection than if you had just used a US entity for those purposes.
I use foreign companies, trusts and limited partnerships sometimes. I also use us LLCs and Corporations sometimes. Sometimes I use a combination of these entities. They are all tools that can be used to serve a variety of purposes.
Best of luck.
---------- FOLLOW-UP ----------
QUESTION: Hi Alex,
Thanks for your response. The BVI corporation was an existing entity that originally was under the directorship of non-US citizens. The BVI company is doing business in the US. Would there be an advantage to dissolving the BVI corporation and somehow replacing it with a US LLC vs. establishing the US LLC through the existing BVI corporation?
So much would depend upon what you are doing. Again, I cannot imagine what business you could be doing in the USA that would be beneficial to use a BVI company. I am actually rather afraid to ask. I suspect you may have received some very bad advice and gotten yourself into some trouble.
If you would like to chat with me I could perhaps have a better idea about what your situation is. Frankly, if you are earning US Source Income, and you are paying the 30% tax rate, you are paying too much. If you are not paying the 30% tax rate, you may be causing yourself unnecessary problems.
If you would like to chat, email me at email@example.com, and we can arrange a convenient time for a phone conversation.