Last year, the Consul General at the United States Consulate in Lagos, Will Stevens, revealed that 60% of Nigerian tech startups are incorporated in the United States, highlighting the growing collaboration between the tech sectors of Nigeria and the USA.
Incorporating in the United States isn’t just a trend, but a strategic move that can lift a business to new heights. At Norebase, we empower African entrepreneurs to expand seamlessly into the US market, and here’s why US incorporation is a game-changer for your startup.
1. Unlocks Access to Global Capital
One of the most compelling reasons for African startups to incorporate in the US is access to a vast pool of investors and venture capital. US-incorporated companies are often seen as more credible by international investors due to the country’s established legal framework and transparent corporate governance practices. This credibility instils trust and makes it easier to secure funding from venture capital firms, angel investors, and seed accelerators.
Many prominent investment programs, such as Y Combinator, require startups to be incorporated in the US—often as Delaware C-Corps—before they can participate. This preference positions US incorporation as the “gold standard” for startups seeking to scale globally in the long run.
2. Enhances Credibility and Brand Prestige
Incorporating in the United States signals a strong commitment to professionalism and growth. A US-based entity is widely recognised as a mark of legitimacy, which can help startups establish connections with customers, partners, and competitors on a global scale.
Additionally, incorporating in Delaware, a jurisdiction renowned for its business-friendly environment, offers access to a stable legal framework that has become synonymous with innovation and reliability. This alignment with a globally respected business climate enhances your startup’s reputation and positions it favourably in competitive markets.
3. Leverages a Robust Legal and Regulatory Environment
The United States offers one of the most mature and business-friendly legal ecosystems in the world. Its stable corporate laws provide predictability and reduce legal uncertainties for businesses, especially those needing to protect intellectual property or establish clear operational guidelines.
Furthermore, the country’s efficient dispute resolution system ensures that companies have reliable mechanisms for resolving contractual or intellectual property disputes. These features make the US an attractive jurisdiction for startups seeking long-term security and operational clarity.
4. Seamless Global Market Expansion
Incorporating in the US opens doors to unparalleled global business opportunities. US companies benefit from streamlined processes when engaging in cross-border transactions, international banking, contracts, and trade which are all essential for scaling operations globally.
Additionally, it makes it easier to form strategic partnerships with multinational corporations while accessing markets across North America, Europe, and Asia. For African startups with global ambitions, US incorporation provides a solid foundation for global expansion.
5. Superior Banking and Financial Infrastructure
US-incorporated entities experience ease when setting up a business bank account, thus enabling startups to access better credit facilities, loans, and payment systems. Conducting transactions in a stable currency like the US dollar also protects businesses from the volatility associated with other local currencies.
These financial benefits ensure smoother cash flow management and greater stability as startups scale their operations.
Factors to Note
While incorporating in the United States offers many advantages, it is important for African startups to carefully evaluate potential tax obligations and costs associated with this decision.
- Tax Implications: Depending on your business structure (e.g., Delaware C-Corp or LLC), you may be subject to federal corporate taxes as well as state taxes if you operate within certain jurisdictions in the US. Additionally, founders must consider how these taxes interact with their home country’s tax laws to avoid double taxation.
- Cost of Incorporation: While incorporating in states like Delaware is relatively affordable compared to other global jurisdictions, there are ongoing costs such as annual franchise taxes and compliance requirements that could add up over time.
- Compliance Requirements: Compliance with US regulations (e.g., filing annual reports) requires additional resources or expert assistance.
These financial considerations highlight the need for careful planning before entering US incorporation.
Incorporating in the US might seem daunting, but it doesn’t have to be. At Norebase, we simplify this process by offering end-to-end support tailored specifically for African entrepreneurs. From setting up your Delaware corporation to obtaining essential documents like an EIN (Employer Identification Number) and opening a bank account, we ensure that every step is seamless and efficient. With access to legal, tax, and business advisory experts, you can navigate compliance requirements confidently while focusing on growing your business.
Conclusion
US incorporation is much more than a legal formality—it’s a strategic decision that can unlock international funding, bolster credibility, and provide a secure platform for global expansion.
Let us be your trusted partner as you expand your business horizons. You can visit www.norebase.com to get started or contact us via mail at operations@norebase.com
