If I start an American company, but I do not live in the US, am I better off with a US or a European bank account?
Although all banks exist, at least nominally, to supply a secure and private repository for a business’s cash assets, and to assist business in everyday commercial transactions, it is our observation at Inc. Plan that there is a significant difference between European and US banks.
- European banks ultimately answer to Central Bank of Europe
- European bankers may feel they are agents of their government to the detriment of clients
- Depositors’ interests are secondary
- European deposits may be subject to arbitrary seizure, or threat of punitive taxation (Cyprus, spring 2013)
In contrast, with American banks the following is true:
- The laws regulating US banks are simpler and less open to bureaucratic meddling.
- Deposits are protected by FDIC, up to $250,000 per account.
- National Bank Depositor Preference Act,12 USC § 1812 (d)(11) requires that in a bank receivership, the depositors get first call on any assets.
These safeguards of depositors’ assets suggest for security and privacy, American banks are the institutions of choice for anyone doing business in the United States.
If I open an American bank account, what kind of bank should I use?
There are many financial institutions in the United States that offer bank accounts, but by far the best for an overseas entrepreneur is a major bank, which is also a member of the “clearing house”. While all FDIC banks, large or small, provide insurance for up to $250,000 per depositor per account, only a major, clearinghouse bank will provide:
- The convenience of multiple locations
- Overseas offices (either directly or through correspondent banks)
- Cost efficient services, such as wire transfer capability.
Smaller banks may offer similar services, but always at a higher fee since they must pay intermediary clearinghouse institutions. Those added costs are passed on to the consumer.
Choose a bank that is a member of the clearinghouse. Such major US banks include Bank of America, PNC, Wells Fargo, Citibank and others.
learn more about opening a US business bank account.