The United States was created by the hard work of immigrants from different parts of our planet. For many years, this country was even called a “melting pot” in which representatives of different peoples gradually become a single nation – Americans.
In our time of tolerance, this concept has been renamed “salad bowl”, where each ingredient is important separately, with its own way of life and traditions. However, the underlying principle remains the same: hard work and enterprise are still honoured in America. The American authorities create the same conditions for all private investors and businessmen, no matter where they come from.
After achieving success at home, many entrepreneurs start to think about entering the international market. Registering a company in the United States can take your business into a new orbit, or it can result in huge losses if you do not take into account local specifics or break the law. For those who are willing and able to learn and work hard, there is a chance to succeed.
The United States is almost immune to political and economic crises, and the American dollar is one of the major reserve currencies of the modern world. It is not without reason that Americans say that their homeland is the land of opportunity.
Due to the peculiarities of the US state structure, commercial activity is regulated at the level of the authorities of each of the 50 states. Therefore, in some regions of the country, it is possible to do business relatively easily and without unreasonably high costs.
Corporate taxation is also largely determined by local legislation. By choosing the right state to incorporate your company, you can significantly reduce your fiscal payments through proper tax planning.
By the middle of the twentieth century, the United States had greatly simplified passenger and freight traffic within the country by means of long motorways. Another undoubted convenience for business is the high degree of standardisation in all spheres of American life, no matter what we are talking about — from the principles of interaction with the American tax service to the place of installation of an electric switch in a room. Thanks largely to standards in America, entrepreneurs save an enormous amount of time and effort.
In the USA, the whole process of opening a company does not take much time and can be done remotely. And the founder of a company may be a resident of any country, provided that a number of conditions are met. The American authorities also do not care whether it is a person or a legal entity.
A private business in the US does not feel the pressure of regulatory agencies at all if 2 simple rules are followed:
All taxes are paid regularly and on time;
No state or national laws are violated.
In America, there is almost no corruption at the local level. Entrepreneurs defend their company’s interests in the courtroom and do not try to solve problems with bribes.
To register their business in the U.S., foreign entrepreneurs use the following legal forms:
The most common way of doing business in America. American individual entrepreneurs are subject to a minimum of requirements, and they submit annual accounts in a simplified form.
A form of business organisation characteristic of the United States, an analogue of a joint-stock company. There are two types of such companies: S-corporations and C-corporations. Only C-corporations are suitable for foreign businessmen, as S-corporations can only be established by US citizens.
It is characterised by pass-through taxation and a complex procedure for changing the company structure.
There are three main types of partnerships in America:
This form of doing business is convenient because the founders do not even need to go through the state registration procedure to establish a partnership, which means that they are spared the need to pay the registration fee and state duties.
However, entrepreneurs will still need to draw up a partnership agreement and obtain licences to operate their business.
GP Partners are responsible with all of their assets for the performance of such a company.
Only general partners have unlimited liability in an LP. At least one member of a US limited partnership must be a general partner.
The remaining partners are limited partners and, therefore, their personal assets cannot be used to pay the debts and liabilities of the partnership. The amount of such a founder’s liability generally does not extend beyond its investment in the LP.
Limited partners are essentially silent investors as they do not participate in the management of the company.
Limited liability partnerships in the US can only be formed by organisations that provide professional services regulated by the laws of a particular state. For example, an LLP can be formed to open an architectural firm, a law firm or a dental office. Generally, the personal assets of the founders of a U.S. limited liability partnership are not considered to be a means of repaying its debts. However, the liability of an LLP partner is not limited if it is proven in court that the company’s liabilities have arisen as a result of its reckless actions or even abuse of its position.
If you already have a successful business overseas, you can register a joint venture, branch or representative office of a foreign company in the United States.
To make an informed decision, you should carefully study the specifics of each type of American company: in terms of ease of doing business, distribution of profits and opportunities for tax optimisation.
Tax returns of the founders.
Imperial & Legal specialists recommend their clients to pay attention to corporate forms of business organisation, which allow limiting the entrepreneur’s responsibility for the firm’s results. For this purpose, we will take a closer look at two types of companies popular among foreign businessmen in the USA – C-corporation and limited liability company.
That’s what these options have in common:
The principle of allocation of the owners’ liability for the debts of the company. In both cases it will be limited to the value of the shares owned or the share in the founding capital of the company;
The founders of such firms may be citizens of other countries;
The C-corporation and LLC are not limited in duration.
For clarity, Imperial & Legal specialists have compiled a table with the main differences in the work of these two corporate structures:
Through-taxation allows a company to distribute profits earned to its shareholders without paying corporate tax. The shareholders of the LLC must report their income (or losses) and pay taxes at their place of tax residence. If such a company will have only one founder, he has the right to send to the U.S. tax service his tax return as a document that fully reflects the results of his company’s activities for the reporting period.
Overseas entrepreneurs in America use the principle of pass-through taxation as an effective tax planning tool.
Double taxation implies that the income received as a result of the activities of a commercial structure is taxed twice:
At the corporate level, when a firm submits a return to the IRS and pays taxes on its declared profits;
At the personal level, when the founders receive a portion of the profits of the company they own, file a return and pay income tax.
IMPORTANT: Double taxation is also a situation where a company or an individual has tax liabilities twice: at the place of profit and at the place of tax residence.
To get the right answer, you first need to understand the purpose of registering a company in the US.
If you need a commercial organisation to do real business and you plan to move to America later on, you can open a company where your office will be located or where you will carry out your commercial activities. It should be noted that this is by no means the most economical option for registering a business.
If a company is opened remotely, the choice of registration is usually limited to the territories that offer the most favourable working conditions for foreign entrepreneurs the American states of Delaware, Wyoming and Nevada.
Ability to conduct business through a corporation, combining the roles of company owner, director, corporate secretary and treasurer. Similar rules apply to LLCs — shareholders do not need to hire a separate employee as a director if they want to run the firm themselves. This flexibility of Delaware’s corporate law is particularly beneficial for small businesses, where it is not possible to have a whole staff of employees.
Owners of companies incorporated in the state may not pay income tax if they are not Delaware residents. The tax will also be waived on the stock they own.
Your company is exempt from paying corporate tax if it earns all of its income outside the state. However, in Delaware, corporations and limited liability companies are subject to franchise tax.
Nevada-registered companies are exempt from paying corporate tax. They also do not pay the franchise tax that was present in Delaware.
The people of Nevada do not know what an income tax is. In general, the main sources of tax revenue for the state budget are sales tax and tax on gross receipts of businesses.
Shareholders, directors and officers of Nevada incorporated companies may not be required to be residents of the state and may reside outside the state.
Incorporating and maintaining a business in Wyoming is generally lower than in other states. The registration fee for incorporating a business entity is only $100, with a minimum annual fee of $60.
Wyoming has no corporate income, personal income, or franchise taxes. Sales tax in the state is relatively low at 4%, and there are preferential tax rates on purchases of certain types of products.
Wyoming has one of the strictest asset protection laws in the United States. In this state, it is not necessary to include information about the owner of a corporation in a publicly available business entity database. LLCs in Wyoming may exclude management and shareholder information from public access.
Registering a business in America is an easy task if you seek legal support from professionals. It is more difficult to open a company in the USA for those who plan to start actively developing their business immediately after registration. Such a businessman needs to take into account several factors that critically affect the future of his enterprise.
Imperial & Legal lawyers have prepared for you a step-by-step algorithm for registering a business in the USA.
Business Immigration;
Buying through a property company;
Commercial activities.
The names of already registered companies, as well as words and phrases of an offensive nature may not be used.
In American business, all of this corporate documentation is considered internal, i.e. not available to the public. Therefore, it is usually kept either with the CEO, in-house counsel or a trusted registration agent.
On the official website of the secretariat, you can find a list of state-approved registration agents.
As a rule, entrepreneurs know in advance whether they need a licence, and therefore immediately after registration apply to the regulatory authorities for it.
If you choose a corporate structure to localise your business in America, you are required to register with the IRS and file a tax return every year, even if all your activities will take place outside the country.
All companies operating in the United States generally have tax liabilities at three levels: federal, state, and local (county, municipal, etc.).
Corporate tax at the federal level is assessed on the income of all companies officially registered with the US Internal Revenue Service. The federal corporate income tax rate is currently 21%.
Corporate taxes at the state, county, and municipal levels may be assessed at rates ranging from 1 to 12%, although there are a few states in the United States where no corporate income tax is assessed at all.
Generally, a firm’s local tax liability arises only when its business activities are carried on in a state or municipality. Exceptions are the states of New York, California and New Jersey, where incorporated businesses continue to pay corporate tax for some time even if they have moved their operations elsewhere.
There is no value added tax in the United States, but in most states there is a so-called sales tax, the rate of which can vary significantly depending on the territory. In the states of Nevada and Wyoming, already mentioned here, it is 6.85% and 4% respectively.
US companies also pay 21% capital gains tax. Although there is no inheritance tax in the US, tax payments can be up to 40% of the market value of real estate when it is inherited.
Imperial & Legal’s experienced specialists can help you understand the three-tier US tax system and optimise the fiscal burden on your business.
To ensure that the start of your business in the United States is not marred by long waits and unnecessary expenses, contact our lawyers.
At Imperial & Legal we prefer a comprehensive approach to solving our clients’ problems. That is why at the first consultation you will be told how you can optimise your taxes, which staff is best suited to register your business, and how much it will cost you to open and own a company.
To answer your question objectively, you should first understand why you will open a company in the United States. If you need the company to indirectly own and dispose of US real estate, it would be logical to register it in the same state where the property is located.
If you need a firm to do business, you will need to choose one of the 50 states whose corporate and tax laws will maximise the benefits to your business.
To find out if a particular American state is right for you, answer these 7 questions:
Who will be the founders of my company: U.S. residents and/or foreign nationals?
Where will my company operate? In the place of incorporation or outside of it: in another state or outside the United States altogether?
Will the company have a physical presence in America – have an office, warehouse, employees, customers and suppliers on its soil?
How much does it cost to incorporate and maintain a company in this state? How long will it take to open a company?
What level of confidentiality will the company’s founders and directors require?
Is my company licensed to do business in the state? How much will the licence cost?
Do my future plans include obtaining a residence permit and moving to the United States?
We have considered Nevada, Wyoming and Delaware as promising locations for incorporating your business in the USA. To enable you to compare conditions and make your own choice, our lawyers have prepared a small table:
The exact cost of incorporating your business in America depends on:
Kind of like a future company;
The state you choose as your “home port”;
Places of business;
Use of nominee shareholders and directors;
The presence or absence of legal support in the registration process;
Additional services to the entrepreneur: registration of a corporation or LLC with the IRS, opening a settlement account in a U.S. bank, assistance in preparing tax returns and financial statements.
In short, if you would like to know exactly how much money you will need to start a company in the USA for your circumstances and wishes, please contact one of our consultants.
In most cases, registering a new company with the secretariat takes no more than 10 working days. Provided you have: a correct company name, a US registered office, complete clarity on the organisational structure and a responsible registration agent.
In states popular with foreign businesses, processing an incorporation application can take as little as one business day if you pay an additional rush fee (in Delaware) or incorporate your company online (in Wyoming and Nevada).
Company registration in the USA with the help of Imperial & Legal specialists. Over 20 years of experience. Specialists provide comprehensive business services. Free consultation available.
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