Starting a Business in America - US Company Formation |
The United States remains a popular country to establish and form a business. Its friendly tax system, ease of entity incorporation, business sophistication, and strong economy attract investors and entrepreneurs from across the globe to contribute to the ‘American Dream.’ The firm guides clients through the US entity formation process and advises on the ideal corporate structure to suit the US expansion. Other US business services offered by our firm include business plans for immigration use.
The backbone, and first step to expanding a foreign company into the US is to incorporate the business in one of the fifty states. Each state is its own jurisdiction, and as such, has its own set of rules and regulations which must be followed to remain compliant with US law. With fifty different rules related to opening an American company it’s vital to consult a US corporate attorney before selecting a state for formation. Often, clients are misled by online articles encouraging incorporation in a particular state on the expectation of favorable tax reasons, which may end up exposing a business to double (or triple) taxation. An international company looking to expand their business in the US must also keep in mind company formation as it relates to US immigration law. While it may be possible to file articles of organization in a particular state within a matter of minutes, this process is likely not sufficient for a US expansion visa. |
What are the Different Types of US Business Entities?
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There are several different types of business entities a company may choose from when setting up an office in the US. While some entities are more complex than others, each option allows the business to operate and conduct transactions in the United States. The optimal company formation for your business depends on a number of factors such as how many owners there will be of the company, US visa type, US and foreign tax burden, and liability.
By far, the two most common US company formation choices are Corporations and Limited Liability Companies, better known as LLC. |
Corporations (Inc.) |
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A US corporation is a legal entity which is treated as a “legal person” under the laws of the United States. It is the individual state’s responsibility to establish the law as its relates to the governing of corporations. As such, a corporation may be sued (and sue others) separately from its shareholders. Shareholders are the owners of the corporation through the amount of shares they own. A shareholder’s liability is only as much as their initial capital investment in the company. Structuring a corporation for US tax purposes is critical in order to reduce one’s tax liability. This is such, because along with being taxed on the corporation as a whole, individual shareholders are also taxed on the dividends they receive. This is often referred to as double taxation.
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Limited Liability Companies (LLC)
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A Limited Liability Company, or LLC, is legal entity in the United States that offers broad liability coverage for the business owner. Whether a LLC is owned by one individual or multiple people, they are referred to as “Members.” Unlike a corporation, there are no shares distributed by a LLC. However, members may elect to receive Membership Certificates based on their membership interest in the company. For the purpose of US taxes, individual earnings derived from the company are treated as pass-through income by the IRS for each LLC member. This means that a LLC member pays taxes on money earned from the LLC each year when he or she files their taxes. There is no general tax on the company (i.e. corporate tax). Nevertheless, in some situations a LLC may elect to be treated as a corporation for tax purposes.
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The Barella Global Advantage |
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Along with completing the company formation, Barella Global customizes the documents and legal matter with the ultimate immigration goal in mind. This process sets us apart from other US law firms which only practice business law, and who do not consider a client’s immigration needs during their representation. Additionally, our work is completed simultaneously along with any US immigration visa being handles by Barella Global, allowing the firm to save our client’s valuable time.
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