The US has been firmly in the top 10 countries for ease of doing business for decades. In own assessment, the World Bank among other indicators takes into account the ease of company registration, tax burden, minimization of maintenance costs and access to loans.
Often the overseas direction is chosen by IT companies, technology start-ups, as well as businesses focused on logistics and digital services. However, the company in the United States is not a “panacea for all the troubles”, as it is not a universal option: before you make a decision, we recommend weighing all the pros and cons.
Establishing a legal entity in the United States is worth if: a) your customers are focused on the US market; b) you are planning a real activity in the territory of at least one state; c) you plan to attract local investors and use flexible corporate law instruments, such as options, trusts, nominee services.
A pleasant advantage: despite the presence of states in which corporate taxation is close to zero, none of them is included in the lists of low-tax countries (or even the list of “black offshores”).
In our opinion, registration of a company in the USA is not necessary when: a) the arguments “for” are only the popularity and promotion of jurisdiction; b) there is no clear vision of the entrepreneurship, business plan and estimate, as well as understanding of the fundamentals of local tax and corporate systems.
If all the same, the skeletons were leaning toward the opening of the United States company, two key issues remain to be resolved:
I. State Selection
Here we advise you to pay attention to the legal field (which can be very different), available infrastructure, tax burden, investors concentration, annual mandatory reports and payments.
For example, Delaware is known for its developed system of corporate governance precedents, a high level of protection of the rights of directors and shareholders, as well as the well-regulated relationship between investors and founders.
Wyoming is one of the most “friendly” to the business state, with no corporation and income tax. Instead, the legal system is not so much geared to the needs of corporations.
Florida (“The Sunshine State”), also does not levy a personal income tax and provides a relatively low corporate tax with the ability to deduct many costs from the taxable base. At the same time, registering a company in Florida you should be careful: for centuries, local court practice is to protect the interests of consumers, not businesses.
Nevada has sad positions among the ratings, but the high average tax burden is primarily caused by serious taxes on gambling and sales. In this case, personal income in this state is not taxed and the tax rate on real estate is one of the lowest in the United States.
II.Choice of organizational and legal form
Most likely, you will choose between LLC and C Corporation. It is also possible to register as a private entrepreneur or to establish a Partnership, but in this case liability is not limited to the assets of the company: all personal property may be subject to collection.
C Corporation is the most common form of business that attracts investors by flexibility in management. The financial liability is borne by the company within its own property, and the banks are loyal lending money. A good choice for a fast-growing business.
LLC is more suitable for a small, niche business. From a corporate point of view, LLC is similar to Ukrainian LLC. But taxation is different: the LLC itself is “tax-transparent”, instead of taxation of the company financial results, founders are subject to taxation. LLC will be the best option if the business does not need external investment.
Regarding registration, you can do it in several ways:
- Personally in the USA;
- Select a service provider and transfer the power of attorney to commit all necessary actions – the classic more expensive and time-consuming way;
- Submit documents online: either by yourself or with our help – this option is faster, cheaper and easier, therefore we recommend it.
After successful registration, there will be a lot of organizational issues, such as receiving an EIN (Employer Identification Number). Even if you do not plan to hire employees, EIN will be required to pay taxes, opening accounts in banks and connecting FINTECH products. You also have to solve the issue with accounting: either order it on a “turnkey” basis, or run independently (which, with small revs, is also possible thanks to many convenient applications). One should be prepared to monitor the regular reporting: not only financial, but also to maintain the status of “good standing”.
If you are thinking of registering a company in the United States and want to assess whether this will really push your business to develop, please contact us: we will share all the details and help with realization.