An alien who wants to do business or invest in the United States should not start a business in the United States – the Internal Revenue Service gladly levies tax on a foreign company. However, according to Richard Hartnig, a lawyer and tax adviser at Schwartz International, a tax consultancy in Atlanta, it is easier to negotiate with an American subsidiary. “If the IRS sends something to a foreign company, it may take several months to send it by mail,” says Hartnig. In addition, in some cases, a company registered in the United States can control when it pays tax. And, adds Hartnig, for passive investment in real estate or business, “if you submit a tax return to the company, you can not get on the IRS screen.”
Here are four questions to consider when starting an American business as a foreign citizen:
1) Choose the structure of your company
Most foreign citizens, said Hartnig, chose the creation of the company C, which can be expanded by providing unlimited shares and, as a rule, more attractive to external investors, although their profits are first at the corporate level and then taxed to dividends. For the shareholders of the company, the benefits are generally obvious: the company’s participants, as a rule, have the right to receive a lower dividend. And while the US company does not own mostly real estate, the parent company does not pay any profit from the sale of the subsidiary in the US. According to Hartnig, even some foreign owners are probably best suited for working with Group C, as the structure will protect them from direct IRS. Check. “Foreigners are very, very reluctant to name their name in the US Tax Code,” he says.
Of course, owners of C companies pay more for this sign because of double taxation. But in many cases, taxpayers can use wages, pension costs and other expenses to reduce corporate income and eliminate a significant portion of double taxation.
In some cases, as a rule, depending on the specifics of its own tax legislation, the optimal corporate device may be limited. In a limited liability partnership, non-controlling partners have limited liability, and profits are transferred to members who pay income tax with their return of income tax.
2) Select the status to register your company
The company must determine where it is located. When a state dominates its market, it is best to integrate it – there is no way to bypass bonds, as in California, a well-known costly jurisdiction, when registered in the states of Nevada or Delaware, in two states the low charge is well known. On the other hand, if the company is not concentrated in a particular state, most consultants are likely to recommend Delaware and then Nevada. Partly this is due to the “soft law” of Delaware in relation to corporations, which provides generous protection to shareholders and directors, as well as its favorable rules for foreigners. (In addition to the fact that neither a physical address nor a bank account is required, Delaware provides its corporate law website in 10 languages.) In addition, at least in part, it is a matter of lethargy: accountants are so familiar with the welcoming wishes of Delaware. are not occupied with studying the requirements of more remote states.
3) Register your company
Forms and other conditions for the formation of an economic unit depend on the state. Here’s how the Delaware incorporation works, which serves as a simplified model for many states:
The company bosses choose a unique name.
You choose a registered agent who can obtain legal documents for the company. (A company with a physical address in the state can serve as its agent, but this is not the case in other states, such as California).
The company completes a one-page fund certificate that identifies the name of the company; The name and address of the registered agent is the total amount and nominal value of shares that the Company has the right to issue, as well as the name and postal address of the founder. Payments start at $ 89 and increase mainly in the amount of shares issued or principal.
After the corporation is formed, it must submit a report ($ 50) and pay a fee for the franchise ($ 175) annually. Despite the fact that there are many online services that can help companies create separate fees of up to several hundred dollars, the documents are usually quite simple and usually provide advice (usually your foreign minister) to individuals in Canada. line. help to submit good documents.
4) Obtain the employer’s identification number
The employer’s identification number is required not only for hiring employees, but also for opening a bank account, paying taxes or often obtaining a business license. Apply for one free with the IRS and avoid many online services using government Internet addresses that charge a fee for this service. But if the CEO of an American company (the IRS calls the “responsible side”) already received a separate taxpayer identification number from the agency, she can not apply for ONE online – she must apply by mail or fax, and when the form Enter the taxpayer identification number , enter “foreign / none”.