As business laws and regulations are well-formed and corporate income tax rates are really low, it is extremely favourable for foreign businesses to efficiently thrive.
However, every state in the US is governed by its state laws and regulations which vastly differs from one another. If your business is largely dependent on one particular state and its demand for your services, it is wise to Incorporate your business thereby acquiring a Foreign Qualification Certificate. Nevertheless, Delaware, Wyoming and Nevada, in particular, provide the most complimenting business and taxation laws which makes it mainstream for companies to incorporate. In particular, Delaware is said to have no state sales tax and the state’s franchise tax for small US businesses is very meagre. Additionally, there is no need for non-residents to pay separate corporate income tax in Delaware.
There are chiefly two main categories of incorporation such as LLC and C-Corporation for Indian businesses to choose from. However, LLC is most commonly chosen because of its ease towards single taxation and because of its adaptability. On the other hand, budding entrepreneurs wanting to appeal to venture capitalists and angel investors to raise funds, they must incorporate as a C-Corp and not an LLC. Also, if the company is planning to go public, C-corp would be the ideal choice to make.
Limited Liability Corporation is an easy choice for many businesses as it offers extensive growth possibilities, poses very little risk, has no shareholders limit and gives increased credibility for the business incorporated. Moreover, when a company is incorporated under an LLC, taxes need not be paid on the trade profits at the legal entity stage. Rather, the taxes from the company’s profits is filed on the proprietors’ tax returns.
C corporation is advantageous to foreign businesses majorly because of the multiple tax planning opportunities and the free transferability of shares it offers. Additionally, it also gives legal protection and has no limits on the number of shareholders or the number of owners. Although in C corporation, the profits are always taxed at the legal entity level. For example, if the profits and the resources of the business are split among the stakeholders as a bonus then the stakeholders are entitled to pay their corporate income tax dues on the profits thus creating a double taxation scenario.
Following are the documents that must be submitted in any of the languages Dutch, English, German or French:
|The owners are the members||The owners here are the Shareholders|
|Appropriate for small-scale businesses with limited shareholders||Apt for middle-size to substantially sizeable businesses with many shareholders|
|Members can set up the structure as they choose and manage||Shareholders elect directors who manage business movements|
|Members are not held liable in an LLC||Shareholders are not held liable in a C corp|
|Depending on the limitations of the operating agreement, transferability is planned||Here the stock of shares can be transferred easily|
|In general, stakeholders from outside don’t prefer an LLC because they are structured to operate as partnerships mostly||Foreign investors prefer C corp because they contain stocks, which is distributed among the shareholders|