MyUSACorporation

The election of S corporation status is made by filing a form called "Election by a Small Business Corporation" with the IRS Service Center, where the corporation files its corporate federal income tax return. The election of the S corporation status must be unanimously approved by all of the shareholders by having all of them sign the "Election by a Small Business Corporation" form. In addition to federal election, three states (New York, New Jersey and Arkansas) require S-Corporations to file state election application, after the IRS has approved the federal election. Eligibility for S-Corporation Status In order to elect S corporation status, a corporation must satisfy the following requirements: Must be a domestic corporation, organized under the laws of any state or U.S. territory, Maintain only one class of stock, Maintain a maximum of 100 shareholders, Shareholders may only be individuals, estates or certain qualified trusts, All shareholders must either be U.S. citizens or legal residents. When Should the Election Be Filed? In order for the election to be effective as of the beginning of that tax year, election must be filed on or before the 15th day of the 3rd month of the corporation's tax year. For example, a corporation that is on a calendar tax year must file on or before March 15th in order for the election to be effective for that tax year. Termination of S Corporation Status S corporation status can be terminated either voluntarily or involuntarily: Voluntarily: S-Corporation election may be voluntarily revoked with the consent of shareholders holding more than 50 percent of the outstanding shares of stock (voting and nonvoting) on the day the revocation is made. Involuntarily: S-Corporation status is involuntarily terminated if any of the disqualifying events occur. A disqualifying event is one that would prohibit the corporation from making the election in the first place. Examples of disqualifying events would include having more than 100 shareholders, a shareholder that is other than an individual, estate, or trust, or a shareholder who is a non-resident alien. Generally, the election is automatically terminated as of the date on which the disqualifying event occurs. However, if a corporation has both accumulated earnings and profits as well as passive investment income that exceeds 25 percent of the corporation's gross receipts for three consecutive years, the corporation election will be terminated beginning with the following tax year. Re-election of S Corporation Status A corporation may re-elect S corporation status only on the 5th year after the year in which the termination or revocation became effective. Ready to Order? We will prepare and file your S-Corporation Election application with the IRS and if necessary with the state authorities as well, all you need to do is complete our simple order form. Ready to File S-Corporation Election? https://www.myusacorporation.eu/election.html

S-Corporation is a regular corporation that has 100 shareholders or less and that passes-through net income or losses to its shareholders for tax purposes (similar to sole proprietorship or partnership). Since all corporate income is "passed through" directly to the shareholders who include the income on their individual tax returns, S Corporation are not subject to double taxation. An eligible domestic corporation (C-Corporation) can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S Corporation. Generally, an S Corporation is exempt from federal income tax other than tax on certain capital gains and passive income. On their tax returns, the S Corporation's shareholders include their share of the corporation's income or loss. S-Corporation vs. C-Corporation Advantages: Like C-Corporations, S-Corporations are separate legal entities from their shareholders and, under state laws, generally provide their shareholders with the same liability protection afforded to the shareholders of C corporations. Unlike C-Corporations, for Federal income tax purposes taxation of S corporations resembles that of partnerships. Thus, income is taxed at the shareholder level and not at the corporate level. Certain corporate penalty taxes (e.g., accumulated earnings tax, personal holding company tax) and the alternative minimum tax do not apply to an S-Corporation. Disadvantages: Unlike a C-Corporation, an S-Corporation is not eligible for a dividends received deduction (a tax deduction received by a corporation on the dividends paid to it by other corporations in which it has an ownership stake). Unlike a C-Corporation, an S-Corporation is not subject to the 10% of taxable income limitation applicable to charitable contribution deductions. Unlike a C-Corporation, ownership of an S-Corporation is significantly restricted (read next). Who Can Form an S-Corporation? S-Corporations are more suitable for small and family businesses, and for those who start their business with small investment. Also, some existing businesses qualify for S-Corporation status. To form S-Corporation or to change your existing C-Corporation into S-Corporation (also called " Election of S-Corporation Status") certain conditions must be met: S-Corporation cannot have more than 100 shareholders. All shareholders must be either U.S. citizens or residents, estates, or certain trusts. Can only have one class of stock. Preferred stock is not allowed. Profits and losses must be accorded to owners in proportion with their ownership stake. Must use the calendar year as its fiscal year unless it can demonstrate to the IRS that another fiscal year satisfies a business purpose. Shareholders cannot deduct losses in excess of their investment. The corporation cannot deduct fringe benefits given to employees who own more than 2% of the corporation. Filing With IRS And The State S-Corporation Election is filed with the IRS (Election by a Small Business Corporation, Form 2553), and that election is recognized by all states. with the exception of New York, New Jersey and Arkansas, which require additional state filing. S-Corporation Advantages Forming S-Corporation generally allows you to pass business losses through to your personal income tax return, where you can use it to offset any income that you have from other sources. S-Corporation shareholders are not subject to self-employment taxes. These taxes, which add up to more than 15% of your income, are used to pay your Social Security and Medicare taxes. When you sell your S-Corporation, your taxable gain on the sale of the business can be less than it would have been had you operated the business as a regular corporation. Taxation of S-Corporations https://www.myusacorporation.eu/s-corp.html

U.S. Companies for Foreigners Registering Your Company In The U.S. Many international entrepreneurs are looking to create or expand their business into the U.S. market. MyUSACorporation.com specializes in helping those entrepreneurs, and we would like to present you with several ideas to consider first. What Documents Are Needed? First of all, to register a company in the U.S. you don't need to present any documents - only information. Documents would be necessary in case you want a US address or need to open a bank account, but not for company registration. Do I Need To Be In The U.S. To Open My Company? Not at all. All filings can be done remotely, with us serving as your proxy in the U.S. In almost all cases when we need a signature from our clients this can be done electronically. Choice of State If you plan to buy real estate property, or open a "brick and mortar" store in the U.S. it is recommended to form your company in the state where this property or store is physically located. Majority of our clients choose either Delaware or Wyoming, due to more expensive fees in Nevada. You can see the comparison between those 3 states here: DE vs. NV vs. WY. Choice of Entity Foreigners can choose primarily between two types of entities: LLC and C-Corporation. LLC is the most common type of entity chosen by our foreign clients due to its simplicity, flexibility and single taxation. C-Corporation mostly chosen by young entrepreneurs looking to obtain Angel or VC financing. You can see a comparison between LLC and C-Corporation here: LLC vs. Corporation also Which Business Entity Is Right For Me?. Restrictions and Things to Consider First of all, as a foreigner you are not required to have Social Security Number to open your company and obtain EIN (company tax ID). You also don’t need to have a U.S. address or phone number, however if you like to have U.S. address and/or phone it’s possible to obtain them from specializing vendors (see phone vendors here, and our U.S. address solutions here). Banking in the US is a more complicated topic. There are some companies on the internet that promise international clients help in opening a bank account remotely, but we warn our clients to be careful with those who claim they can help that way. To learn more about banking in the U.S., associated problems, and possible solutions please read our article "Opening a Bank Account in the United States". Drop-shipping is a very popular modern business concept, and U.S.-based drop-shipping businesses became the driving force of the "location-independent entrepreneur" phenomenon. Much has been written on the mechanics of the drop-shipping business itself, so this article will only cover the aspect of U.S. company registration, taxation, banking, and other related business filings: U.S. Company Registration for a Drop-Shipping Business. Finally, international clients would need help filing their U.S. company taxes. We addressed this issue in our article U.S. Taxation for Foreign Entrepreneurs. So you’ve got a brilliant idea that you want to turn into a business. You want to save every penny possible as you get things going, so you file the papers to create your own business entity. It’s pretty simple, after all. You find some forms online, fill them out, and you you should be in business in no time flat. Read our article One Of The Biggest Mistakes Many New Business Owners Make (And How To Avoid It). Additional Information If you have any questions about all of the above and anything else our customer service representatives are here to help. You are invited to contact us via Skype, email, or call our customer service at +1 (347) 773-4343 (Also Viber, WhatsApp, Telegram). https://www.myusacorporation.eu

Specifics of U.S. Company Registration for Real Estate Investment Purposes Many international investors are looking into the U.S. real estate market as their next source of investment. This is due to the robust nature of that market, and reliable legal framework ensuring lower risk than in most developing markets. MyUSACorporation.com specializes in helping foreign investors with proper registration of the legal entities needed to serve as holding companies for their real estate assets. Choice of Legal Entity Very important: it is a highly recommended and a common practice to register a unique legal entity for each individual real estate asset, in order to limit the liability of that particular property to itself and shield the investor and his/her other properties from any potential liability related to that property. We invite you to read our article on Limited Liability Protection to understand this very important issue in depth. Foreigners can choose primarily between two types of entities: LLC and C-Corporation. LLC is the entity of choice when it comes to real estate and practically all real estate assets in America are held in LLCs. It is also the most common type of entity chosen by our foreign clients due to its simplicity, flexibility and single taxation. C-Corporation mostly chosen by young entrepreneurs looking to obtain Angel or VC financing. It is however important to also know that an investor does not need to own those LLCs directly, and instead can opt for a holding schema where one company (possibly a C-Corporation, in a friendly state such as Wyoming or Delaware, for tax and other reasons), holds all LLCs that in turn hold the real estate assets. This structure also helps preserve anonymity (read more about that below). You can see a comparison between LLC and C-Corporation here: LLC vs. Corporation. Choice of State As mentioned above, for real estate holding purposes an investor should opt for registering an LLC. Since we are talking about a physical cash-flowing asset the choice of state is limited to the state where the asset is located. So for example, to buy a condo in Miami, Florida, one must register a Florida LLC. https://www.myusacorporation.eu/us-company-registration-for-real-estate-investors.html

Choosing The Right Incorporation State Once you have decided to incorporate or form an LLC, you need to choose the state for your new entity. Naturally, for most businesses the choice would fall on their home state, i.e. the state where the company will do most of its business. This rule holds especially true for smaller businesses that will likely not expand significantly, or that do not want to conduct business outside of their home state, like shops, dealerships, etc. As your business grows, and it appears that you may need to conduct business in another state, you can always register what is called a "Foreign Entity", or a "Foreign Corporation" - technically, a legal "extension" of your business in another state. Not all businesses need to be organized in the state where you are currently located (especially if you are a foreigner and live outside of USA). Each state has its own legal requirements and registration procedures for new businesses wishing to incorporate. Certain states are famous as favorable homes for incorporating or forming an LLC due to their unique incorporation laws and favorable tax policies. The most notable are Delaware, Wyoming and Nevada. Some Examples: If you are looking to place your real estate assets under a legal entity like an LLC then it makes sense to incorporate in the state where those assets are physically located. It is generally recommended to put each real estate asset in its own LLC in order to limit the liability of each property to itself. For those entrepreneurs looking to form a corporation or LLC for their new ventures (like online businesses, or technology start-ups), choosing one of the more favorable states (like Delaware, Wyoming or Nevada) might prove to be a wiser choice. That is especially true if some or all shareholders and/or employees are not located in the same state, often the case with Internet-based businesses. Home-based businesses would often enjoy many tax benefits related to maintaining an office in your home, therefore, with some exceptions, it would usually make sense to organize your home-based business in your home state. Some specific needs require specific choices as far as organization goes. An example of such specific need would be estate planning. If you are looking for ways to protect your children and spouse from enormous estate tax liability when you go to a better place, there are incorporation tools offered by various states (such as "Close Corporations", "Close LLCs", etc). Other examples include some more exotic types of entites like Series LLC or L3C - Low-profit LLC (a cross between a nonprofit organization and a for-profit corporation). These types of entities are currently being offered only in few states. To fully evaluate your incorporation needs and to choose the right state to form your business entity in it is important to consult your tax and legal advisors. Those specialists should have the knowledge and experience to help you evaluate your unique business needs and help you make the best choice. https://www.myusacorporation.eu/de-nv-wy.html

Comparison Between LLC and Corporation The following table gives side-by-side comparison of 3 most common forms of business organization: C-Corporation, S-Corporation, and LLC (Limited Liability Company): NOTE: LLC is the most flexible type of business entity thanks to the fact that LLC members can keep the company taxed as partnership (or disregarded entity if single-member LLC, both default forms of taxation), or instead elect it to be taxed as S-Corporation or even C-Corporation, if company owners' taxation goals work best with these types of taxation. Any corporation is taxed as C-Corporation by default, and can be elected to be taxed as S-Corporation, provided all shareholders are U.S. persons, etc (read here for a list of requisites for S-Corporation). Quick Comparison: LLC vs. C-Corporation The entities are taxed differently. By default an LLC is a pass-through tax entity, meaning that the income is not taxed at the company level (however, a Multi-Member LLC is still required to complete a separate tax return). The income or loss as shown on this return is 'passed through' the business entity to the individual members, and is reported on their individual tax returns. C-Corporation is a separately taxable entity, and pays tax on the income prior to any dividend distributions to shareholders. If and when corporate earnings are distributed to shareholders in the form of dividends, the corporation does not receive the reasonable business expense deduction, and dividend income is taxed as regular income to the shareholders. The entities differ in their structure. LLCs are less rigid in their structure than corporations, so you have more flexibility in adapting the LLC to your unique business. The Operating Agreement of an LLC can be structured in a limitless number of ways. Formality: A corporation is a formal entity with officers and directors (at least one of each) required. An LLC, on the other hand, can be 'member managed' and run in a less formal way. For small, start-up businesses, less formality means you can focus on making money rather than administrative work. Quick Comparison: LLC vs. S-Corporation Difference in income allocation: While S-Corporation special tax status eliminates double taxation, it lacks the flexibility of an LLC in allocating income to the owners. An LLC may offer several classes of membership interests, while an S-Corporation may only have one class of stock. Ownership restrictions: Any number of individuals or entities may own interest in an LLC. Also, LLCs are allowed to have subsidiaries without restriction. Ownership interest in an S-Corporation is limited to no more than 100 shareholders. On top of that S-Corporations cannot be owned by C-Corporations, other S-Corporations, many trusts, LLCs, partnerships, or non-resident aliens. Self-Employment Taxes: One advantage of S-Corporation is the way self employment taxes are calculated. S-Corporation owners employed by the company must receive salary, and their self employemnt tax is caluclated based on that salary (this is true with the exception of S-Corporations based in New York City). Owners of LLC, on the other hand, pay self employment taxes based on all member distributions they receive. Quick Comparison: C-Corporation vs. S-Corporation https://www.myusacorporation.eu/llcvscorp.html

Comparison Between Incorporation-Friendly States It is commonly recognized today that Delaware, Wyoming and Nevada can all be called "incorporation friendly" states due to their corporative laws, relatively low fees, and limited or nonexistent state-level taxation. However, how would a person choose between the three? In general, Delaware, through its developed legal system and laws protecting shareholder rights, is geared toward the large complex public corporations, whereas Nevada and Wyoming are more attractive to the small privately held corporations and LLCs. Delaware law tends to protect the rights of boards of directors and shareholders, while Nevada and Wyoming tend to favor management. Does the above comparison mean Delaware is not the best place to incorporate? Not necessarily. The choice to incorporate in Delaware depends on the long term goals of your company. Delaware has an excellent body of corporate case law spanning 110 years regarding such matters as management/shareholder issues and mergers & acquisitions, and that's precisely why the Fortune 500 are drawn to this state. Delaware laws tend to be "pro-management" when it comes to minority shareholder disputes. Huge public companies have literally hundreds of such disputes pending in the courts on any given day. So if you are aiming to grow your company to become a Fortune 500 company (or at least planning it to attract VC investors and possibly go for IPO one day), Delaware's case law offers many insights into what you can and cannot do, and what the likely consequences may be. Unfortunately, Delaware also has corporate income tax, personal income tax, a state franchise tax, reporting requirements and regulations compelling disclosure of substantial amounts of information resulting in far less privacy for you. That makes Nevada and Wyoming much more attractive for small privately owned businesses. Nevada or Wyoming? Things to consider when choosing between the two states: Information sharing with IRS: Nevada is famed as the only state that does not share information with the IRS. Although that fact by itself is true, there are few things that you should know about it: First of all, Wyoming does share information with the IRS, but only the information given by companies with real assets inside the state. So if you don't have any real estate in Wyoming you are as protected in that regard as in Nevada. Second, Nevada makes IRS mad. That means if you are in Nevada the IRS is targeting you because you are in a non friendly state. Piercing of corporate veil: The corporate veil separates the assets and liabilities of the company from the assets and liabilities of its owners, thus protecting owners from business risk. Nevada offers the best corporate veil protection available. Wyoming also has well established criteria concerning the piercing of the corporate veil. Where fraud is not present, a Wyoming corporation that does not co-mingle funds and maintains some form of corporate formalities, including holding meetings of shareholders and directors, will not be pierced. Many professionals consider Wyoming to be inferior to Nevada in that regard, with others claiming the differences are negligible. State taxes: There are no state income taxes on individuals or companies both in Nevada and Wyoming. Ready to Start Your Business? https://www.myusacorporation.eu/de-nv-wy.html

Which Business Entity Is Right For Me? Once decided to become involved in a new business venture, how would you know which legal entity is the right for you? The choice of entity would influence many aspects of the life of your business, from taxation to limiting liability, and more. Let's start by reviewing the most common types of entities, available for people doing business in the United States: Sole Proprietorship & General Partnership A sole proprietorship is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business. General Partnership is similar to Sole Proprietorship, except it is owned and run by two or more partners. All profits and all losses accrue to the owner(s) (subject to taxation). All assets of the business are owned by the proprietor (or the general partners), and all debts of the business are debts of the owner(s) and must be paid from owner(s)' personal resources, meaning that the owner(s) has unlimited liability. A sole proprietor may do business with a trade name (DBA) other than his or her legal name. This also allows the proprietor to open a business account with banking institutions. It is a 'sole' proprietorship in the sense that the owner has no partners. General Partnership usually does business under a trade name as well. Establishing a sole proprietorship is cheap and relatively uncomplicated. You don't have to file any papers to set it up - you create a sole proprietorship just by going into business. In other words, if you'll be the only owner of the business you're starting; your business will automatically be a sole proprietorship, unless you incorporate it or organize it as an LLC. Of course, you do have to get the same business licenses and permits as any other company that goes into the same business. It is also advised to register a DBA ('Doing Business As') name with the state for your business. General Partnership is established by drafting a partnership agreement and obtaining EIN for tax purposes. Registering a DBA is advisable in order to be able to legally operate under the chosen business name. Advantages: One takes all the profits of the business - no corporative taxes on the profits made, No double taxation, Easy to start up, Relatively fewer regulation, Full control over the business, Easy to discontinue, Quick decision process. Disadvantages: Unlimited liability - owner(s) of the business is (are) responsible for the business's debts, If business becomes successful, the risks accompanying the business tend to grow, Hard time raising capital - owner(s) have to make up for all the business's funds, C Corporation A corporation is a type of business entity that is organized under specific provisions of the General Corporation Law. A corporation must have shareholders, directors and corporate officers, and must be registered with the state. In addition, the corporation will be taxed at the state and Federal level on its earnings. A corporation offers the protection from personal liability for the owners (shareholders). This corporate veil of protection does not offer protection from liability in the case of fraud, failure to pay taxes, under capitalization of the corporation, or commingling of personal and corporate funds. https://www.myusacorporation.eu/business-entity.html

What is Limited Liability? The best way to explain limited liability is this - you risk what you put in. In other words, limited liability is a way to make sure that a person who is engaging in business does not risk his or her personal possessions in case the business fails. Any investor, partner, or member of the company that by law has limited liability cannot be made responsible for any unfulfilled company obligations and debts that are more than the amount that the person has invested. Jack and Jill Here is a simple comparison. Jack and Jill are friends. Jack is a handy guy and Jill is a great cook. To earn money from their talents, both start their own business. Jack earns his living by doing renovations. He bought his own equipment and simply advertises his services under his own name. Jack is a sole proprietor. Jill decided to open a bakeshop. Before going into business, however, Jill has formed a small corporation (an S-Corporation), called Jill's Cakes, Inc. Jill invested her savings into Jill's Cakes, Inc. as a starting capital and then bought her baking equipment and leased her shop on behalf of her corporation. So long as things go well for Jack and Jill there are almost no differences between the two ways of doing business. As soon as things turn sour though, the differences become apparent. One day, Jack mopped the floor right before leaving the apartment he just painted, but forgot to put up a sign. The owner walked in, slid on the wet floor and broke an ankle. He is suing Jack for medical expenses and lost wages. Jill accidentally dropped a peanut in a wrong batch of batter and caused a severe allergy attack in one of her customer. That customer is suing her for medical bills and pain and suffering. What is at risk for Jack and Jill? Jack is risking everything he owns - his work equipment, his truck, his house, his personal belongings. So long as there is a judgment against him, Jack must sell anything he owns to pay it. Jill is risking only her business assets - her cooking equipment, her cash reserves, and anything else owned by Jill's Cakes, Inc. But her personal things, such as her car and her apartment, are safe. Her business may become bankrupt, but her life will not be (completely) destroyed. Of course, this story describes a worst case scenario. Many businesses prosper without many troubles. But many also fail, and it is so easy for a business owner to take advantage of limited liability that everyone should do it. Maintaining Limited Liability Several types of business entities offer their owners the protection of limited liability. The most popular are corporation and limited liability company (LLC). Each of these entities has its own advantages and drawbacks, but both offer their owners limited liability protection. A few things are important to remember in the context of limited liability. First, a company must be properly maintained in order to offer full liability protection that it is designed to offer. In short, if a company is only a company in name, but is run as if it is one and the same with the person running it, the courts will consider it a sham, and will not afford the owners limited liability protection. You can read more on this topic in our article on Piercing the Corporate Veil. Second, even in a limited liability business an owner may be responsible for amounts beyond his or her investment. This is the case when an owner has personally co-signed a debt agreement (such as a credit card application). This signature gives the lenders a personal guarantee of repayment of that debt and in the case of default they can go after the owner's personal assets. Other owners of the company (or investors) would not be liable if complete repayment is beyond the resources of the business, but the owner who had done the co-signing would be responsible for that amount. https://www.myusacorporation.eu/llc.html

Protecting Your Assets If you are a business owner, one of the most significant reasons to incorporate or form a limited liability company ("LLC") is to protect your personal assets from a business creditor's claims against your company. This ability of a properly-formed and maintained company to shield its owners from personal liability is sometimes referred to as the "corporate veil". Under certain circumstances, however, business creditors may be able to successfully make a claim against a business owner's personal assets or "pierce the corporate veil". When properly managed, corporate veil provides crucial personal liability protection against creditors, lawsuits, and other disputes. Typically, these claims can only be applied to business assets. An owner's personal liability is restricted to your investment in the company. Personal assets, such as real estate, bank accounts or other investments, are safeguarded from business creditors. In other words, you only risk what you put into the business. Most veil piercing circumstances occur because a business owner has either failed to abide by the legal requirements for operating a business or because the owner did not clearly separate his personal and business assets. Here are some guidelines for establishing your business and conducting it in a way that makes "piercing the corporate veil" less likely: Separating Personal and Business Assets If you are the owner of a corporation or an LLC, you are obligated to maintain a legal separation between yourself and your company. If you fail to do this, you risk creditors claiming that your company is merely your "alter ego" - a mere shell of your "self". Your personal assets may then become vulnerable to business creditors. These are some of the steps to take in order to separate business and personal assets: First, not only should you maintain separate bank accounts for your business and personal finances, but you should never use company funds to pay your own personal expenses. If it becomes absolutely necessary for you to provide personal funds to pay employees or other pressing business expenses, document the additional funds as either a loan or an additional investment into the company. Second, directors, officers and controlling shareholders (or members and managers of an LLC) have a general fiduciary duty of loyalty and integrity that should govern all their corporate conduct. This means that as an owner of a company you should always be making decisions that are in the company's best interest. An opposite behavior would be taking actions that benefit you personally to the detriment of the company you own. If an owner violates this duty either on purpose (in bad faith) or by not paying proper attention (negligently) he may be personally liable for any consequences of his actions on behalf of the company to a business creditor. Third, it is important to maintain adequate business capital. If your business is deliberately undercapitalized (cannot afford to pay for its operational expenses), you may become financially responsible for legal claims against your company. To guard against some of the mistakes listed above, companies can sometimes obtain "Errors and Omissions" insurance coverage that would insulate directors and officers from legal action caused by their conduct while representing the company. https://www.myusacorporation.eu

Why Delaware? Delaware is famed to be the "incorporation capital" of America - more than 60% of Fortune 500 companies are incorporated in Delaware. According to Delaware Department of State, Division of Corporation's 2006 Annual Report the number of active business entities in Delaware has grown 50% in the last six years to a total of more than 765,000. In 2006, Delaware welcomed more than 145,000 new businesses. The reason why so many Fortune 500 companies are drawn to this state is the fact that Delaware has an excellent body of corporate case law spanning 110 years regarding such matters as management/shareholder issues and mergers/acquisitions. Some Facts Here are some facts dealing with forming a company in Delaware: Names and addresses of shareholders, directors, officers, members or managers of a Delaware Company do not appear within public records. Moreover, during incorporation process, there is no obligation to provide this information to the State of Delaware. No minimal capital investment in the Company is required. There is no sales tax in Delaware. The Company has no obligation to have a bank account in Delaware. The Delaware Company headquarters may be located anywhere in the world. The Company has no obligation to have its headquarters in Delaware, nor to conduct any business in this state. The sole obligation for the Company doing business somewhere other than Delaware is to be represented by a Registered Agent in Delaware. The same person can be Shareholder, Director and Officer of a Delaware Corporation. Directors can establish the price they wish for the sale of the Company's shares. They can also adopt, modify or repeal any Company bylaw. If the Company does not do business in Delaware, it does not have to pay any income tax to the state (this is relevant to C-Corporations only). If a Delaware Company shareholder doesn't reside in the state, the said shares are not subject to inheritance tax in case of death. The Delaware Court of Chancery is the oldest business court in the country and uses judges instead of juries. Delaware adopted a whole set of corporate laws which are very favorable to companies and which recognize contractual freedom. The "General Law Corporation" of Delaware is one of the most evolved and flexible corporate laws in the United States. With all those advantages in place, Delaware might not be the most suitable place to incorporate your new business. Delaware is one of the three states commonly recognized as "corporate heavens", the other two being Nevada and Wyoming. Before making your choice please see our article that runs a comparison DE vs. NV. vs. WY. https://www.myusacorporation.eu/delaware.html

Incorporation in Wyoming Why Wyoming? Few people know that little fact, but it was Wyoming that invented the American LLC in 1977, as it was modeled after the 1892 German company law known as Gesellschaft mit beschrnkter Haftung (GmbH). Nevada and Delaware copied Wyoming's LLC and profited from it most through better marketing. Wyoming is one of the best places to establish a company, and this is proven by the fact that a very high percentage of the companies dealing on Wall Street are registered in Wyoming. The popularity of Wyoming as a "corporate heaven" in enhanced by the very liberal Corporation Law which enables companies to be established quickly with the broadest possible powers permitted under the law. There are little or no restrictions on any consequent business activities. Advantages of Incorporating in Wyoming Here are some advantages of incorporating or forming LLC in Wyoming: Wyoming has no state corporate income taxes, Wyoming has no franchise tax, Wyoming has no tax on corporate shares, The annual fees are based on the value of corporate assets that are physically located in Wyoming, not on assets located elsewhere, One person may fill all the required corporate officers and directors, Stockholders are not revealed to the State, No annual report is required until the anniversary of the incorporation date, The articles of incorporation may provide for unlimited stock without a requirement for stating par value, Wyoming statute has provisions for bearer script which can be used when stockholders capitalize the corporation in increments less than the par value of the stock, Wyoming allows for nominee shareholders, Share certificates are not required, There is no minimum capital requirements, Meetings may be held anywhere in the world, Corporate officers, directors, employees and agents are statutorily indemnified from personal liability associated with their corporate activity, Additional indemnification is allowed even after suit is filed by a potential judgment creditor, Wyoming has a continuance procedure, which allows a corporation formed in another state to change it's domicile to Wyoming wile maintaining its corporate history. You can learn more about advantages of Wyoming over other states, as well as get help deciding whether you should or should not choose Wyoming as the state of registration by reading our article Start Your Business in Wyoming. Wyoming is one of the three states commonly recognized as "corporate heavens", the other two being Delaware and Nevada. Before making your choice please see our article that runs a comparison DE vs. NV. vs. WY. https://www.myusacorporation.eu/wyoming.html

Let's start from a little disclaimer: corporate formalities can be and in many cases are a rather complex topic. This article attempts to capture the most basic scenarios which are also the most common ones. That being said, we always recommend to consult a corporate/business attorney, licensed to practice law in the state of your corporation's registration, who will be in a best position to offer advice on specific formalities that might be required for corporations registered in that state. Examples of the more complex cases requiring corporate attorney attention are mentioned in the end of this article. Also, this article deals with for-profit corporations only. And now lets proceed to the basics. Corporate Formalities vs. LLC Formalities One of the advantages of the LLC over corporation has to do with LLC structure and company formalities, both being less complex than corporate structure and formalities. As such, many states do not even require LLCs to have Operating Agreements, though it is a good practice to always have one in place. Corporations on the other hand are required to have Bylaws and Minutes of Initial Meetings in almost all states. Basics of Corporate Structure & Corporate Roles Corporation is an entity separate from its owners, and has a three-level structure: it is owned by shareholders, managed by board of directors, and it's day to day operations are run by officers. Below you can see the roles involved, as well as the steps that are typically taken in order to properly establish a standard corporation. The steps don't have to be in that order - there is typically a degree of freedom in terms of what is done first. Incorporator A person or a group or persons who decide to form a corporation (typically future owners of the corporation) appoint someone - a person or an organization - to act as the Incorporator of their new corporation. For example, our in-house incorporators representing our company act as Incorporators on most corporations that our company forms on behalf of our clients. The role of an Incorporator officially ends when the corporation is registered with the state, and the Incorporator issues a Letter of Resignation, naming the initial Directors of the corporation. Board of Directors A board of directors is a body of elected members (Directors) who jointly oversee the activities of a corporation. Board of Directors is elected by the vote of Shareholders (though initial board is appointed by the resigning Incorporator), and part of the responsibilities of the board is to appoint corporate officers and issue shares of stock. Initial Board of directors is listed in the Letter of Resignation of the Incorporator, and this initial board is responsible to adopt the governing document of the corporation - the corporate Bylaws - as well as make first decisions involving initial issue of stock and sale of this stock to shareholders, as well as appointing corporate officers. For that purpose the First Meeting of Board of Directors takes place and its summary is recorded in the document called "Minutes of the First Meeting of Board of Directors". Shareholders Shareholders are owners of the corporation, who typically contribute money or other tangible or intangible value to the corporation in exchange for corporate shares of stock. Shareholders can be individuals or organizations, such as other corporations, LLCs, trusts, etc. To become a shareholder one needs to purchase shares of the corporation either from a new issue of stock (which is authorized by the Board of Directors), or through purchase of existing shares from other shareholders. https://www.myusacorporation.eu/corporation.html

General Taxation Questions Q. What are the main types of business taxes in the U.S.? The main two types of taxes a foreign U.S. business owner should be concerned about are income tax and sales tax. Those are two completely different, unrelated taxes. Q. Are there any other taxes I should be concerned about? Some types of products have additional tax (and licensing) requirements, for example liquor and tobacco products, as well as other products. If you are not sure if your product or service has licensing or taxation requirements contact us and we will assist you with the research. Q. How does U.S. income tax work? This is a simple question, however it’s U.S. income tax we are talking about. Technically, each taxpayer must pay tax on the income created in the U.S., and in some cases (such as the case of U.S. citizens or permanent residents) on income created abroad. The income tax is paid to the federal government (IRS), and in many cases to the state of residence, and in some cases even to the local jurisdiction (e.g. New York City). However, we created this article precisely for the reason we cannot just simply answer this otherwise great question - the real answer is “it depends, because it’s complicated”. Keep reading the next items to see if U.S. income tax applies to you, and how. OK - now that we know the difference between sales tax and income tax let’s handle the sales tax portion of U.S. taxation, before diving into the depths of income taxation. If you want to skip the Sales Tax section click here. Sales Tax Questions Q. How does the sales tax work? Sales tax is a tax paid by the end user (consumer) of a tangible product (and in some cases service) sold by a retailer. This tax is paid on a state level (there is currently no national sales tax or VAT). For example, if you own electronics store in NYC, and a customer comes in and buys an item in your store, you would apply 8.875% (as of 2013) tax on top of the price paid by the customer. Then you are responsible to file a sales tax report to NY state and remit (pay) all the tax money collected from the customers. Q. How do I know if I need to apply sales tax on the stuff I sell? Excellent question. Before reaching a conclusion you must answer three questions first: Are you selling to end users, or are you a wholesaler? Only retailers selling to end users are required to collect and remit sales tax. Does your business have nexus in any state that has sales tax? Nexus is physical connection, and we discuss it later in this article. Some states (Alaska, Delaware, Montana, New Hampshire and Oregon) have no sales tax to begin with. Is your product/service taxable to begin with? Keep in mind, most tangible goods are taxable, while most services are not, but each jurisdiction has its own rules, so it’s not that simple. Q. Should I register in a state that has no sales tax, to avoid having to deal with it? Sorry, but it’s not that easy. For example, let’s assume you register in Delaware (that has no sales tax) and you are selling some tangible items by shipping them from China to buyers in the U.S. Since in this case your business only has nexus in Delaware (as state of registration), you will not have to worry about sales tax at all. However, if you are using a U.S. dropshipper that ships the product from warehouses in California, Kentucky and New Jersey, technically you are required to collect sales tax from buyers of your product in all three mentioned states. https://www.myusacorporation.eu/taxes.html

Many international businesses need to open a U.S. business bank accounts to make doing business with U.S. customers more convenient and to avoid the hassle of foreign currency and exchange rates. In general, it is strongly recommended that a business entity maintains a separate bank account. This would help keep entity in compliance with IRS record-keeping requirements and will provide for a better way to manage company’s cash flow. After 9/11 and with the passing of the Patriot Act it became really hard for foreigners to open U.S. bank accounts. Today all US banks are required to document verification that the person opening the account is the person on the I.D. they’re receiving. The easiest solutions practically all banks chose to go with is simply having one of the employees in their branches make sure that the person opening the account in the branch is the same person in the photo I.D. Some remote account opening options become available from time to time. You are welcome to check this post to see what options are currently available. Otherwise you are welcome to continue reading this article to find out how else you can open a bank account. Ways to Open a Business Bank Account in the US, and Alternatives So what are the possible ways to open a bank account in the US for a non-US person, not residing in the US? Let me present you with several possible solutions to this dilemma, including some alternatives to opening an account in the US: If You Have a Personal Bank Account in the U.S... If you visited the U.S. in the past and have opened a personal bank account your best bet would be to try to contact your bank (preferably the same branch) and see if the would open an account for your business remotely. Try a Few Online Bank Options Periodically it's possible to find an opportunity to open an account remotely with an online bank. For example, you can try such banks as Silicon Valley Bank）or EverBank. Also, eTrade seems to have the option of opening a bank account, even though they are technically a brokerage. It's a long shot, but worth trying before anything else. Keep in mind: online banks typically require an SSN (Social Security Number), but would open an account if you have ITIN (individual Tax Identification Number) as a replacement (ITIN has the same number of digits as SSN). Use a Reloadable Prepaid Debit Card Account Instead of Traditional Bank Account In most cases what you need is not a bank account per se, but the functions provided by a traditional bank account. For that you can use a reloadable prepaid debit card from companies such as NetSpend，Payoneer , etc. What you get is an internationally recognized debit card and an account number with routing and ABA numbers. With such an account you can set up free Direct Deposit of your paycheck, have your card reloaded at various locations (for example NetSpend list on their website more than 100,000 NetSpend Reload Network Locations throughout the U.S. to add cash or checks), and transfer money using PayPal®, a checking or savings account, or another card account (NetSpend or Payoneer). You should even consider opening accounts with several of those companies, to diversify your financial option. https://www.myusacorporation.ru/en/us-bank-account-for-non-residents.html