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Company Formation in the USA
Businesses are looking to incorporate companies in the U.S. more and more. However, legal complexity, recent tax reform, and foreign trade barriers pose a challenge for company formation in the United States.
NNRoad’s team of experts guides firms through the complex incorporation process, minimizing risks for smooth market entry.
Below you can check the types of companies that you can open in the USA:
- Limited Liability Company (LLC) -A (LLC) can be considered as a mix between a Partnership and a Corporation because of its similarities to both. Like a Sole Proprietorship/Partnership, finances are sent to owners for their personal tax returns. Additionally, it is also a separate legal entity like a Corporation and has similar liability protection, but there is no stock involved.
- C-Corporation - A Corporation (also known as a “C-Corporation”) is a distinct legal entity that can protect owners from corporate debt and personal liability. It is a separate establishment so can enter contracts, purchase real estate, and enter court as an entity fully separate from the owners. This entity may raise financial funds through selling stock and ownership can also change based upon stock ownership. The ownership of a corporation does not affect its duration and it has the ability to deduct many business expenses in taxes (unlike other legal entities).
- S-Corporation - Companies may reach“S-Corporation Status” after its establishment by registering with the Internal Revenue Service (IRS). Once processed and accepted, the company is no longer required to pay corporate income taxes on its profits but the income is instead sent to shareholders for computing tax returns where each shareholder includes the profits with their own tax returns. S-Corporation is very sought after by smaller companies who want to avoid numerous classes of stock and complicated company structures.
- Sole Proprietorship - A DBA (commonly referred to as “Doing Business As” and a “sole proprietorship”) is a business entity not completely separate from the owner because the owner is personally liable for the company and its financial status (added on owner’s tax returns). A “Partnership” is then such a business with multiple owners.
| Limited Liability Company (LLC) | C-Corporation | S-Corporation | Sole Proprietorship | |
| Legal Status | Separate entity from the owner | Separate entity from the owner | Separate entity from the owner | Separate entity from the owner |
| Separable Taxable Entity From Owner | Depends on the tax status | Yes | No | No |
| Number of Owners | Depends on the tax status | Unlimited | 100 | One |
| Management | Per articles of organization | Articles of incorporation generally required | Articles of incorporation generally required | Owner |
| Continuity of Life | Per articles of organization | Board of directors | Board of directors | Terminates with the death of the owner |
| Owner Liability | Limited to investment, except for personal services | Limited to investment, except for personal services | Limited to investment, except for personal services | Unlimited exposure |
| Transferability of Ownership | Per articles of organization | Can sell all or a portion of stocks | Can sell all or a portion of stocks | Only by the sale of entire business or creation of a different entity |
| Ability to Raise Capital | Limited to owners' contributions and LLC's borrowing abilities; can sell interests to raise capital | Limited to owners' contributions and corporation borrowing abilities; can sell interests to raise capital | Limited to owners' contributions and corporation borrowing abilities; can sell interests to raise capital | Limited to owners assets and borrowing ability |
Discover our Total Market Entry Package
NNRoad offers a complete market entry solution for companies wishing to have local professional support during their market entry into the USA.
This package enables you to hire employees even before your company is completely set up in the U.S. Once your company’s formation is finished, NNRoad transfers all employment relationships to your new entity.
Steps for Company Formation in the USA
- Confirm the selection of a business entity type.
- Verification of selected business name.
- Preparation and filing of all entity set up documents.
- Entity compliance kit and seal.
- Sample legal/compliance documents.
- Obtainment of Federal Tax ID (EIN).
- Assist with the search for the required business license(s).
- Registered agent service.