Establishment of Corporation in the U.S.

 

Establishment of Corporation in the U.S.

 

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Establishment of Corporation in the U.S.

 

Globalization! It's been a long time since people talked about globalization. Currently, countries are closing down due to the Covid 19, but there are still a lot of people who constantly make a lot of efforts to expand exports and somehow go abroad to target overseas markets. These days, due to the development of the platform, individuals are becoming sellers by using Amazon or eBay and are participating in export and overseas market expansion. In case of Amazon, you will need importer or IOR (Importer of Record) in the U.S. when using Amazon FBA or FBM. There is a way to use an agency, but let's find out how to set up a U.S. corporation.

Conditions of Incorporation in the U.S.

From a foreigner's point of view, I feel like there is a huge barrier to entry if you try to establish a corporation. However, the American corporation can be established by anyone, including foreigners, and there is no need to have a business in your home country. American corporations can also be established without capital.

Establishment of Corporation in Delaware

For those of you who have learned about the establishment of an American corporation, you've probably heard a lot about setting up a corporation in Delaware. Delaware has the advantage of simplifying the cost and procedure of establishing a corporation in other states.

I think the United States is a country that encourages business. For example, Tax Exception (Section 1202) has no profit tax up to US$10 million, so if you plan to set up a corporation in the United States and attract investors, I would advise you to set up a corporation in Delaware. If you're going to start and maintain your business with your own money, I'd advise you to create a corporation in the state you're going to do business in. If you do business in California, you can create a corporation in California.

Corporation Type

If you have decided to establish an American corporation, you need to decide which one to set up.

1. Sole Proprietorship

2. Partnership

3. LLC (Limited Liability Company)

4. Non-Profit Organization

5. S-Corporation & C-Corporation

In the case of Sole Proprietorship, you can think of it as a one-person company. Because there is no boundary between business and personal property, if there is a debt to the business because the business has bankrupt, you have to pay it back with your personal property. That's why the Sole Proprietorship is certainly not suitable for selling a company or attracting investment.

In the case of Partnership, as the name suggests, several people own a business. There's a type of partnership. 1) Limited Partners (LP) and 2) Limited Liability Partners (LLP). In the case of Limited Partners, one general partner has unlimited responsibilities and the remaining partners have limited responsibilities, and in the case of Limited Liability Partners, all owners have limited responsibilities.

Limited Liability Company (LLC) is a form of corporation that most individuals or small companies consider when considering establishing a corporation in the United States. Individual assets and corporate assets are separated separately so that if there is a financial problem with the corporation, the owner's personal assets will not be affected. Apart from the law, it also has the advantage of being able to defend the legal responsibility of the corporation from being passed on to the owner individual.

In the case of Non-Profit Organization, you can think of it as a non-profit foundation.

S-Corporation & C-Corporation is similar to LLC, but it would be quick to understand if you think it's usually a large corporation.

EIN (Employer Identification Number)

 If sales and profits are generated after setting up a corporation in the U.S., you should pay taxes, right? What you need is an EIN number.

Branch vs Subsidiary

If you already have a corporation in your home country, you can think about whether to advance into a branch or subsidiary when you enter into the U.S. market. In other words, thinks that it is establishing a branch of your home country corporation, so from the standpoint of the United States, it is possible to think that a foreign company is doing business as a foreign company in the United States, and that the subsidiary is to understand that an independent corporation in the United States, or an American company, is established from the perspective of the United States. If you decide to enter the overseas market, you do your best, but if you look at the major market in your home country, you usually think of the branch and the main market in your business as the United States, you think of the subsidiary a lot. From a cost-effective and efficient standpoint, it is recommended to enter the United States as a subsidiary. In the case of branch, the legal responsibility can be extended to the overseas headquarters because the head office is overseas in the US position. However, because the subsidiary is considered an American corporation, legal responsibility can only end with an American corporation. In terms of tax terms, the branch does not generate a double taxation depending on how the U.S. government and your country made agreement. However, in the case of Subsidiary, the head office of your home country company and the U.S. corporation are considered separate companies, and if you want to bring the money from the U.S. to your home country, dividend tax may occur, so you may think that the branch is better than the subsidiary in terms of taxation. However, if you want to raise your home country company and American corporation separately by continuously reinvesting the profits made by independent corporations in the U.S., you can think that the branch and subsidiary are similar in terms of taxes. However, if you go further in terms of taxes, the subsidiary may be better because it is a foreign company and there are withholding, branch level interest tax, and other duties and taxes to be borne. In addition, if your home country company headquarter is subject to loaning money to the U.S. corporation instead of investing in the acquisition of shares, it can be treated as paying interest on the loan when the U.S. corporation sends money to your home country subsidiary, and it can be treated at a low tax rate if your country and the U.S. made agreement

 

How to Apply for an EIN Number

 

 To receive EIN #, you can fill out Form-SS4 and apply on the IRS website below.

https://www.irs.gov/businesses/small-businesses-self-employed/how-to-apply-for-an-ein

 

LLC Establishment Cost

How much would it cost if you decided to set up LLC? First of all, the cost varies from state to state. Let's see how much it costs each week.

Alabama

State Fee: US$ 212

Alaska

State Fee: US$ 250

Arizona

State Fee: US$ 85

Arkansas

State Fee: US$ 50

California

State Fee: US$ 75

Colorado

State Fee: US$ 50

Connecticut

State Fee: US$ 120

Delaware

State Fee: US$ 110

Florida

State Fee: US$ 125

Georgia

State Fee: US$ 100

Hawaii

State Fee: US$ 50

Idaho

State Fee: US$ 100

Illinois

State Fee: US$ 154

Indiana

State Fee: US$ 98

Iowa

State Fee: US$ 50

Kansas

State Fee: US$ 160

Kentucky

State Fee: US$ 40

Louisiana

State Fee: US$ 105

Maine

State Fee: US$ 175

Maryland

State Fee: US$ 197

Massachusetts

State Fee: US$ 520

Michigan

State Fee: US$ 50

Minnesota

State Fee: US$ 155

Mississippi

State Fee: US$ 53

Missouri

State Fee: US$ 52

Montana

State Fee: US$ 70

Nebraska

State Fee: US$ 109

Nevada

State Fee: US$ 425

New Hampshire

State Fee: US$ 102

New Jersey

State Fee: US$ 130

New Mexico

State Fee: US$ 50

New York

State Fee: US$ 205

North Carolina

State Fee: US$ 127

North Dakota

State Fee: US$ 135

Ohio

State Fee: US$ 99

Oklahoma

State Fee: US$ 104

Oregon

State Fee: US$ 100

Pennsylvania

State Fee: US$ 125

Rhode Island

State Fee: US$ 156

South Carolina

State Fee: US$ 150

South Dakota

State Fee: US$ 150

Tennessee

State Fee: US$ 308

Texas

State Fee: US$ 300

Utah

State Fee: US$ 76

Vermont

State Fee: US$ 125

Virginia

State Fee: US$ 100

Washington

State Fee: US$ 200

Washington DC

State Fee: US$ 220

West Virginia

State Fee: US$ 125

Wisconsin

State Fee: US$ 130

Wyoming

State Fee: US$ 102

 

  We must know for sure and prepare thoroughly...

It takes a lot of courage and information to start a business in your home country, but how much courage and information will it take to start a business in the United States? The more you prepare and know, the less you can spend, so I hope all the businessmen preparing to enter the U.S. will succeed.

That's all for today. 

The above information and related laws are subject to change at any time, so please consult with relevant experts for further advice. 

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