The best way to expand your business to any offshore territory, for instance in the United States of America (USA) is to open up a company. You can easily open a company in USA, and still, be able to operate it as a non-resident.
There are certain factors that you will need to focus on while incorporating your USA-based Company either as LLC or C-Corp. A few of them are incorporation, compliance, bank account opening, and meeting up the state and federal requirements so that after this you can legally initiate and operate your USA-based business.
Globalization has led to the operation and management of multiple businesses across the globe. This provides sufficient opportunities for entrepreneurs to further scale their business and leverage their market reach.
Meanwhile, the USA has a big market of businesses and an enabling business environment. You can enhance your business reliability, market access, and investments by incorporating your company into the USA.
Which company to form LLC or C-Corp?
Limited Liability Company (LLC):
LLC protects its members and owners from being held personally liable for the operations and debts of the business. The LLC equals the business structure of partnership or sole-proprietorship with the advantage of increased risk protection.
Like the sole-proprietor and partnership company owners, members of the LLC pay their taxes as per the proportion of their personal income. This is called a “pass-through taxation structure”. Many small business owners opt for LLCs for their simplicity and flexibility.
Company Corporation (C-Corp):
C-Corp is a type of tax classification which is available to both types of corporations including LLCs and corporations. C-Corp is not a type of business entity. Although it is more frequently used by corporations.
C-Corp has no broader restrictions on shares ownership. There are no limitations to the total shareholders’ numbers. Businesses inside and outside of the US can also obtain ownership. C-Corp is considered to be the most suitable business framework for collecting huge amounts of capital from a bunch of investors.
Pros and Cons of LLC Incorporation:
1. Pass-through taxation.
2. Limited Liability
3. Fewer Regulations
4. Greater Flexibility
1. Can’t issue shares of stock
2. Difficult to source investment
3. Retention of earning is more difficult
4. Owners pay self-employment tax
Pros and Cons of C-Corp Incorporation:
1. Limited Liability
2. Unlimited Shareholders
3. Great for Equity Financing
4. Lower maximum tax rate
1. Double Taxation
2. No personal write-offs
3. Stricter rules and regulations
4. More expensive
Requirements in setting up a Corporation in the US:
After deciding on forming a company from available options let’s discuss the few basic requirements needed during the procedure:
Choosing a company name:
There are a large variety of name selections available on the internet or you can propose your own desired name. But before selecting a name, double-check its availability.
Hiring a registered agent:
An agent is hired which could be a person or agency who must possess a physical address in the business hosting country. That designated entity must be available during office business hours and will comply with official legal and state documents for the company.
Provision of important documents:
You will need to provide the names, and addresses of the concerned people involved i.e. officers, directors, members, etc.
Procedure after forming the corporation?
After forming the company there are still some tasks left to be completed which we will discuss below:
Arranging a US-based Business Address:
If you would like to receive commercial mail, customer mail, etc. to an address in the United States, or if any bank you contact requires a separate physical address in the United States (which is not the same as your registered agent), you need to arrange “mail forwarding” and/or “virtual office” service.
U.S. bank account opening:
You need to open up a U.S.-based bank account if you want to transact in US$. Currently, the geopolitical situation around the globe has become uncertain to an extent that it leads to the exercising of strict compliance and regulatory laws. But nevertheless, there is hope as there are other various options available on the table that could turn the table and open up ways for easy proceeding.
Selecting a State:
During the procedure of forming the company, you will have to select a state in which your proposed company will be operated. For a conductive and enabling business environment, it is considered to select a state which has minimum tax rates. Delaware, Nevada, and Wyoming are popular choices for registering your proposed company as they are best known for being quite economical states.
Registering a company on US soil is neither difficult nor a rocket science at all. Every entrepreneur residing outside the US has always been willing to set up his/her venture in the U.S. because of the big market and economy. Befiler provides LLC and C-Corp incorporation, EIN registration, US bank account opening, and federal and state tax filing services. Reach out to us through email ([email protected]) or Whatsapp in order to set up your business abroad while residing in Pakistan or elsewhere.