Company Incorporation in USA

Incorporating in the United States of America

USA, Known for housing multinational conglomerates, Fortune 500 HQs and Hot tech startups, is a top choice due to business-friendly rules and regulations and its position as a favourable business location.

Along with this, there are separate federal and state laws that apply when you register a business here. Specific federal protections are provided to your company along with the laws made by each specific state.

Currently, there are 52 states in the USA, which have their own state rules. Out of all these states, Delaware is the most prominent state that companies prefer to incorporate.

Why do the founders choose Delaware?

Most founders who are planning to set up in the US choose Delaware as their first option, because its business laws are modern and evolving at a rapid pace.

Delaware also has related matters special courts which provide quick judgements on corporate disputes. Along with all these, single-day processing of corporate activities using expediting options makes Delaware the most sought state.

What are the preferred structures to incorporate?

Companies can be seamlessly incorporated in the USA within a week and require less time.

For incorporating a company in the USA, you first have to choose a business structure which suits your requirements. There are different types of business structures present in the US, however, the following are the most used business structures for incorporation:

S Corporation
C Corporation (or INC.)
Limited Liability Corporation (or LLC)

S Corporation- If you want to incorporate an S Corporation, then you would receive tax benefits. S corporation is a type of business entity where the shareholders have limited liability from the debts of the business.

C Corporation (INC) – C Corporation gets its name due to its tax status. C Corporation offers limited liability for its shareholders and directors. Investors choose this organization due to tax benefits and the ability to raise investor capital easily. Entrepreneurs choose C Corporation to plan out their tax with respect to federal compliances in the USA. A C Corp has an extension ‘INC’. to its tail end.

Limited Liability Corporation (LLC)- A limited liability company or limited liability corporation (LLC) is a hybrid of a partnership and a corporation in the USA. An LLC provides limited liability to its members across the world. Many entrepreneurs choose this form of entity due to its benefits such as tax and flexibility in operations. The respective laws of each state in the USA govern the requirements for an LLC.

Taxes in the USA

The country has a complex tax regime. Businesses are taxed at the state as well as central level in the USA which is called franchise tax and federal tax respectively.

The franchise tax is levied on the capital or net worth of the business, while the Federal tax is income tax which is paid to the central agency – IRS (Internal Revenue Service).

Along with this, GST/VAT should be paid by businesses that have a GST/VAT registration.

Setting up from foreign jurisdictions

While you are setting up a business in the USA from your home country, you have to make sure that you have notified all the regulators, agencies and offices that are related to foreign setups or investments in your country.

In the case of INDIA, you are required to alert the Reserve Bank of India (RBI) on every foreign investment you do. Our expert consultants in the India office can help you in assisting these transactions and keep it updated with the regulatory bodies and other Government offices.

To know more about compliances while you set up in the USA, you can schedule a call with one of our consultants.

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