Incorporating a business is an important decision for any entrepreneur, and many of our clients wonder where they should start their business adventure. The U.S. offers various advantages for incorporation. We will break down the aforementioned benefits into 8 essential elements in this article, and will help you make an informed decision about whether to incorporate in the U.S.
1.Limited Liability Protection:
Forming your company in U.S., you as an entrepreneur establish a different legal entity which separates your personal assets from the companies. Whether you have an LLC or a C-Corp, the corporation is liable for its own debts and obligations while the owners’ personal assets are often sheltered from the company’s liabilities.
In an LLC, the owners are referred to as members and are not personally liable for the company’s debts and obligations. In C-Corps owners are referred to as shareholders and cannot be held liable for the company’s debts and obligations unless they have personally guaranteed to do so.
Business owners can be held liable for their company’s debts or obligations if they engaged in illegal or fraudulent actions or failed to separate personal and company assets. Directors and executives can also be held accountable for harming the company or shareholders. These exceptions are rare, thus managing a company lawfully is generally safe. Get help from Afterglow Innovations Inc. to stay compliant.
2. Access to the US Market:
The US market is attractive to offshore companies due to its size, purchasing power, and cultural significance. Foreign companies can more easily access the US market by incorporating in the US. US-based firm can have a legal presence for doing business in the US. This allows you to gain access to new markets and customers, improving revenue potential, increasing innovation potential, obtaining essential resources and assistance, and establishing trust with American clients and partners.
The credibility associated with a US presence enhances a company’s standing and opens doors to collaboration, innovation, and essential resources. For instance, Amazon’s global success is rooted in its adept navigation of the US market, while Etsy strategically utilized the US market to broaden its reach and increase revenue. Incorporating in the US is more than a legal formality; it’s a business strategy that unlocks new opportunities and establishes a strong foothold in the dynamic American business landscape.
3. Access to U.S. Fundings and Loans:
As many investors prefer to invest responsibly, they tend to invest in what they are already familiar with, which the U.S. corporation system. Credibility is built with customers, suppliers, and other stakeholders by incorporating in the US. Thus, by collaborating with other businesses and attracting excellent talent, you may make your business more profitable.
At some point of your business adventure you might need to borrow money from an American bank. The American banks request your US business credit history when giving out any kind of loans.
Having a credit history that dates back a couple of years will grant you a loan much easier. So, your American company’s credit history will be built faster the sooner you incorporate. The requisite credit history can only be obtained by incorporating in the United States since credit history requires a bank account, and American banks nearly only provide bank accounts to US residents. Which brings us to our next keypoint: US Bank Account
4. US Bank Account:
American banks nearly only provide business bank accounts to US residents, as stated above. To get an US bank account as a non-resident it is best practice for your business to incorporate in the US. Because all the top banks refuse to open business accounts for overseas corporations according to their compliance and business standards. Luckily, we are here. If you are a non-resident, you can contact Afterglow if you need assistance with opening your US business bank account!
5. Tax Benefits:
Corporations are taxed differently than sole proprietorships and partnerships, consequently they may be entitled to a number of tax benefits and deductions. Especially in terms of taxation, LLCs provide more flexibility than corporations. Members have the option of choosing to be taxed as a S corporation or as a partnership, which may lead to substantial tax advantages. There are many states that provide tax exemptions! Wyoming only imposes 4% tax, and there are many exemptions for that. Also for example, Delaware has no sales tax!
6. Intellectual property protection:
In terms of protecting intellectual property rights, the US is the global leader (IPR). Around a million petitions for patent or trademark protection are submitted to the United States Patent and Trademark Office each year. The office is dedicated to protecting you from legal infractions and upholding the law. The odds are in your favor if you are a foreign national considering launching a business in the United States. If you need a trademark application, make sure you contact Afterglow for a quotation!
7. Immigration:
Investing in an American company is one of the best ways to accomplish your goal of residing in the United States. The E-2 classification, for example, allows aliens to reside in the country by “investing a substantial amount of capital in a US business”. The investor must either hold the majority of the company or exercise operational control over it in order to qualify for this status. This makes it a great choice for non-residents who wants to live in the U.S. to incorporate there.
8. Perpetual Existence:
Corporations have perpetual existence, meaning they can continue to exist even if one or more of the members leave the company or pass away want to incorporate a business in the US. It ensures the continuation of your business even under the worst possible circumstances.
It is important to remember that each state has its own set of regulations governing corporations, so you should check with a lawyer to ensure you are complying with the rules and regulations in your chosen state.