Company Registration in the USA

Organizational and Legal Requirements

If you are interested in the formation of a company in the USA, you should first understand the requirements you face in terms of organization. Our professionals will be the best help in this. The key features that a future business owner should know are summarized below.

• Director
  A director of an American company can be not only a resident of the United States, but a citizen of any country. Exceptions are sanctioned countries, as well as persons from sanctioned lists. Your company may have one ore more directors. The lower age limit for a director is 18 years.
• Shareholder
  The requirements for shareholders are the same as for directors: a resident of any country over the age of 18, and neither the country nor the individual or entity is under sanctions. The should be at least one shareholder. The best way to make sure that you, your legal entity, or your potential partners and their countries are not on the sanctions lists is to contact our lawyers and use our service for company registration.
• Address
  Your business address must be in the state where you plan to incorporate it. Some states require an additional mailing address for correspondence.
• Company Name
  To open a new business in the United States, you have to first come up with a unique company name that will distinguish it from others. Uniqueness is checked against the American company register.Additionally, the company’s legal name must end in Inc., Corp. or Corporation if it is a C corporation, LLC for limited liability companies, and LLP or LP for limited partnerships.Your stores, offices, website, etc. can also use a different name than the registered one — the so-called Doing Business As (DBA) name. Our lawyers will tell you more about what is needed for this.
• Authorized Capital
  There are no requirements for the payment of authorized capital in the legislation of the country, which significantly simplifies company registration in the USA. You can start small and then look for investors and shareholders for a business already registered in a reliable and transparent jurisdiction. The nominal value of a share can start from 0.01 USD.
• Local Account
  You will need a bank account to run your business. The good news is that American law does not require you to open a local bank account. You can use your tried-and-tested bank. However, having an account in a US bank offers many advantages, including access to credit and lower cost when making payments within the country or paying taxes.
• Registered Agent
  According to US regulations, every company is required to have a local registration agent. That is, you will need a separate agent in each state where you work. Such a local agent must have a special permit to act as a registered agent in a particular state.
• Reporting
  Any company registered in the USA is required to prepare and submit reports no later than the established deadline. The deadline depends on the type of business (see below). The revenue service fines companies that do not submit reports on time.

Taxation

A peculiarity of the United States is the territorial principle of taxation. In short, the amount that is taxed in the case of a company or a partner depends on the service location, the source of funds, and the site of their accumulation.

Given the hierarchical federal system, taxation in the United States is divided into three levels: federal, state, and municipal. A tax may be credited at these levels, depending on the source of the funds and the nature of the business.

At the federal level, the effective income tax rate is 21%. Each state or municipality independently sets the tax rate at its own level. For example, Wyoming state legislators established a zero income tax rate. And in Delaware, this rate is 6.7%.

Note that this approach applies to C corporations. Partnerships and LLCs have a different structure and specifics of formation, where taxes have to be paid by the partners. To do this, you must have an SSN (Social Security Number) or obtain an ITIN (Individual Taxpayer Identification Number for non-residents and resident aliens without an SSN).

In the United States, a progressive approach to income tax is used. This means that the interest rate is calculated according to the gradient: the higher the net profit (profits minus losses), the higher the tax. The final rate can reach 37%.

It is also interesting that an LLC is eligible to inform the tax authorities that it will follow the taxation process provided for a C corporation. This approach is common in cases where the company’s partners are foreigners, as it is more understandable and profitable.

Reporting

There is a common misconception that some businesses in the US are not required to report to the Internal Revenue Service (IRS). It is not true. It is the responsibility of every company to prepare and submit tax returns on time. The fine for failure to report is quite significant — up to 100,000 USD.

For small and medium-sized businesses, there is no requirement for an audit of the report, but it must be prepared and signed by a certified public accountant in the United States. Failure to comply with this principle will result in a refusal to accept the report and a fine.

The Form 1120 filing deadline for C corporations is April 15 each year. The accountant serving the company can extend the deadline, for which a corresponding request should be submitted. Partnerships and individuals file Form 1090 by April 1 each year.