If you are a not a U.S. citizen and thinking about incorporating, U.S. might be the right choice for you. First of all, incorporating a business in the United States is almost similar to the procedure required for a U.S. citizen. Since being a U.S. citizen or resident are not necessary for incorporating in the U.S., non-U.S. citizens can start or expand a business on American soil. However when you cross borders and oceans; you should consider the differences in individual state tax laws, transportation costs, tariff/trade regulations, size and scope of your company, leases, employees and much more.
People who are not US citizens and who want to do business here, have extra advantages especially for online businesses.In order to be able to use certain payment methods and to take advantage of the tax facilities, it is necessary to get an EIN number.So it is in your best interest to establish your business here.
Incorporating in the U.S. is that company incorporation in the United States is administered at the state level -not federal level- for both foreign nationals and U.S. citizens. The most important thing to realize is that you do not register your business in the U.S.; instead, you register it in one of the 50 states. The process is different from state to state, but generally there are two steps: 1) applying to register in that specific state, 2) establishing a registered agent with a valid physical address in the selected state. When you decide which state to register in, there are a few things to keep in mind. If you have any office or physical presence in the U.S., then you should incorporate in that state. If you do not have a physical presence in the U.S., then you can incorporate in any state. Delaware, Nevada, and Wyoming are traditionally considered the most business-friendly states for incorporating.
Among others, Delaware is considered the most reliable state in which to incorporate or form LLCs. Incorporating in Delaware has many advantages; here are a few things you need to take into consideration:
The Delaware court system is well established and highly respected
Delaware’s laws are generally business-friendly, and, unlike other states, it has a separate and specific Court of Chancery that hears cases about corporate law. Chancery judges generally have a background in corporate law and can decide cases relatively quickly, without the need for a jury. Delaware’s corporate laws are fair, consistent, and well understood. These predictable laws allow corporations to evaluate the probable outcomes of litigation or the advisability of settling a case.
Delaware offers a lot of flexibility for structuring your corporation
It is quicker to form a corporation in Delaware than in just about any other state. The Delaware corporate statutes provide serious flexibility in the organization of a corporation. The rights and duties of board members and shareholders are also more eligible than others. For example, shareholders, officers,directors, and don’t need to be residents of Delaware. While in other states, you may need a minimum of three people to hold the officer and director positions, Delaware laws allow just one person to be the only director, shareholder, and officer of a corporation.
Delaware offers great privacy
As opposed to other states, Delaware does not require you to publicly disclose the names of the corporation’s directors or shareholders. This provides anonymity that is not available in some states.
You don’t have to be in Delaware to incorporate
You can form a Delaware LLC or C-corp online; therefore, you do not have to be in Delaware. You can electronically register your new C-corp or LLC in Delaware within as little as an hour from receipt of your internet order.
Delaware offers some tax advantages.
Delaware has some corporation-friendly tax law. There is not any sales tax in Delaware. There is none state corporate income tax in Delaware on goods or services provided by Delaware corporations operating outside of Delaware. (Though there is a franchise tax). Also, people outside Delaware who own stock shares aren’t subject to Delaware taxes. Delaware does not tax intangible property such as leases, royalties, trademarks, or copyrights. Non-residents pay no personal income tax. Delaware does not have ad-valorem or value-added taxes (VATs) or taxes on business transactions (TBTs). Delaware does not have the use tax, inventory or unitary tax. There is also no State of Delaware inheritance tax on a stock of Delaware corporations that are operating outside of Delaware and are non-residents of Delaware. There are no Delaware capital shares or stock transfer taxes which also makes Delaware the most suitable state to incorporate in.
Angel and VC Investors are more likely to invest in Delaware Corporations
Angel investors and venture capitalists usually prefer to invest in companies incorporated as a C Corp in Delaware. Therefore, if you seriously consider about receiving investments from these types of investors, you may want to incorporate in Delaware.
It is less expensive to relocate your corporation
Relocating the corporation might be less expensive – the annual franchise tax in Delaware can be as low as $125 / year with reporting fees whereas in California the annual franchise tax is $800.
You do not need to have a Delaware business office address
You only have to maintain the address of your Delaware Registered Agent which is required for service of process.
In conclusion, it is an exciting step to form a corporation in the life of your business, but you should think carefully before deciding which state to incorporate. Depending on the type of your business, Delaware’s predictable laws and corporation-friendly tax structure make it a clear choice.