Many decide to set up a company in the United States, an LLC in Delaware, because they are convinced that it is prestigious. I’m not convinced. It can also be for offering better service for your American customers, or to make better use of the opportunities offered by this rich market. However, it’s usually the desire to associate a prestigious place with your own commercial brand.
However, as we know, the united states is a federation of states, each one of which applies its own tax and legal policies. So, if you want to start up a company in the country, you have to choose the state that applies the best tax policies for companies and is most appropriate for your business needs.
There are no tax-exempt states in America, since the 21% federal tax on businesses is applied throughout the country. Local taxes, on the other hand, differ greatly from one state to another, and this becomes a determining factor at the moment you choose the state where you will register your company.
Unless you are interested in particular regional markets there is one jurisdiction in America that is known for being the place favored by big businesses for establishing their legal headquarters, and this is the state of Delaware.
Delaware is a small state; however, it harbors more than half of the American businesses quoted in the Stock Market. It’s calculated that 65% of the businesses listed in Fortune 500 are registered in Delaware. For them, businesses like Apple, Google, Facebook, Twitter, as well as the majority of the big multinationals, have chosen Delaware. This small state holds the interesting record of having more companies than inhabitants.
Tax treatment of the LLC in Delaware
The preferred type of company is the LLC. This type of company is the most used because the partners, who are called members here, are responsible only responsible for the amount of capital they deposited. And, regarding taxation, benefits aren’t taxed at the business level. In exchange, the taxation on benefits corresponds to each member on a personal basis.
If the LLC doesn’t operate in Delaware, it is considered exempt from national taxes. Likewise, if the LLC has generated benefits outside of Delaware, taxes aren’t paid in Delaware on said benefits.
However, benefits obtained by business carried out in the United States will be subject o a federal tax of 21%.
The federal profits tax declaration must be presented once a year. And once a year, the annual company renewal tax must also be paid.
The LLC can be listed in the business register even without maintaining a bank account. However, if you open an account in an American bank and you use it to work with American businesses, the LLC is considered as a resident. In this case, you must take on the accounting obligations established by the law.
To comply with these obligations, you have to keep records in accordance with current laws. For this, you need to hire the services of a professional accountant, called a CPA (Certified Public Accountant) here in the States. The elaboration of the financial status is annual and the required documentation, in which the application of income from the activities – distributed to each member – must also appear.
The business can also be constituted by a single member. Therefore, in legal terms, it is like a unipersonal business and the benefits are to the single partner for tax purposes.
Share capital and annual report of American companies
When registering your LLC in Delaware, neither the names of the shareholders nor the constitutional documents are published. However, the business must present an annual report which includes the names of the directors.
When founding the LLC, the amount to be contributed by each member will be determined. However, payment of the quota isn’t obligatory. Therefore, the LLC is founded without funds. This way, the figure of the loan is used, where the partners loan money to the business, and this is paid back with the benefits that have been generated. This system permits the members to save the use of funds.
Corporate bank accounts in the U.S.
Non-residents can open personal and business bank accounts in America. However, the process isn’t as easy as before and, in the case of company accounts, it’s being restricted to the United States, After September 11, the Patriot Act dictated strict norms for opening accounts to foreign citizens, in order to prevent terrorism and money laundering.
Although the LLC is located in America, banks have become reluctant when members of the LLC aren’t residents. The banks are authorized to deal with non-residents, but very often prefer to avoid it and reject the request for opening an account. In any case, this is a problem that can be resolved./
However, in the case where the bank considers the request, it’s necessary to follow the guidelines offered by the bank.
There are banks that even ask for a certificate of good conduct. However, an important requirement that all banks ask for is to provide an address in America. The address must be a real physical address; they don’t accept addresses of virtual offices or P.O. boxes.
This can be overcome, I’ll personally explain to you, how to do this.
If you want to facilitate the success of your case, you can go to the United States in person and visit the bank. This makes the process much easier and quicker for opening your bank account.
And, in closing, if you need a bank account, but you don’t want to go through all the fuss, there is a viable alternative that I can recommend, but it will increase your expenses. This system is the game of Chinese boxes.
If you’re interested in opening an offshore company in America, an LLC in Delaware without dying in the process, contact me because I can help you pulverize the distinct obstacles that you can find along the path. If, on the contrary, you have discovered that you need a more flexible company click here and read all the options for the best offshore companies.
