If you are thinking about establishing an incorporation in a foreign country, the US might be the right choice for you. First of all, you don’t have to be a US citizen.
Incorporating a business in the United States is almost identical to the procedure a US citizen would follow. There is no citizenship requirement for incorporating a business in USA. Non-US citizens can start or expand their business on American soil.
However, when you cross borders; you should consider the differences in state tax laws, transportation costs, tariff/trade regulations, size and scope of your company, leases, employees, and much more.
Citizenship by Investment
Another thing to consider while incorporating in the US is “citizenship by investment”. Citizenship by investment means an individual acquiring citizenship in another country by investing a considerable amount of money into that country. In the US, a form of citizenship by investment is also available, which is an option to consider if you are planning to start a life for you and your family in the United States.
Foreign investors who invest $1 million or a minimum of $500,000 in areas with high unemployment rates may be granted conditional permanent residency by the USCIS (US Citizenship and Immigration Services), along with their spouse and unmarried children under 21. Also, maximum of 10,000 visas per year may be granted to qualified entrepreneurs as well.
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:
1. The Delaware court system is reliable 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; therefore, they can decide cases relatively in a quicker manner, without the need for a jury presence. Delaware’s corporate laws are fair, consistent, and easy to interpret.
These predictable laws allow corporations to evaluate the probable outcomes of litigation or the advisability of settling a case. Let us remind you that most Fortune 500 companies are incorporated in Delaware, largely because of the state’s premium justice system.
2. Delaware offers a lot of flexibility for structuring your Corporation.
It is quicker to form a corporation in Delaware than almost any other state. The Delaware corporate statutes provide high flexibility in the organization of a corporation. The rights and duties of board members and shareholders are less strict than in the other states.
For example, shareholders, officers, and directors 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.
3. Delaware offers some tax advantages.
Delaware has some business-friendly tax laws. There is not any sales tax in Delaware. There is no 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 certain 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 inheritance tax on a stock of Delaware corporations that are operating outside of Delaware and are non-residents of Delaware. There are no capital shares or stock transfer taxes in Delaware which also makes Delaware the most suitable state to incorporate in.
The state levies an annual franchise tax on the par value of common stock. The franchise tax starts at $75 plus a $50 filing fee and can reach up to $180,000. Most states charge an annual fee to maintain a company in the state. In the state of Delaware, it costs $225 for corporations or $300 for LLCs. But in any case, you should consult a tax professional to find out if incorporating in Delaware will provide any tax benefits for your business.
4. 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 a great level of anonymity that is not available in some states.
5. You don’t have to be in Delaware to incorporate.
You can form a Delaware LLC or C-corp online, which means you do not have to physically be in Delaware. You can electronically register your new C-corp or LLC in Delaware using standard filing, 24-hour filing, same-day filing, and even two-hour or half-hour filings.
6. 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 receiving investments from these types of investors, you may want to consider incorporating in Delaware.
7. 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.
8. Disadvantages of Incorporating in Delaware
If your business is not physically located in Delaware, you may face additional costs and obligations, other than the cost of registering to do business in any other state or your home state where you are already operating as a business. You may need to register to transact business in another state if you have a physical location and employees outside of Delaware.
Foreign qualification registers a company to do business in a state other than the state of incorporation. There may be foreign qualification costs and ongoing fees in other states where you transact business. You also need to consider that Delaware requires you to file annual reports even if you already have in your home state.
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.