Where to Incorporate?
Each U.S. state has different taxation and corporate laws. Therefore, you need to consider all pro and cons when starting a new business in the U.S. Since non-U.S. citizens are welcome to start or expand to the U.S. without the U.S. citizenship or residency, you have many options. The main things to lookout for are the tax requirements. You should consider that you may fall under the category of foreign-qualified businesses in your home state if you don’t incorporate in the state of your business. This means extra restrictions for out-of-state corporations. Also, don’t only look at the rate; also check for the minimum tax or franchise tax. Comparing all benefits of incorporating outside the home state may not be worth it after counting the added costs of fulfilling ongoing requirements and taxation imposed by the state where you incorporate. Delaware and Nevada are the most popular states for incorporation.
Incorporate in Delaware.
- No personal income tax for non-residents
- Flexible business law
- Corporate trial is by judge rather than jury and uses a dedicated court for business law cases
- No state corporate income tax for companies that are formed in Delaware
o Note: there is a franchise tax if you do not make transactions in Delaware
- Tax requirements are often favorable to complex companies or large numbers of shares
- Upper management or shareholders don’t have to be residents of Delaware
- Shares of stock owned by non-Delaware residents are not subject to Delaware’s taxes
Incorporate in Nevada.
- No state corporate income tax
- No fees on corporate shares
- No personal income tax or any franchise tax
- Upper management doesn’t need to be residents of Nevada.
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