Business entities in USA

Business entities in USA

Healy Consultants will assist our Clients determine the optimum type of company to use in the USA. Although several corporate entities exist, the most common ones are the LLC and the corporation, which can be structured either as an S-Corp or a C-Corp.

Table of comparison between United States entities

 LLCS-CorpC-Corp
US company incorporation costsUS$9,890US$7,550US$5,950
Subsequent annual costsUS$4,500US$6,800US$6,800
Primary purpose of the entitySmall and medium businessSmall and medium businessSmall and medium business
Example of a real life companyHealy ConsultantsFamily deliTwitter
Foreign ownership allowedYesNoYes
Limited Liability enjoyedYesYesYes
Formal Rules/RegulationsNoYesYes
Corporate tax payable on profitsElectableNoYes
Allowed to issue sales invoicesYesYesYes
US corporate tax payableNo
Allowed to import goodsYesYesYes
Allowed to export goodsYesYesYes
Type of business permittedAllAllAll
US bank account allowedYesYesYes
How long to open company bank account3 weeks3 weeks3 weeks
Can rent an office locally?YesYesYes
Tenancy agreement required?NoNoNo
Can conduct business within the US?YesYesYes
Can apply for immigration visas?YesYesYes
The US employment visa feesUS$11,950US$3,950US$3,950
Can hire staff in the US?YesYesYes
Incorporation period1 week2 weeks1 week
Shelf companies allowedYesNoYes
Minimum shareholders allowed111
Maximum shareholders allowedUnlimited100Unlimited
Minimum directors allowed111
Bearer shares allowedNoNoNo
Annual accounting requiredYesYesYes
US resident company secretary requiredYesYesYes
Can buy property in the US?YesYesYes
The Client needs to travel?NoNoNo
Annual tax returnYesNoYes
Annual audited financial statementsNoNoNo
Access to US double tax treatiesYesYesYes
US resident director or shareholder requiredNoNoNo
Can own shares in other US companies?YesYesNo
Annual government fees$250$710$310
Healy Consultants fees$2,990$1,790$1,590
Draft invoice (PDF)

Limited Liability Company (LLC)

    setup an LLC in USA
  • The LLC is the most flexible business structure under US corporate law. A US LLC has only one shareholder, who is typically the company’s “manager”. LLCs are treated from many perspectives like partnerships in other jurisdictions, being managed by the members. However, the members can appoint managers who act in a capacity similar to that of a director. In addition, there is no minimum paid up share capital requirements for incorporation;
  • An LLC, due to its simple and flexible structure, is highly recommended for conducting business within the USA. Furthermore, there are no restrictions on the type of business activity that a US LLC can pursue;
  • The main document governing LLC administration is the operating agreement, which is somewhat analogous to articles of association. LLCs also use a document called the “articles of organization”, which are more akin to the modern memorandum of association;
  • Prior to incorporation, an LLC is required to i) appoint one director and one shareholder (member) ii) open a US corporate bank account with a balance of US $1 iii) appoint a registered agent in their state of incorporation and finally, iv) have a legal registered office in the country.
  • S-Corporation

    • This type of company is more similar in structure to companies seen elsewhere, typically the Plc or SA;
    • The unique feature of the S-Corp is that the owners make an election so that the company does not suffer federal corporation tax. Instead, profits and losses pass directly through to shareholders, who pay tax on their total income at the normal rate;
    • An S-Corp is ideal for small businesses as it eliminates the double taxation on profits and dividends. Furthermore, an S-Corp is not required to file corporate taxes;
    • By law, an S-Corp cannot have more than 100 shareholders. Also, all shareholders must be US citizens or residents in order to be eligible to make the S-Corp election;
    • An S-Corp must have a board of directors, file annual reports, keep meeting minutes, and has generally more regulations than the LLC, which that normally is just run on the basis a shareholder agreement.

    C-Corporation

    • This is the main kind of corporation used by US companies with medium to large operations, involving a large investment or raising of capital;
    • C-Corporations pay tax at the corporate level, and shareholders are taxed again on their dividend income. However, the shareholders are not mandated to be American residents;
    • A C-Corp is ideal for those looking to sell shares to the public or get outside venture funding, as there is no limit to share transfer or share ownership.

    Free Zone Companies

    • The United States free zones are ideal for trading firms because these zones in each state i) limit customs clearance time ii) lower or eliminate state and local taxes, and iii) offer great transportation infrastructure;
    • In total, there are 293 free zones in the United States. Healy Consultants will help our Client to determine the optimum zone to suit their business needs;
    • A free zone company can be any corporate entity, including LLC, S-Corporation or C-Corporation.

    Foreign Branch Office

    • In the United States, a branch office is allowed to invoice local customers and sign local sales contracts in any business sector in the United States;
    • A foreign branch office will work within the scope set by the parent company. In case of a lawsuit, the parent company will be held legally liable;
    • US companies commencing operations in another state often register themselves as a “foreign company”, which is the term used for branches. Foreign and domestic treatment for companies is often dealt with at the state level, so “foreign” in this context just means foreign from that state.

    Representative office

    • While a United States representative office is 100% foreign-owned and controlled, it is not permitted to make direct sales within The United States;
    • Such an office will only engage in activities such as i) promoting the business of the parent company and ii) market research.

    Doing business in The US without a local company

    To minimize USA company setup costs in America, entrepreneurs implement the following strategies:

    • Through a local agent or distributor, a foreign company is allowed to sell its goods/services directly to US customers;
    • Business owners can also sell their franchise to a United States commercial agent or distributor, eliminating the need to hire local staff and incorporate a local company.

Contact us

For additional information on our business setup services in USA, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Paavan Chhabra, directly:
client relationship officer - Paavan
US sec us chamber US dhs US commerce department US irs US sba US aicpa acaus