Frequently Asked Questions and Answers for Registering a US Company（Part 1）
The United States is a federal country, divided into federal law and state law. The law governing company registration and operation is mainly state law, and the laws of each state are relatively independent. The conditions, procedures, fees, and rules for registering companies are not the same. Therefore, strictly from the legal level, there is no concept of "American company", only "California company", "New York company", "Delaware company" and so on. Nevertheless, each state still has a lot in common in company registration. This question and answer mainly takes the establishment of a California company as an example, so that everyone has a basic understanding of registering a US company. This question and answer is not a legal opinion. If you have any legal questions, please consult a professional lawyer.
Q1. Why register a US company?
1. Advantages of the business environment
Compared with China, the laws of the United States are much more complete and mature. The government departments are standardized and transparent, and there are not too many routines of relying on relationships and going through the back door. The US society as a whole has done a better job in privacy protection and risk prevention than in China.
2. Advantages of international brands
American companies have a strong and technologically advanced image in markets around the world. Therefore, the establishment of a US company will help to form a good brand image, further open up overseas markets, and put products into a larger world market.
3. Advantages of cross-border e-commerce
Registered U.S. companies can compete fairly with domestic U.S. companies to facilitate listing and financing; entering certain e-commerce platforms that only U.S. companies can enter can get some platform policies (including lower commissions, title risks and category restrictions) Etc.), you can get a U.S. tax number to solve your actual business needs. E-commerce platforms and PayPal can withdraw cash to U.S. bank accounts for free, saving a lot of intermediary service fees. Compared with individuals, consumers trust the company more and are more willing to place orders from the company.
Take Amazon as an example. Starting from September 1, the Amazon platform will disclose the seller’s real registration information to buyers. For local consumers in the US market, they are more inclined to choose and trust the products of a US company. For sellers who sell on the Amazon platform as an overseas individual or enterprise, a large number of potential customers may be lost. Platform sellers registered as a US company can effectively avoid this adverse situation, and even take this as an opportunity Expand sales share.
4. Advantages of property protection.
Doing business in the United States as an individual is risky, especially when the individual owns assets (such as real estate) in the United States. In the event of a problem, whether it is a business debt or a client's fall, the plaintiff can obtain compensation from the client's personal property. On the contrary, when a company is established and the business is conducted in the name of the company, the plaintiff can only request compensation from the assets under the company's name, but not from the client's personal property.
5. Advantages of reasonable tax avoidance
Registering a US company can simplify the procedures for exporting to the US, reduce time and labor costs, and lower taxes also reduce the overall cost of commodity exports, and ultimately enable investors to occupy the target market at a more favorable price. Each state in the United States has its own tax incentives. Take California as an example. For high-tech R&D companies, R&D projects that meet the regulations can apply for tax credits.
6. Advantages of immigrant visas
Registering a US company can facilitate investors to apply for relevant business visas (such as L-1 visas) and facilitate business activities in the United States. Once a US company has reached a certain scale, it can also apply for a US green card.
Q2. Who can register a US company?
Any company or individual over the age of 18 can apply to register a US company. Even if the applicant is not in the United States and does not have a US identity, a professional can also complete the company registration on his behalf.
Q3. What types of companies are available in the United States? What are the advantages and disadvantages of each type?
The two common types of U.S. companies that foreigners can choose from are joint stock companies and limited liability companies.
1. A joint-stock company (C-Corporation) is the most common type of company. Shareholders control the company through equity, and daily operation and management are usually managed by a professional team, requiring at least one shareholder meeting every year. The company pays income tax based on its profits every year. If there are dividends, shareholders must also pay personal income tax on the dividends. Therefore, joint-stock companies will have the problem of double taxation (of course, company profits can be deducted by various expenses). Although the operating cost of a joint-stock company is relatively high, among all types of companies, the probability of a joint-stock company being checked by the IRS is also the smallest. Since the vast majority of large and medium-sized companies in the United States are joint-stock companies, joint-stock companies will give people a more formal and reliable impression.
2. A limited liability company (LLC) is a type of company that lies between a stock company and a partnership. While protecting the personal property of shareholders, shareholders can manage the company in an agreed manner like a partnership, which is more flexible. There is no need to pay income tax at the company level. The company's profits and losses will be calculated on the individual shareholders. No matter whether the company pays dividends or not, shareholders need to declare personal income tax. Although LLC has lower operating costs and is more flexible, because LLC is more tax-like a partnership, the probability of being audited by the IRS is greater than that of a joint-stock company. LLC can also choose to file tax in the form of a joint stock company.
Q4. What are the requirements for the company name?
The choice of company name is relatively free, generally speaking, as long as it does not overlap with other existing company names. It should be noted that most states stipulate that specific words must be added after the company name to show the company's organizational form, such as Corp., Inc., LLC, etc.
Q5. Does the company have a requirement for registered capital?
American companies have fewer requirements for registered capital, and the regulations of each state are slightly different. Take California as an example. When registering a company, there is no need to register the company’s registered capital, nor does it require capital verification. However, in practice, if the initial capital invested by the shareholders in the company is significantly less than the actual business needs, in the subsequent operations In the event of insolvency, there may be a risk of being required to take personal responsibility for the company's debts.
Q6. Do American companies have restrictions on their business scope?
The scope of business of American companies is relatively small, and generally they can operate as long as they are legal. However, it should be noted that engaging in specific business activities (such as the catering industry) may need to apply for corresponding business licenses or permits from relevant departments.
Q7. Are there requirements for office space for registered US companies?
American companies have no special requirements for the registered company address, but this address will be made public. Take California as an example. When registering a company, you only need to provide an address in the state (not including an email address), and you do not need to have an actual office space. If customers choose our registered agent service, we will provide customers with a registered address for free.
Q8. Who is the registered agent that needs to be filled in when registering a US company? What is the role of a registered agent?
A registered agent is an individual or company appointed by a company to receive legal documents and official letters from government departments on its behalf.
Each state requires registered business entities (such as stock companies, LLCs, and limited partnerships, etc.) to appoint their registered agents on the establishment documents. These company establishment documents need to be filed with the company registration authority and will be made public.
When individuals, government agencies, or legal document service personnel want to formally contact the company, they will look up the company's registered agent information and deliver the letter or legal document to the company's registered agent. When the registered agent receives the documents on behalf of the company, it will promptly forward the relevant documents to the company. For those companies that do not have a fixed office address and personnel at the place of registration, it is particularly important to choose a reliable registered agent.
