Opening a company in the United States is quick and inexpensive. The types of American companies are corporations and LLCs. The corporation in America corresponds to the Indian SPA
Export USA goes beyond simply opening companies: we teach you how to use your American company and we offer all the services you need to successfully enter the American market
Opening commercial companies in the United States is a much less complex operation than in India: less bureaucracy, lower costs, much easier fulfillments and, above all, faster times
Having a corporation in America does not mean having to pay taxes in India: only dividends paid by the corporation will be declared in India.
To open a company in America:
- It is not mandatory to have an American partner or administrator;
- The board of statutory auditors is not envisaged;
- There is no minimum capital requirement to be paid;
- No need to have a visa;
- No need to be resident in America;
- From the 2018 financial year the taxation of the profits of the Corporation is 25% with a single rate .
Unlike lawyers, law firms or accountants, we at Export USA have a complete view of all the commercial activity and when opening the company we can already advise you and offer services also for what concerns:
- domicile of the company,
- internal shipments,
- international shipping and customs clearance,
- recruitment of staff,
- labor costs and payroll service
- rent offices and commercial premises,
- visas for the United States,
- legal and tax advice through related professionals
- search for distributors or representatives,
- opening of shops and restaurants,
- opening of stores on Amazon and pop-up stores,
- ecommerce to sell online,
- trademark registrations,
Generally, we at Export USA recommend opening a corporation like Corp in the United States
C-Corporation and LLC Incorporation is the two types of companies to choose from when opening a company under US law
In the United States the corporation is equivalent to the Indian joint-stock company and we recommend it to all those Indian companies that already operate in the United States with a certain stability, who already have, for example, representatives or a “sales manager”, goods stored in US territory, repetitive customers or even business contacts with potential customers in the United States.
Setting up a company in the United States allows you to open a bank account with an American bank and therefore facilitates payments avoiding the need for bank transfers or delegating collections to the sales manager. In fact, it makes you “American” in the eyes of customers and suppliers and helps a lot in negotiations and in the process of building trust from American customers towards your company.
The American tax authorities can carry out tax checks against Indian companies that sell in America even without a permanent organization in the USA
With an American company the accounting inspections that the IRS – the US tax authorities – could do against Indian companies that operate directly in America are avoided
Even more important: the establishment of a commercial company in the United States avoids the possibility that the American tax authorities can carry out tax and accounting checks on the Indian company. The bilateral agreements between India and the United States on corporate and tax matters provide for the possibility for the American tax authorities to request documents and conduct investigative actions against Indian companies operating in the United States [and vice versa for the Indian tax authorities of course]
. Beyond of accounting inspections, which are actually quite rare, it should be noted that even a simple request for information by the American tax authorities translates into a significant increase in resources and costs as all the accounting and tax documentation for the American tax authorities must be prepared in English and the accounting items must be reclassified according to the American accounting principles [GAAP – Generally Accepted Accounting Principles]
An American company can take out an RC policy produced with an American insurance company with significant savings on the annual premium compared to the same policy opened with an Indian insurance company
Open a company in the United States: Limitation of risk related to liability for product damage
Open a LLC Incorporation in Delaware Last but not least, the problem of civil liability for the request for payment of damages in case of legal actions related to [real or alleged] defects of the product must be kept in mind. The possibility is far from remote.
Let’s say that the product that your company sells in the United States is a chemical component that is used in the production of a cement or a paint. If the end customer a busy due to the damages caused by this cement or paint, are normally called into question even the manufacturers who provided the intermediates that were used in production.
So even if you are confident that your product is absolutely safe and harmless, there is always the possibility of being sued for lawsuits that do not directly affect the products that you’re company exports, resulting in [usually large] attorney fees and the risk of being sentenced to pay damages.
The establishment of a commercial company in the United States limits the risk to the value of the capital of the company, avoiding that the Indian parent company has to respond financially.
We recommend, in the United States, to set up a capital company of the type “Inc.” or “Corp” which fully corresponds to the Indian “SPA”.
Operating in America through a company under US law means that you and your American customer are both subject to American laws, eliminating a strong element of uncertainty / risk.
Opening a company in the United States helps sell in America because it reassures the American customer
Beyond the legal and fiscal reasons, however important, USA Company Registration under US law helps to sell because on the one hand it testifies to American customers the seriousness with which the market is faced; it is an important sign of the willingness to invest and this gives security to the American customer. In a very practical sense, having a company in the United States reassures the potential American customer because:
It means that he can pay by check [by far the most popular form of payment in America] to a current account opened on an American bank quickly and easily;
It reassures that the commercial relationship is governed by American laws and therefore makes it easier for the buyer to understand what the implications of liability arise from the commercial relationship;
It simplifies the management of all the problems related to the regulations on money laundering and international terrorism;
It implies that you can have product liability insurance underwritten by an American insurance company with significant savings compared to opening the same type of insurance made in India;
And finally, it most likely also means that you ship from a warehouse in the United States reducing the risk of shipments arriving late and facilitating restocking and giving the possibility to place multiple orders for even small quantities.
Directors and board of directors in American corporations
Roles and figures in the American corporations:
- Shareholder [partners];
- Board of Directors;
- Directors [members of the Board of Directors];
- Officer [“Directors”]
As in Indian SPA, there are also distinct roles in American corporations. In particular we have:
Shareholder – They correspond to the shareholders of Indian joint-stock companies. Among other things, the shareholders’ meeting proceeds with the election of the board of directors and the approval of the year-end financial statements.
Board of Directors – Corresponds to the Board of Directors of SPAs in India. He is responsible for corporate management and responds to the shareholders’ meeting. The members of the board of directors of companies in America are called “directors”. The Board of Directors elects the “Officers”.
Officer – The mandatory positions required by law are:
- President [we also recommend appointing a Vice President]