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FORMING A CORPORATION
Our Law Firm has formed
hundreds of corporations in the United States. No capital investment is required,
as in Germany and other countries for instance. We can also form a corporation
for you in any U.S. state.
Many non-U.S. residents have questions about forming a corporation. They ask:
"Are we allowed to incorporate?" "How much capital is required?" "Do I need
a Green Card?" "What type of corporation can be formed and what are the tax
implications?" "Who can form a corporation for me?" "Must I live in the United
States?" "How can I obtain a Social Security Number or tax number?" "Must
I open a business right away?" Above are just a few of the typical questions
that we are regularly being asked at our Law Firm. I would like to answer
these questions in a general way, because individual cases usually require
specifically tailored answers.
Are we allowed to start a corporation in the United States?
Yes, generally, a foreign person can form a corporation. The corporation is
formed by an incorporator initially, often a lawyer, who will then resign
in favor of the shareholders (owners) of the corporation. The corporation
is registered with the Secretary of State, Division of Corporations. The name
of the proposed corporation should be checked with the Secretary of State
for availability. No two corporations may have the same name, or closely similar
names, to prevent confusion. The corporate name must include the word "corporation,"
"incorporation," "company" or such other word or abbreviation, such as "Inc."
or "Corp." to indicate that it is a corporation, not a natural person or partnership.
The shareholders (owners) need not be identified or registered. The shareholders
can be individuals or other corporations, including foreign corporations.
At least one director must be shown in the Articles of Incorporation. One
person can hold all corporate positions and titles: director, president, secretary
and treasurer. That person or persons need not be residents of the United
States and can conduct business from outside of the United States. It is required
that the corporation always identify a "registered office" in the U.S. and
a "registered agent" who must be a resident of that State.
How much capital is required?
Typically, as little as $100 is sufficient as capital. That would be, for
example, $1 value per share for 100 shares. Therefore, a large capital investment,
as may be required in other countries, is not necessary in the United States.
What types of corporation can be formed?
There are three types of corporations: A "C" corporation is responsible for
the debts of the corporation, but not the individual shareholders. The net
profits are taxed and the dividends are paid to the shareholders who may have
to report the dividends as income. "S" corporations have the same functions
and benefits as "C" corporations, except that they can have no more than 35
shareholders and that the shareholders must be U.S. residents for tax purposes.
Generally this refers to people who live in the U.S. for more than six months
a year. Holders of an E-2 investor visa, L-1 visa L-1 visa and even B-2 tourist
visa, if they pay taxes in the U.S., can qualify to be shareholders of an
"S" corporation. The main advantage of the "S" corporation is that the corporation's
net profits are passed on to the shareholders and are not taxable to the corporation.
A Limited Liability Company (LLC) is a corporation with limited liability,
similar to a "S" corporation, yet with several significant differences. One
major difference is that it requires at least two persons to form an LLC.
The owners need not be U.S. citizens or U.S. taxpayers. There are several
other differences that cannot be adequately addressed in this article. Whether
or not an LLC qualifies to be taxed like an "S" corporation should be discussed
with a tax advisor.
Who can form a corporation for me?
Typically a lawyer will form the corporation, although others may do so also
as long as they are not practicing law without a license by providing legal
advice.
Must I live in the United States?
No. A person can ask an incorporator, usually a lawyer, to form the corporation
without being in the U.S. The incorporator can sign the articles of incorporation.
The president and secretary must sign the shares giving ownership to the shareholders.
Later the shareholder can sign documents at the required annual meeting.
How can I obtain a Social Security or Tax Number?
Social Security Numbers are available only to U.S. citizens, Green Card holders
or people holding a U.S. visa which allows them to work, such as an E-2 Investor
and L-1 Intra-company transfer visa. Others may apply for a Taxpayer Number
from the Internal Revenue Service if they must file a U.S. tax return. Corporations
must apply for a Taxpayer Identification Number with the Internal Revenue
Service. The application must be signed by an official of the new corporation.
If that person does not have a Social Security Number, then a copy of his
foreign passport must be attached to the application. If the corporation will
sell products to the general public, it must also apply for a Sales Tax Number
from the State Department of Revenue and collect sales tax. Businesses are
also required to hold a Business License available from the city where the
business is located.
Must I open a business in the United States?
No, it is not required that corporations operate a business. An individual
can incorporate himself, for example. A corporation may be used for the sole
purpose of owning real estate, even a house. However, an active business must
be established to qualify for an E-2 Investor or L-1 Intra-company Transfer
although this business could be a real estate investment or activity.
Off Shore Banking & Forming an Off Shore Corporation
Dobbs & Neidle, PC can establish for you an offshore presence in the Bahamas, through the establishment of companies, or other legal entities. We are similarly able to offer full time management services for those who require assistance with actual offshore transactions.
Offshore Banking In The Bahamas
The Commonwealth of the Bahamas is considered to be one of the most stable
and confidential banking centers. Since 1990, following the passage of the
International Business Companies Act (IBC), the Bahamas has witnessed a dramatic
increase in the registration of companies and trust licenses. This legislation
made changes that created a business environment more conducive to offshore
business:
Incorporation within 48 hours;
Lower registration fees;
No capital requirements;
No personal liability for shareholders;
No exchange control regulations for twenty years;
One person only required for incorporation.
Other Advantages
In the Bahamas there
are numerous tax advantages for the individual, as well as the company. No
income tax, capital gains tax, inheritance tax, or sales tax. The Bahamas
has not entered into any tax treaty or contract with any other country. Total
banking, financial and corporate confidentiality is assured in the Bahamas,
which has a long lived tradition of efficient service, and business privacy.
There are over 400 financial institutions in the Bahamas. Most international
advisers recommend that the multi-national investor or businessman should
diversify with a foreign bank account. For example, non U.S. residents may
invest in the United States through a Bahamian company and avoid or reduce
any U.S. tax liability. The investor or business man is therefore assured
of anonymous business transactions or investments, since the company or trust
is the legal holder of the investment portfolio or business entity.
After reading this information, click here
to arrange a consultation with an attorney.