Setting up a company in United States it is often the ideal, if not necessary, choice for companies wishing to export to the USA. This process is relatively simple procedurally and can be completed in approximately 48 hours or less.
To operate in the country, a company can open a Representative Office, which provides a fixed base for the Italian company in the USA. However, this office cannot carry out business activities, does not generate income in the area and is not subject to taxation. The activities carried out must be auxiliary to those of the Italian parent company.
Alternatively (and it is the most widely adopted choice), a company can establish an autonomous entity distinct from the parent company. In this case, the choice of corporate form becomes fundamental.
Among the most common corporate entities in the USA are the LLC and the Corporation. All are subject to a variety of taxes, at both the local, federal and state levels.
it is also possible build a society in a State other than the one in which it intends to operate, provided that the company is also regularly registered in the other States as an operating entity.
In this article, we will analyze the various solutions available, highlighting the characteristics of each choice.
It is important to note that, with the exception of Sole Proprietorship, intended exclusively for the sole entrepreneur, all the corporate forms we will talk about can be used by both small businesses and large multinationals. There are no significant formal or economic restrictions, and the costs of establishing the various types of companies are quite similar to each other.
Corporations (Inc. or Corp.) and Limited Liability Companies (LLC) are comparable, respectively, to Spas and Srls in Italian corporate law. The Limited Partnership, similar to the Italian SAS, is less frequent thanks to the greater management flexibility offered by the LLC.
The Corporation is considered incorporated once the Certificate of Incorporation is registered with the Office of the Secretary of State. There is no mandatory minimum capital requirement. In fact, capital mainly has an accounting function rather than a legal one and can be made up of shares without par value.
Members can decide whether payments should be treated as equity or a loan, with each option offering specific benefits. The management of the Corporation is structured on two levels: Directors and Officers. The incorporation process includes choosing the state of incorporation, selecting the company name, submitting the Certificate of Incorporation, requesting federal and state tax numbers, and opening bank accounts. From the point of view of the Italian company wishing to incorporate in the United States, an interesting aspect is the exclusion of assessments of the latter by the American tax authorities. This allows avoiding the translation of all the required documentation into English and its adaptation to the principles of the American accounting system.
The LLC, comparable to the Italian limited liability company, issues shares (Membership Interests) and has only one level of administration (Managers). LLC formation is similar to that of a Corporation, with the articles of incorporation varying depending on the state in which it is formed. The LLC can have only one member, and the members are only liable up to the limit of the company's capital.
One of the main characteristics of LLCs is their fiscal transparency: they do not have to file a tax return since the income is transferred directly to the members, who must declare it in their personal taxes. From a tax point of view, the LLC is preferred in cases where double taxation is to be avoided: in fact, this legal form can be taxed like a partnership.
The establishment of the LLC occurs through the signing of the articles of association and the adoption of a Operating Agreement. This corporate structure is flexible and gives members limited liability. For this reason it is one of the most chosen options by companies interested in exporting to the USA.
There Limited Partnership (LP) it is similar to the Italian limited partnership. In an LP, limited partners have liability limited to their share of the capital, while general partners manage the business and are liable with their personal assets.
It is advisable to draw up an association contract to regulate the relationships between the members and the company. If an LP has no limited partners, it turns into a General Partnership, in which all partners are responsible with their personal assets.
In planning internationalization strategies, the choice of corporate form to operate in the United States plays a crucial role. This decision depends on your specific situation and the type of business you intend to start. LLCs are often preferred for real estate investments or situations with low taxable income, although it should be considered that, if owned by a foreign company, they may be treated as subsidiaries for US tax authorities, with unfavorable tax implications. On the other hand, Corporations, with their flat tax rate at 21%, are generally more advantageous for operating in the United States.
When deciding which company structure to adopt to export to the USA, it is in any case essential to evaluate several critical elements:
For assistance in choosing the legal form best suited to your needs for exports to the USA, you can count on Octagona. With over twenty years of experience in consultancy for the internationalization of companies, we support companies at every stage of their expansion journey beyond national borders.
Don't hesitate to contact us for more information.
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