Entity Set Up
The right international tax structure can give you a competitive advantage.
The type of entity chosen should always take account of the tax implications which arise.
Entity Set Up
Cuevas & Cuevas International Business Advisors can assist clients and their attorneys with the most efficient tax structure entity choice for the establishment of a US entity and advice on the best overall tax structure in which to operate. As a non-citizen, there are many decisions to be made and our advisors have the experience to help you get your enterprise off to the right start.
Choosing an entity
Your first step is to select the best entity and tax structure for your business. Each entity type offers benefits to your business in terms of operation and taxation. Non-residents follow the same steps to set up business entities, but also need to consider getting visas, opening bank accounts, and international tax laws.
“We depended on the experience and expertise of the Cuevas & Cuevas global services team to help us weigh our international options. Now they are helping us implement our plans. They are as committed to our success as any of our international team members.”
- Austin Clark, Vice-President
International Operations
Partnership
A partnership structure includes two or more people who agree to share the profits and losses of the business. Partnerships are treated as “pass-through” entities, which means that all profits pass through the business to the partners, who in turn pay tax on those profits as personal income. Each partner is liable for any losses incurred by the business, which is one of the drawbacks to this particular structure.
LLC
An LLC is an option similar to a partnership if and when an LLC chooses pass-through taxation and that of a corporation in the way the owners are protected from personal liability for the business. If you are considering a limited liability company (LLC), keep in mind that the Internal Revenue Service(IRS) doesn’t have a special tax classification for LLCs. This gives you the freedom to choose how your LLC will be taxed.
An LLC may be taxed in four primary ways:
- As a sole proprietorship
- As a partnership
- As a C corporation (C corp)
- As an S corporation (S corp)
If you own a single-member LLC, you may elect to be taxed as a sole proprietorship, partnership, or C corp. If your LLC has more than one owner, a sole proprietorship isn’t an option, but the remaining three are.
Corporation
Corporations are completely separate from the people who found and own the business. Corporations, also referred to as C-corporations, are taxed and held liable for their profits, losses, and actions. In addition to corporate taxation on profits, any dividends paid to shareholders are also taxed at the personal level. This potential double taxation is sometimes considered a drawback. There is an alternative corporation structure called an S-corporation, which can elect to be taxed as either a C-corporation or an LLC.
Another available legal business structure is a sole proprietorship, although this business structure is more appropriate for an owner/operator.
Choosing a State
Some US states have a reputation for being more business friendly than others. Delaware, Nevada, and Wyoming often come to mind. Utah also frequently ranks highly in lists of the best states for business. Each business, and business owner, has different needs and therefore careful consideration is necessary. Some of the points to think about while making this decision include:
- Taxes
- Government economic incentives
- Minimum wage requirements and the local labor market
- Your plans for future growth and development
Licenses and visas
As a non-citizen you will need to take care of other details to establish your business in the US. While it is possible to establish and run a US based business from outside of the country, depending on the legal entity structure you choose and the level of involvement in the day to day running of the business may require you to attain a visa to work in the US. The Department of Homeland Security publishes a list of visas and guidance on which visa is the most appropriate in a given situation.