I have seen a recent increase in the number of foreign companies inquiring about doing business in the U.S. Their most frequent question: Should they just open a branch office here, or should they form a corporation or other legal entity? They almost always form a corporation. Here’s why:
- Many customers here prefer to do business with a U.S., rather than overseas, entity. The U.S. entity provides a level of comfort, and shows a level of commitment, that is not present with the overseas entity.
- The U.S. legal system is well-known for a high incidence of litigation. Foreign companies like to have a legal firewall between their U.S. operations and the foreign parent company.
- Although both corporations and limited liability companies (LLCs) can provide legal protection, there is a widespread marketplace perception that a corporation is more substantial and more “real” than an LLC.
- The cost to form a corporation and maintain it here is quite low, especially in comparison to the formation costs and minimum-capital requirements in many other countries.
- If an E-2 or L-1 work visa is sought, USCIS requirements refer to the types of documents associated with corporations rather than LLCs.
- Foreign Parent + U.S. Sub = Legal Firewall
- Foreign Company Alert: Obtaining an EIN may be your Biggest Challenge in the U.S.
- Visa Basics for Foreign Entrepreneurs Coming to the U.S.
- Ten Tips for Success in the U.S.
- How Much Does It Cost to Incorporate?
- Why (not) Incorporate in Delaware?
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.