Foreign Companies: Form a Corporation when You Come to the U.S.

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:

1. 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.
2. 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.
3. 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.
   
4. 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.
5. 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.

Related posts:

• 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.