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

United States flag, symbolic of the desire to form a corporation when a foreign business comes to the US

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.

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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.

  1. 10/28/2011 | 2:49 pm Permalink

    Dear Dana,

    We are in the process of opening a corporation in the U.s. We are Canadian citizens residing in Canada. We have been told that as Canadian citizens we cannot form a LLC in the USA because we do not have a SSN. Is this true? Are there ways around this?

    Thank you.

  2. 10/28/2011 | 2:54 pm Permalink

    @John Doble
    Not true! It is possible to obtain an Employer Identification Number (which is required to open a bank account or to conduct business) without SSN. Please see “Foreign Company Alert: Obtaining an EIN may be your Biggest Challenge in the U.S.” at http://dana.sh/bRsAnI.

  3. 6/1/2012 | 9:18 pm Permalink

    Hello Dana,

    We are a leading publishing house based in India. We have an arrangement with Apple and Kindle, under which our books are sold in USA through their application/portal. On Apple’s instruction, we applied for EIN, which we received quite easily. The EIN Letter states we are required to file Form 1065 every year.

    I am bit confuse since this form is for Partnership Firm. Also, we don’t have any presence in USA. Further, our revenues were less than even USD $ 1000. Please guide me how should I go for submission of Form 1065.

    • 6/2/2012 | 7:38 am Permalink

      I’m sorry, but I am not a tax advisor, so I am not qualified to answer your question. Page 2 of the Instructions for Form 1065 discusses who must, and who need not, file that form.

  4. 7/26/2012 | 2:06 am Permalink

    Hi,

    We are top training providers in India.what is the process to start a company in US and what is the process to tie up with existing company.

    Thanks
    Sreekanth

    • 7/27/2012 | 3:08 pm Permalink

      As concerns starting a company, please see all of this blog’s posts about startups.

      As concerns tying up with an existing company, that is too broad a question to be answered from either the business or the legal perspective.

      I suspect that you will need to discuss these issues with a qualified business lawyer.

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