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:
- 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.
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.
John Doble
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.
Dana
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.
Vikas Kamal
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.
Dana
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.
sreekanth
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
Dana
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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