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Why incorporate in the USA and which State is Best for Non-Residents?

USA

The USA has many advantages for non-residents seeking to incorporate there but not trade in the USA.

First, and most important, non-residents are not taxed, which provides a significant advantage for those incorporating LLCs. An LLC (Limited Liability Company) in international terms is more akin to a Limited Partnership. Members are liable to taxation (if any) on profit share from the LLC.

The other principal type of US business entity is the C Corporation  (a standard limited company in most countries). C Corporations are taxed on their profits wherever sales are made and whatever the ownership structure. The standard rate of Federal corporate tax in the USA is 21% for 2021.

It is important to understand that each state determines its own taxation rates (in addition to Federal Taxes), and the States are certainly not equal in their taxation policies.  Throughout this article, we refer to ‘incorporate’, but in fact, we mean forming an LLC (Limited Liability Company).

There is a shortlist of States which are generally considered to be business-friendly. Top of the list is Delaware, which not only created LLCs but also has a well regarded Chancery (business) court. Other contenders include

  • Florida – downsides include corporate tax, more applicable to C Corps.
  • Nevada – licensing requirements for certain businesses can make this unattractive.
  • Texas – this is a business-friendly state with low taxes.
  • Wyoming – our choice due to minimal requirements and low costs.

You might ask why California and New York are not on the list above. Simply, bureaucracy and state-level obligations.

An introduction to Wyoming LLCs.

Compared to other states in the US, Wyoming offers numerous advantages to non-residents that want to set up an LLC there.

To recapitulate, these include:

  • Zero Wyoming State taxes.
  • Low maintenance costs.
  • Minimal information on the public record.

 You will, however, need an EIN (US tax number), and we can arrange this for you when you form an LLC with us. An EIN (formally Employer Identification Number) is a tax registration certificate and will be required by banks/e-Wallets before they will open an account for an LLC.

A little more detail on setting up an LLC in Wyoming.

The Wyoming registry does not ask for information to be filed, and therefore there is no public disclosure concerning your business or its structure. Once instructions have been received, it should take just a couple of days to set up your company.

The Benefits of LLC Incorporation in Wyoming

  • For a limited liability company or LLC, there are no state taxes to be paid in Wyoming.
  • The LLC is seen as a separate entity to its owners which means you are not liable for debts and can protect your assets.
  • The reporting and disclosure rules for a Wyoming LLC are minimal, and you do not have to be a US resident to set one up.
  • Single Member LLCs are permitted and even a Sole Member can act as the Manager who fulfils the same function as a director.
  • An LLC will continue indefinitely, even if passed onto other owners, and will only cease to trade once it is officially dissolved. It’s also, therefore, easy to ensure the transfer of ownership of a business.
  • The filing fees for setting up a Wyoming LLC amongst the lowest in the US.
  • You can set up banking facilities anywhere in the world, giving your business the flexibility it needs to operate on a global stage.

What is the next step to form your Wyoming LLC.

First, is to decide on a company name, better to give us three choices which we can check for you.

Second, is to decide who will be the Manager and, of course, your co-investors as Members. If you have multiple Members it’s probably a good idea to have a Members agreement in place – we can provide a draft.

Thirdly, please contact us to get things moving.

Finally, after formation you will need to apply for an EIN and subsequently open a bank account, both of which we can assist with.

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