1. Top legal framework

Establishing and running a business - you essentially accumulate business assets. They can be in the form of money, intellectual property (e.g., trademarks, copyrights, and patents) real estate, etc.

It’s important to determine who will own and manage all of those business assets. It can be, in particular, you (as an individual) or your company (as a legal entity). The latter is way more viable for liability protection, merger and acquisition, and other commercial reasons. Company registration allows you to run your business via your own company (corporation or LLC).

To this end, your company needs a legal framework (jurisdiction) where it will exist and operate. One of the best incorporation jurisdictions in the world is the US. Here, you can be sure that your business assets will be safe. That’s regardless of politics (e.g., who becomes the next President) and economy (e.g., how the annual GDP grows).

If someone treats your business unfairly, you can confidently rely on the American legal protections. In this respect, the US law enforcement and court systems shield your company registration, ownership, and management.

2. Avoiding offshore company 
Having chosen other jurisdictions, most people holding offshore companies now run into huge problems in opening a bank account anywhere in the world.

In contrast, corporate America is certainly way more attractive than offshore company jurisdictions. Moreover, American companies are generally more reputable than companies from other startup jurisdictions. 

3. American vis-a-vis American

Americans usually prefer to deal with American companies, rather than any foreign companies. So, neither a BVI or Cypriot company in good standing would work as well as a Delaware company formation. That is partly due to the fact that the State of Delaware is one of the best — if not the best — jurisdictions in terms of corporate governance law. Alternatively, a New York company would work great as well.

The rational is clear: Americans prefers to conclude contracts with companies in the States, so that, if something goes wrong, they could resolve a dispute at home, rather than somewhere abroad. 

Even if a foreign company somehow works, starting a company in the US would highly likely work much better. American businesses can effect a due diligence on their counterparts in a state registrar of companies online. For this purpose, it may suffice to check a company name with legal form (i.e., Inc/Corp or LLC). 

4. US Bank Account Only for American Company

If you are a nonresident, then, without an American company, it’s virtually impossible for you to open a business bank account in the US. The largest American banks normally refuse to open corporate accounts for foreign companies. That is due to bank compliance policies. They usually require American company registration documents.

Without a US bank account, you may be unable to receive payments from Amazon, for example, under the Amazon referral program. So, company formation in the US is normally a must in this case as well.

5. US Loan Only for American Company

You may eventually need to borrow money from an American bank. In this case, the bank would certainly request your US business credit history. The bank policy may, for instance, require an American company to exist for at least a couple of years. Without a US company registration, there would be no credit history at all. So, the sooner you incorporate your American company, the sooner you kickstart your business credit history.

6. US Investment Only for American Company

Your business may need to get an investment. For this purpose, American market is the most attractive for you to find business partners and investors. To finance your startup investment in the US, you need an American company registration (again). This is because the US investors are unwilling to finance a foreign company.

7. Immigration 

You may wish to invest and work in US. In this case, your American company registration and US business immigration would help you a long way. Specifically, you may get a business visa or work visa. Having formed a US company, for instance, you may become a US treaty investor and get an E-2 visa, i.e. US investor visa.

Alternatively, you may qualify for an L-1 visa, i.e. intra-company transfer visa. Finally, you may get an EB-5 visa, i.e. investment green card in US. So, an American company would help you with your US immigration. 

Comparable in title and operation to businesses in other countries, the primary business formation structures are
- sole proprietorships
- partnerships
- corporations
- limited liability company (LLC).

Certain business structures limit whether non-US citizens can be owners of a business incorporated in the US. With LLCs, there are no limitations on the number of investors who can own interests in the business and no restriction on non-US citizens assuming roles as members (owners). By contrast, if the corporation distributes profits to the shareholders in the form of dividends, shareholders pay income tax on those distributions; thus, C corporations are often criticized for imposing “double taxation.”

Under US tax law, a non-U.S. citizen may own shares in a C corporation, but may not retain shares in an S corporation. S corporations allow shareholders (owners) to report their portion of business income and expenses on their personal income tax returns and avoid corporate level taxation. The US tax rules dictate that non-US citizens cannot be shareholders of S corporations. For these reasons, many non-US citizens operating businesses in the US choose to incorporate their business as an LLC.

This answer depends on whether your company has an actual presence in the US. For example, if your company has an office in Miami, you may wish to incorporate your business in Florida. If your company does not plan to have a physical presence in the US (translating that it will operate solely from overseas), then formation of a corporation or LLC in Delaware or Nevada, the two most business-friendly states, may be preferable. If your non-US company operates in more than one US state, you may incorporate in any of these states, but you must also register to do business in the other states through a process called foreign qualification.

In some cases, the laws of your company’s home country may dictate the choice of entity, so it is vital to consult with Sidney Advisory consultants who are familiar with both US and international law to make an informed decision relative to which entity is best for your business.

How you choose to structure your business is important in many ways because the rules and regulations vary for each. Those rules and regulations can impact how successful (or not) your business is. From liability issues to taxes to the amount of paperwork you must maintain each year is all dependent on the structure.

It is important where you choose to form your business. Each state's laws are different, and inherent to those differences are specific advantages and disadvantages.

Four specific states are often at the top of the list of consideration for any startup company or organization in California, and those states are:
- California
- Delaware
- Nevada
- Wyoming.

Sidney Advisory consultants will assist our Clients in choosing the right state based on business needs and requirements. Choosing the right state can go a long way for the success of your business. 

Delaware
Delaware is a state that is and has been known to be very welcoming of persons looking to incorporate a business. Due to this welcoming business environment, more than 67 percent of all Fortune 500 companies are incorporated in Delaware even though they do not hold a physical office in Delaware. There are more than 1.4 million legal entities incorporated in Delaware as of 2018 – that says a lot.

That said, though Delaware has laws that benefit businesses, there are also drawbacks of incorporating in Delaware. 

Pros 
■ Taxes. You do not have to pay state tax income if you incorporate in Delaware but have your headquarters outside of Delaware.
■ Investments. Investors prefer Delaware given its pro-business environment.
■ Court of Chancery. Judges with specific knowledge and training in corporate law oversee business affairs.
■ Privacy. Important information about officers and directors do not need to be disclosed at the time of formation.
■ Flexibility. Unlike many states, Delaware provides flexibility to corporate and board structure and doesn't require residence, so you can operate your business from anywhere.

Cons
■ Expense. For small businesses, you may not benefit from corporate-friendly laws in Delaware and may spend too much to form your business without benefiting from the actual advantages the state offers.
■ Small Businesses. Generally, Delaware doesn't cater to small businesses but rather to the larger ones.

Nevada 
Pros
■ Taxes. There are no state corporate income taxes, no fees on corporate shares, and no personal income tax or franchise tax for corporations or LLCs.
■ Flexibility. Shareholders, directors, officers, members, or managers do not have to be residents.
■ Privacy. You do not have to list owner names as a prerequisite to incorporation; investors and all interested parties can remain anonymous.
■ Asset Protection. You do not have to list assets, which adds an element of privacy, but you also are protected against liability in all its forms – there are no loopholes in Nevada as there are elsewhere that could trigger personal liability.

Cons
■ Fees. The fees to incorporate are high when compared to most other states.

Wyoming
Pros
■ Taxes. There are no corporate state income taxes, no franchise taxes, no personal income tax, and a low sales tax.
■ Fees. Filing fees remain considerably low at under $100 per year.

Cons
■ Limits on Privacy. You must identify individuals running day-to-day operations.
■ Remote Businesses. The tax advantages for businesses incorporated in Wyoming are largely only for those who reside in the state.

California 
Pros
■ Taxes. Taxes are moderate, and even then, California offers a number of tax credits to corporations to help them grow.
■ S corporation. When certain requirements are met, California allows corporations to elect S corporation status, which in turn benefits the company because it is then taxed similar to a partnership.

Cons
■ Taxes. California taxes companies, including franchise taxes.
■ Privacy. You are required to disclose the name of certain top-level officers who are running the corporation such as the CEO, CFO, and the Secretary, as well as disclosing the name of all members of an LLC.

Yes definitely! Here are some reasons you should consider: 

1. New York is buzzing for startups 

Business owners thrive by being around other entrepreneurs and there are many startups in New York City (NYC). CNBC recently named NYC the “top city to open a small business in America,” and startups flock to NYC because it’s one of the world’s largest center for finance and a hotbed for industries like IT and entertainment. In fact, greater Manhattan is the leading center for banking, finance, media, and telecommunication in the U.S. Notable NYC startups include Birchbox, BuzzFeed, Etsy, and WebMD.

2. Tax Benefits 

New York may not be the most business-friendly state in the US, however they have instituted several tax benefits and incentives to help ease the burden on small business owners.

START-UP NY allows new businesses to operate tax free if they’re located on or near certain universities in the state. Also, the New Markets Tax Credit Program gives money to businesses and real estate developers to create jobs and foster community development in low-income neighborhoods throughout New York State.

3. Multiple airports 

There are 16 primary airports in New York, which is useful to small business owners who frequently fly to see clients. To put this into perspective, South Dakota only has three primary airports and the state is much larger than New York. Additionally, there are two major airports in New York City and they both fly internationally.

4. Large professional talent pool 

If you want to expand your business and hire employees, you’ll want to pick a location with a large talent pool. 44% of New Yorkers are college educated and many natives stay in the state to find work. New York also gets talent from Boston, Washington D.C., and surrounding cities, so you have a large talent pool from many cities. Also, in 2017, New York hired more software engineers than any other position, proving that tech talent is not only present in Silicon Valley.

5. NYC is a melting pot 

Diversity is important because it gives you a different perspective and increases creativity. According to Forbes, it can even make your business more successful and profitable. There are more than 700,000 minority owned business in New York, making it a melting pot and one of the most diverse cities in the US. By having a diverse team, you’re introducing new ways to tackle problems, which can result in increased productivity.

If you’re looking for a diverse state that’s full of startups, New York could be the right location for you to open your business. It’s important to note that while New York City is the largest city in the state, it is also the most expensive. 

1. Your business needs a legal name for the formation documents. 
An LLC’s or corporation’s legal name is the official name used when you file with the state to form your LLC or corporation. It appears on your formation document (e.g., Articles of Incorporation or Certificate of Organization). This name must meet the state’s business entity naming requirements for LLCs and corporations.

2. You can have one legal name but more than one assumed name Your business can have only one “legal” name at a time. But it can have any number of assumed or DBA (“doing business as”) names. So if you have some other business name ideas, you can use them as DBAs. 

3. Your legal business name must be distinguishable
The legal name of your LLC or corporation must be distinguishable from the names of other entities on record with the state filing office. Otherwise, the state may refuse to file the documents to form your LLC or corporation. The same rule of it being distinguishable applies in some states when filing for an assumed or DBA name.

However, there are a number of states where assumed names do not have to be distinguishable, meaning more than one company can file the same assumed name.

4. Your legal business name should include the correct required words
States generally require that the legal name of your LLC or corporation include certain words indicating your business structure.

- Corporations: A corporation’s name typically must include words like Corporation, Incorporated, Company, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd.

- Limited Liability Companies (LLCs): An LLC’s legal name usually must include words like Limited Liability Company, Limited Company; or abbreviations like L.L.C., LLC, L.C., LC, or Ltd. Liability Co.

5. Your legal name should not contain any prohibited or restricted words
Many states also prohibit certain words in a business name. Some are words that the state considers inappropriate. Others are intended to protect the public from being misled. For example, a state might not allow “Insurance” in the name of a business that’s not an insurance company or may require the approval of the Insurance Department before allowing use of that word. They also prohibit words that indicate it is a form of entity that it is not. So a limited liability company couldn’t have “corporation” in its name.

6. Comply with laws in other states where you are qualified to do business
In order for your LLC or corporation to qualify to do business in states outside its state of formation (known as foreign qualification), your company name must also meet the statutory requirements of the foreign state(s).

Under most LLC and corporation laws, the name of a foreign LLC or corporation name must meet the same statutory requirements as the state’s domestic LLCs or corporations. And if you want to do business under an assumed or DBA name, most foreign states will also require you to register the assumed or DBA name.

7. Adopt a fictitious name, if your corporation’s or LLC’s legal name is not available
If you find that the name your business is formed under cannot be used in a state in which it will qualify, you will generally be required to adopt and do business under an acceptable fictitious name (also known as an alternate name). The fictitious name must be set forth in the application for authority that you file to qualify in the state.

8. Choose a memorable name
The company name is a valuable asset for any business owner. It can help potential customers remember you, find you, and understand what you do. Don't make your business name so obscure that customers can’t determine what it means.

This often occurs when under pressure to find a unique web domain name. Business owners purposefully misspell or awkwardly construct a business name.

Try to come up with a name that is relevant to your industry or business. For example, if you have an Internet business, you may want your web domain name to be included in your legal name.

That doesn’t mean that the name needs to be descriptive — save that for your tag line or slogan. But find a way to stand out with a catchy, distinct, and evocative name, one that speaks to the core of your business.

9. Conduct a trademark search
Just because a legal name is considered available by the state filing office, it doesn’t mean that some other company doesn’t own trademark rights to the name.

The state filing offices don’t check state, federal, or common law trademark records when determining whether a name is distinguishable. They check their own business entity filing records.

The penalties for trademark infringement are severe, so it’s important to check that your choice of business name isn’t already protected. You should also make sure other names, like assumed, fictitious, or domain names you might use won’t infringe on someone’s trademark rights. Conduct a trademark search to uncover if any names or marks already in use are identical or similar to the names that you choose. The U.S. Patent and Trademark Office has tips on how to conduct a trademark search.  

10. Perform a name check with the state
You’ll also need to conduct a name check with the state filing office to determine if your preferred legal name is available within state records.

Doing a name check will prevent a state from rejecting your documents because the name isn’t available when you try to incorporate or form an LLC. But keep in mind, a name check simply tells you that the name is available at the moment you perform the check. It does not “hold” the name for you or guarantee that you’ll have it. If there will be a delay before you are ready to submit your incorporation or formation documents, consider taking advantage of a name reservation. This leads to our next point.

11. Buy time by reserving your name
If your preferred legal name is available in a state, it remains available for anyone else, too. However, most states let you file a name reservation to protect your right to that name for a period of time. A name reservation usually lasts 60 to 120 days, but the duration varies by state. Many states allow you to renew the reservation.  

12. If you change your legal name, remember to meet the statutory requirements
You can change your corporation’s or LLC’s legal name as many times as you want, but the new name will have to meet the same statutory requirements as the original legal name. And to make the name change effective, a filing will have to be made with the state — typically either the articles of amendment or a certificate of name change. If the corporation or LLC is qualified in any foreign states, an amendment or change of name filing will have to be made there too, to notify those states of the change.

Company incorporation in the US is administered at the state level —not the federal level — for both foreign nationals and US citizens. The process will differ from state to state but is generally comprised of two steps:
1.) applying to register in that specific state
2.) establishing a registered agent with a valid, physical address in the selected state. A registered agent can be either the business owner or another designated person who is authorized to receive legal documents on behalf of the business during standard business hours.

To incorporate a company as a LLC or corporation, formation documents must be filed with the appropriate state agency, which is most often the Secretary of State. Required filing fees must also be paid.

A corporation’s formation document is typically referenced as the Articles of Incorporation or Certificate of Incorporation, depending on the state. The Articles of Organization or Certificate of Organization often refer to the LLC’s formation document. Formation paperwork is used to advise the state and the public of specific details relating to the company. Formation documents serve as a formal record of reference of the corporation’s or LLC’s existence.

LLCs and corporations must offer certain information in their formation documents. The mandatory disclosures vary minimally by state.

US residents will likely need a Federal Tax Identification Number (TIN) to start their business. This process requires a Social Security number. For foreign businesses, an Individual Taxpayer Identification Number (ITIN) may satisfy the requirement. The Internal Revenue Service (IRS) issues these tax processing numbers to individuals who have to pay US taxes but are not eligible for a Social Security number. Residents and non-resident aliens as well as foreign nationals fall into this category.

To obtain an ITIN from the IRS, complete and mail IRS Form W-7. You can get started by printing Form W-7 and the associated instruction sheet.  

If you are a non-resident, you are taxed in the US only on US source income (for example, your share of the LLC’s income). If you are a US resident, you are taxed on your worldwide income. Resident status is not limited to those having a green card.

Resident status also applies to those with a physical presence in the US. For example, for 2009, a person is treated as a resident if he or she is in the US for at least 31 days and at least 183 days during 2007, 2008 and 2009 (counting all the days in 2009, but only 1/3 of the days in 2008 and 1/6 of the days in 2007). Even if this residency test is satisfied, you can still be treated as a non-resident in certain situations (for details on determining residency and tax obligations, see IRS Publication 519, U.S. Tax Guide for Aliens. Non-U. businesses that do not operate in the US (for example, do not have any income from US sources), do not owe any federal income taxes; however, there may be annual state charges or fees for maintaining the LLC or corporation.

Non-US companies that do not want to form a business here but merely wish to import their products to the US should explore import rules by navigating the Commercial Importing Procedures and Requirements.