We have compiled a list of most important things you need to know before opening a business in the States.
Incorporation of the Company:
Setting up a business in the U.S is very easy especially if you are thinking about incorporating your business. Incorporation of business is very important. It will act as safety insurance for your company and its stake holders. In order to make your business into incorporation you just need to follow some easy steps which are described below;
- Choose the type of business entity:
This is the first step to start your new business. You have to choose the type of business you want to start. Here we have briefly described the basic types of incorporations for your convenience. They are;
This is the basic type of incorporation. All profit corporations are initially C corps. C corporations are subjected to corporate taxes. There’s no limitation on the number of shareholders in it.
The S-Corp is considered as a pass through entity. This means that the business isn’t taxed itself instead the income is transferred to the stake-holders and they are taxed for it. This means that additional taxes are surpassed which are bound to pay in C- Corps. But in S- Corps the number of stake-holders are limited a maximum of 100 members can be in a single S-Corp.
LLCs i.e. Limited Liability Company is the most secure type of company to consider because it fully protects the personal assets of its owners and members. It is also taxed at individual level like an S-Corp. the owners of LLCs cannot be held directly responsible for any debt or loss of the company. They are allowed to form in all the States of the U.S.
- Choosing the members:
The second important step is to decide the members of the company. You will have to decide who will be the members and who will be the directors.
- Choose the state:
Choosing the State in which you want to start your business. This is very important as every State has its own different laws.
- Naming your Business:
Every State has its own rules related to naming of incorporations. Before naming your company we would advise you to check your specific State’s rules.
- Filing your Incorporation papers:
This is the final step after completing all your documents. You are required to file your incorporation papers and submit them in the State Secretary’s office along with other required documents.
Get your Federal Tax id:
If you want to setup any type of business in the U.S you are required to get a federal tax id or EIN i.e. Employer Identification Number. It is required so that the IRS can recognize your business. It is a unique nine digit number assigned to you by the Internal Revenue Service IRS. The number is used both for identification and employment tax reporting. When it is used just for Identification rather than employment tax reporting, it is referred to as Taxpayer Identification Number (TIN). And it is referred to as EIN when used for the purposes of employment tax reporting.
You can learn more about how to get a federal tax ID and tax ID forms on the Official IRS website. Another thing to remember is that you should never give your federal tax id number in tax lien auctions or sales, lotteries etc. because it is solely for tax administration purposes.
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