HOW DO I INVEST IN THE USA WITH MY FOREIGN COMPANY?
HOW DO I INVEST IN THE USA WITH MY FOREIGN COMPANY?
How do I invest in the USA with my foreign company?
The United States is a land of business and offers a wealth of investment opportunities. Moreover, the country boasts one of the best financial and entrepreneurial systems in the world. How can I invest in the USA with my company? What tax regime can I expect?
How do I invest in the USA with my foreign company?
Creating your company in the United States
It's important to know that corporate law is governed by state law. States determine their own laws. But generally speaking, foreign investors have two types of companies to choose from: the LLC and the corporation.
LLC
An LLC (Limited Liability Company) is a limited liability company. A hybrid between a partnership and a corporation, its advantage is that members cannot be held liable for the company's debts, obligations, and liabilities. Furthermore, it can be managed by either its own directors or appointed managers. The cost to set it up ranges from $100 to $800.
Corporation
Equivalent to the French public limited company, shareholders are only liable up to the amount of their contributions. This more formal structure requires the establishment of a board of directors, annual meetings, company bylaws, and more. Its cost also varies between $100 and $800.
Read also: Taxation of an LLC, the essential questions
Taxation: LLC vs Corporation
LLC
An LLC's liability is very limited. In fact, in the event of debts, LLC members are virtually, if not completely, protected. From a tax perspective, LLCs pay no taxes. It is the income of each partner that is taxed. The income tax rate ranges from 10% to 37%. It is also possible to transfer shares to other investors.
Corporation
From a tax perspective, the Corporation is a separate taxpayer from its shareholders. This is called "double taxation." Indeed, the Corporation is taxed on its profits, and the shareholders are taxed on the dividends distributed to them. This can be a disadvantage in some cases. However, for shareholders residing in France, for example, this has the advantage of not creating a "tax presence" in the United States for them, thus avoiding direct submission to the American tax authorities. In addition, the tax burden is reduced for "foreign" shareholders by the exemptions and refunds of French tax provided for in the Franco-American tax treaty.
This double taxation can be avoided if the Corporation opts for an "S-Corporation" sub-chapter. In this case, the tax is levied at the shareholder level on their share at the rate corresponding to their tax bracket. However, an individual or legal entity residing in France cannot be a shareholder of an S-Corp because the law only allows individuals residing in the United States to invest in this type of structure.
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