Forming a U.S. entity correctly is a crucial step to protect your business as it grows for either sale or a profit center to support you and your family.
Nothing is worse than building a U.S. brand, working 12+ hours a day to build it up, getting ready to sell, and losing everything because you thought you were protected.
We receive weekly emails from e-commerce sellers worldwide, looking to clarify several key issues before forming a U.S. entity.
They know they can go on an essential website and form an LLC for $150-$300 but realize there must be more to all the tax ramifications than is being shared, and they are correct.
These are the 12 most essential questions you should be asking Before and During the Formation of a U.S. Entity :
The critical questions below are essential for getting the best answer and support. They apply to all foreign e-commerce sellers looking to establish a U.S. entity.
The good news is when forming a U.S. entity with our packages, we either have resources for each question or these are addressed with our complete U.S. entity formation packages.
- What Factors Should You Consider to Determine Which State are Best to Incorporate? Knowing the factors and which ones are most important to YOUR situation is most important. It is essential to determine your overall risk both in your home country and in the U.S. The key is to determine which factors match what you want to accomplish. Our 45-minute video in our U.S. entity formation package is comprehensive and covers your best options.
- What Factors Should You Consider to Determine Which Type of Entity and Taxation Type is Best? Getting these factors out of order may cost you a small fortune in unnecessary U.S. taxes. If an LLC, how should it be managed, managed by managers or members? Which gives you the most flexibility to open a U.S. bank account and secure the proper foreign ownership? Also significant, but not often discussed, is your U.S. entity’s ownership, and which US tax returns does this trigger? Our 45-minute video included in our packages is comprehensive and covers your best options.
- What Factors Should You Consider BEFORE Choosing a U.S. Company Formation Service? This goes way beyond prices and service (hint: look for a company with a 20+ year track record, video endorsements, and relationship with top firms, not just the cheapest; they don’t always have the resources to hire tax firms to provide when with the correct information…).
- Does Forming a U.S. Entity Mean I Will Pay U.S. Federal Income Taxes on Profits? Avoid the misinformation and confusion on this must-know subject. You must be realistic in your profit goals, and where do you want the profit to end up in your country or the U.S.? What about the sales tax requirements, especially after the June U.S. Supreme Court Wayfair vs. South Dakota? Do you know which states you have to register even if you are not selling on Amazon FBA?
- What Type of U.S. Address is Best for my U.S. Company Formation? There are different approaches and consequences if you don’t get the right one for your situation (now scanning is more important than ever). More expenses are involved in lost time, fines, and penalties for not receiving important mail from the state or IRS in time. This can be avoided.
- Do Federal Tax Treaties Come into Play in My Decision Making? And if they do, are they straightforward? Not owing any U.S. tax is very different from needing to, or recommended to, file a U.S. return. (our package includes training with a U.S. tax attorney on this important subject)
- When is a U.S. Bank Account Recommended? It may not be a must, but if it is, do you have a shot to open one or not? Does the bank require both partners to be present? Do we need the IRS letter? A lease agreement? Banking is a big moving target that changes every year. We always have the latest options for our clients. One main reason is our 26-year track record, and we work with the best. We don’t remember a bank with an office in California, especially if your company needs to catch up on sales tax.
- What Factors Need to be Considered to Open a U.S. Merchant Account? This is another moving target. It would be best if you got your hands around it. Do you know if an offshore merchant account is your only option? Are Shopify payments possible?
- What Support is Critical After I Form a U.S. Company? This is how you avoid real trouble. What is most valuable when you form a US entity is the clarity about the formation upfront. It becomes accessible to the right resources, tools, and expertise when and if you need access. Nothing is worse than getting filed and being on your own to figure everything else out.
- What are my Annual Tax Requirements After I Form a U.S. Company? Not knowing and being late is very expensive (some have fines of up to $20K if late). Should you or your foreign company file a protective return in the U.S.? The critical question to address concerns whether or not your company is engaged in a U.S. trade or business. Most CPA videos online don’t detail the details of this definition. You may not be paying U.S. taxes, but you certainly want to ensure you file the proper tax returns with treaty benefits.
- How will Factors Determine the Length of Time to Form a U.S. Company? Time frames may vary significantly and affect your deadlines and business launch (the key is to read through the overpromising that occurs online).
- What Factors Do I Need to Consider in Transitioning to Selling from my Foreign Company to a U.S. Company? These are missed often and will become severe issues down the road (this is why we did training with an expert firm on selling a U.S. company, so you have the end in mind as you get started with NCP).
Ultimately, NCP will be your best resource to support you after you form your company with us. As a client, you will have access to over 20 vetted referral partners in areas that may come into play for support as needed.
