Incorporations in the USA

Legalization of Documents under International Law: for the countries that are signatories to the Hague Convention documents are legalized by apostille. For any other countries there is an option for consular legalization by embassies of these countries in the USA.

Main Company Types: Corporations (companies limited by shares) and Limited Liability Companies (LLCs).

A Corporation always acts as a separate taxpayer and it must render account on its revenues received from sources worldwide. In case a Corporation pays taxes outside the USA (under a Double Taxation Treaty), it still must file its accounts. For more details please refer to our Audit and Reporting page.

A Limited Liability Company is exempt from taxes and accounts filing in case it does not receive any income from the US-sources and its sole member is non-US resident. Such a company is not subject to tax registration within the USA. The sole member of such a Limited Liability Company becomes liable for paying the LLC taxes and these taxes are payable at the country of tax residence of such a sole member. In other words, the taxes of such LLC must be paid by its sole member in the country of his/her residence.

Companies names must be composed only of Latin letters and end with the following extensions: “Ltd.”, “Inc.”, “Corp.”, “Corporation”, “Incorporated”, “Limited” – for corporations; and “LLC” for LLCs.

Directors:: a Corporation must appoint at least one director, either legal entity or individual. In the USA there are no restrictions applicable to directors’ nationality. The Register of Directors is not open for public (and is kept by the company Registered Agent). A Limited Liability Company must appoint a manager; a member of such company may act as its manager (in this case a company is called member-managed).

Shares: : a Corporation may only issue registered shares. A company business is deemed started once this company has issued at least one share. The Register of Shareholders is not open for public (and is kept by the company Registered Agent). A US Corporation must have at least one shareholder – either a legal entity or an individual.

In case of LLC capital is divided in shares that are distributed between the company members. An LLC capital often does not have a monetary value which makes it difficult to identify the amount of personal liabilities of its members in case of the company bankruptcy.

LAWYER’S COMMENT:

As of now the main disadvantage of the US LLCs (i.e. de facto tax exempt companies) is that such companies encounter difficulties when opening bank accounts. Thus, for example banks located in Baltic States do not open accounts to the companies incorporated in the USA in case such companies do not have a Tax Identification Number (TIN). Moreover, even an existing bank account may be closed. The above situation is mainly due to pressure exerted by the US authorities.

However, the US companies are deemed to be rather an attractive tool for the purposes of international trade business and investment projects since the USA are a highly reliable jurisdiction being the world’s leading power and having in force Double Taxation Treaties with a number of countries; besides the incorporation procedure is easy to follow and prices are low.

A Corporation may be formed in any of the US states, as for LLCs, these may be formed only in states where this type of legal entities is permitted by law.