Many foreign entrepreneurs immigrate to America to open new businesses. However, is it possible for a foreign corporation to do business in the United States while remaining established in its home country? Keep reading to find out.
Can a Foreign Corporation Do Business in the US? – The Essentials
The most common form of organizing a business in the United States, a corporation is a legal entity incorporated under the laws of the state it was originally established. Therefore, the law treats corporations as separate legal entities with their own standing to sue and be sued.
In a corporation, the owners (also referred to as shareholders) are not liable for the company’s debts and judicial liabilities – except in a few specific cases (i.e., piercing the corporate veil).
Primarily, no shareholder in a corporation is exposed to liabilities incurred by the company itself, hence having his or her personal assets shielded against creditors’ claims and judgments.
The United States economy welcomes prosperous companies that come from abroad to generate capital influx and boost job creation. Under US federal law, corporations formed in other countries may do business in the United States – as long as the company strictly complies with all legal requirements.
Can a Foreign Corporation Do Business in the US? – Incorporating with a US State
Depending on the company’s home country, the procedures and requirements to form a corporation tend to be similar to those pursuant to US local laws. It is crucial to note that corporations in the US are subject to the specific legal requirements imposed by the state in which the entity is incorporated.
One of the most important steps involved in the process of incorporating a corporation originally formed abroad in the United States is accurately identifying the best state to establish the company.
In Florida, the first step to form a corporation is to file Articles of Incorporation with Florida’s Department of State. Additional steps involved in the process include:
- Choosing a proper corporate name
- Preparing the paperwork
- Filing a Certificate of Incorporation
- Obtaining a federal Employer Identification Number (EIN)
- Appointing a Registered Agent
- Structuring the corporate bylaws (internal corporate document not filed with the state)
- Appointing directors and holding board meetings
- Issuing stocks/shares
- Filing the required annual report(s)
Can a Foreign Corporation Do Business in the US? – Tax Compliance
In several cases, a corporation formed abroad may choose to establish a branch company within the United States to conduct its business activities. Still, it is worth noting that most foreign companies designated as C- corps prefer forming subsidiary companies for tax reasons.
Both at the federal and state levels, US law has a concept that an income “effectively connected” with a source established on US soil is subject to taxation. Hence, if a foreign c-corp generates “effective connected” income, the company will be exposed to US taxes like other native c-corps.
Tax law is a complex and demanding matter (especially for foreign entrepreneurs). Ideally, the best approach is to rely on the guidance of an experienced business attorney to ensure full compliance.
Immediately Contact an Expert Business Attorney
Doing business in the United States as a foreign company requires a strategic approach. Contact a well-versed Florida business attorney today by calling (305) 921-0976 or emailing [email protected] to schedule a consultation.