Choosing the best state to start a business in the US is crucial before initiating your American venture. Keep reading and find out more about the pros and cons of forming an LLC or Corp in Wyoming, Nevada, or California.
How is the process to register a company in the United States?
The process of opening a company in the United States requires a choice: the best state to start a business. When selecting, many entrepreneurs face a series of doubts related to American different state laws and taxes.
In the United States, there are both federal and state taxes. Also, besides income tax, companies don’t have to pay other tributes, such as annual reports or franchise tax.
Therefore, before understanding how these taxes work, it is necessary to learn about the differences between the types of companies (LLC and Corp). In addition to that, you need to know the laws for each of them before choosing the best state to start a business.
LLC and Corp: What’s the difference between them?
With an LLC or Limited Liability Company, tax payers don’t have to pay income tax at the corporate level, but at the individual level. In that case, partners are responsible for paying taxes after distribution. However, LLC companies must distribute profits at the end of the year among its partners.
In case the LLC is the ideal modality for you, but you don’t intend to have a physical operation in the United States, a tip is to register your company in states where there are no State Income Tax – state tax – for individuals. So, you don’t have to pay it. In addition to selecting the best state to start a business, you must choose between LLC and Corp.
On the other hand, the Corporation requires payment of Federal Income Tax at the corporate level. At the state level (State Income Tax), the percentage varies according to the chosen state. In fact, some states, such as Wyoming, do not have this charge. This modality brings advantages, such as, businesses that intend to be traded on the stock exchange. There are many factor when it comes to choose the best state to start a business
However, C Corp entrepreneurs need to deal with double taxation. As partners pay taxes at the corporate level and then later when profits are distributed to shareholders. In this second moment, as an individual.
Wyoming, Nevada, and California: which one is the best state to start a business?
Despite attracting a lot of attention, California has high rates when compared to other states. Along with Hawai, Oregon, Minnesota, New York, and New Jersey, California has one of the highest rates in the US for the State Income Tax. That’s why several companies, like Apple and Google, that operate in California are actually incorporated in Delaware.
On the other hand, Wyoming and Nevada have the advantage of not requiring the payment of State Income Tax. In the case of Wyoming, the annual renewal is also lower and can be a good option for business owners concerned with reducing their fixed costs. In these two states, there is also confidentiality regarding the information of the company’s partners, unlike in Florida, for example, where the information is public.
Globalfy can help you. Just choose the best state to start a business
Check out Glboalfy’s plans that includes Registered Agent services, Virtual Address, bank account, and +US$200,000 in rewards and discounts with partners that help manage and organize your business. Select the best state to start a business and we can enter the US market in less than five minutes.