With technological developments, shorter shipping times, and an ever-increasing English-speaking population, Indian entrepreneurs are better positioned to explore US and Canadian markets and start enterprises there.
The United States of America has been one of the worlds’ largest economies since the late 19th century. The current economy is valued at $20 trillion, which is almost 14 times the size of India’s economy, making the United States an economic superpower. Besides falling underdeveloped economies, the USA is also blessed with advanced infrastructure, technology, and an abundance of natural resources. The US economy is mainly service-oriented, contributing to 80% of its GDP, while manufacturing contributes to about 15% of its output.
With one of the lowest corporate tax rates and well established business laws and practices, the USA is the right choice for most Indian businesses with global ambitions or a foreign customer base. A business in the United States can be set up in several ways. These include a sole proprietorship, general partnership, an LLP\LLC, or a corporation. However, the entry route for Indian nationals or Indian entities is limited to an LLC, which is known as a C-Corp in the USA.
Furthermore, laws and regulations in the United States of America pertaining to the incorporation and management of an LLC or corporation differ from state to state. However, all LLCs or corporations for Indian nationals are incorporated in states such as Delaware due to various advantages like low taxes, minimal maintenance fees, and excellent corporate laws.
Delaware is not only a good option for Indian nationals and companies but even for American companies, as more than half of all publicly traded and fortune 500 companies in the USA are incorporated in Delaware.
Setting up an LLC in the USA
An LLC, or a limited liability company, is an entity that has the features of both a corporation and a partnership. An LLC provides owners with limited liability protection in case of lawsuits and/or bankruptcy.
However, LLCs are operationally flexible and the compliance requirements are simple. For instance, a corporation requires resolutions and shareholder meetings, and recording and the filing of forms showing that meetings were held. This isn’t done in the case of an LLC.
In case you are looking to seek funding from an angel investor or venture capitalist, then you may want to consider opening a C-Corporation in the United States. C-Corporations are regarded to be much more professional by bankers, investors, customers, suppliers, and employees, making it an ideal choice for most businesses. As they are independent legal entities that are separate from the people who own them, C-Corporations are viewed as a ‘legal person’ in view of tax laws. Therefore they can be engaged in business and contracts, can initiate lawsuits, and can themselves be sued.
All LLCs or corporations that are established in Delaware are required to maintain a registered agent in the state. This registered agent is responsible for receiving and processing official mail on behalf of the company.
Corporate Tax Rate
State corporate income tax rate in the US differs from state to state. The lowest being 3% in North Carolina to 12% in Iowa. Delaware corporate taxes are levied at 8.7% of the net income. However, if a business is incorporated in Delaware but does not transact business in the state of Delaware, then state corporate tax would not be levied. Thus, a Delaware incorporation would be most advantageous for foreign nationals and entities seeking to do business in the USA through Delaware.
Our team at Vakilsearch offers you a variety of company registration options that range from private company registration, LLP registration, one person company registration, etc. Vakilsearch also has substantial experience with setting up companies of all structures in the USA, and is India’s largest professional platform of lawyers, chartered accountants, and company secretaries, with years of experience behind us. We execute legal work for thousands of companies every month by leveraging our tech capabilities and the expertise of our team of legal professionals.
We make your interaction with the government as smooth as possible by doing all the paperwork for you. We will also give you absolute clarity on the process to set realistic expectations.
With a team of over 300 experienced business advisors and legal professionals, you are just a phone call away from the best in legal services.
Access to Experts
We provide access to reliable professionals and coordinate with them to fulfil all your legal requirements. You can also track the progress on our online platform, at all times.
By handling all the paperwork, we ensure a seamless interactive process with the government. We provide clarity on the incorporation process to set realistic expectations.