The Applicable Businesses Forms Essay
If a foreign entity wants to open a business in the US it does not matter where and it does not matter to do what, except that every sector will have to report to the department responsible to such sector, the general requirement is the company should choose a name if the business name is going to be different from the name of the individual opening the business. The chosen name should not be in use by another business.
Almost all states and municipalities require Sole Proprietorships and Partnerships to register with the city or county office where the business is going to open shop. Another key aspect of opening a business to know is what Limited Liability Company means, because such kind of business formation will limit the liability of the business to the business only without affecting the personal asset of the business owner or owners. It is possible to make almost all kinds of businesses limited liability.
The other kind of business a foreign entity might be interested in could a Limited Partnership where the foreign entity would invest money into the business, but does not participate actively. Although it could share from what is generated according to the
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To cite an example a foreign business might want to join hand with a local or foreign company to sell products that could include industrial goods in the US. If anything happens to such business presuming that it is big business dealing with varied interests, the limited partner that invested in industrial goods only to be sold in the US will lose only that investment even if the loss might have been much higher. A corporation is one of the best vehicles for a foreigner to start business in the US simply because once the corporation is formed it possible to sell stock and raise more capital.
The shareholders have a limited liability simply because if any loss is incurred from the operation of the business what they will lose is what they invested through share buying. Other than that, corporations are the effective business vehicles to start in the US, although it is always possible to convert any kind business into a corporation by offering share after meeting certain requirements. Moreover, such business entities have to file annual reports at the end of their fiscal year.
There are various kinds of corporations and one of them is S corporation and what it does is it can pass its income expenses to its shareholders without paying any tax and the shareholders make the required payment while declaring their income tax, whereas the C corporation pays the incurred tax without passing it to its shareholders. Among other methods of starting a business, it is also possible to acquire an existing business and change its form to whatever the preference is to accomplish. There are license, registration and permit requirement while starting a business depending on what is intended to do (4).
Other general information any foreign entity that wants to open business in the US has to know is there is a sales tax to be collected from buyers and that could differ according to the states where the business takes place. Just to cite a few example there could a be Use Tax, a Service Occupation Tax, the Service Use Tax that require to be familiar with and not meeting any of these requirements could lead to paying a hefty penalty. There are also a number of sales tax exemptions that are important to know and could vary from one state to the other.
To cite a few examples, purchase for resale for anyone who has a ROT number from revenue of department, interstate commerce, sales made to charitable, religious, educational or governmental agencies are all exempt from sales tax. A sales tax exempt is also available for buying manufacturing machinery, equipment, and replacement parts. There is more to sales tax that requires a close scrutiny and is dependant on each state’s requirement. Also a property tax determined by local municipalities requires paying after an assessment takes place.
It is also important for any foreign entity to be familiar with how to deal with hiring employees that has some requirements attached to it. One of them is withholding tax that will be deducted from employees salary and will be sent to the government on intervals where registering with the federal and state bureaus is required. Another key element that is as good as a social security number for a business entity that is registered and has permit to do business in the US is Federal Employer Identification Number that businesses use to pay their taxes.
The exception is for sole proprietors since they can pay the income they generated from any business as personal income tax, as long they do not have employees or they do not have to fill excise tax returns. Another requirement is employers are required to make unemployment insurance contribution if they employ one or more workers or they at least pay $1500 in wages. The other similar requirement is workers’ compensation where employers are required by law to pay money into an insurance program for employees.
The idea behind the payment is to make sure that workers will be covered as much as possible if anything happened to them while they are under the employment of the company or the business. Most businesses are required to display various banners that will inform workers such as they are equal opportunity employers, which insurance company is covering the workers, occupational hazards etc (5). These are the major requirements and the complication will be easier if there is no plan to come to the US and open an office in person, simply because doing so will require hiring employees that will make the requirement complicated.
Since selling industrial goods, whether imported, obtained or manufactured in the US, such an undertaking will require to meet a thorough requirement. Once caught committing a mistake, it does not matter if it is the first time or not, there is always a penalty attached to it that requires avoiding since it could be hefty. Other than that, since the US market is highly developed, as long as a systematic execution of the business is in place the system itself is resourceful.
It is possible to obtain credit as long as it is possible to meet the requirements, and they vary according to the need and the amount required. There is no shortage of consulting agencies that are more helpful than hiring full time staff for new businesses, especially when they are new to the US market. When it comes to patent and trademarks the US is the best place where the law observance requires a very high integrity and anyone found breaking the law could also face criminal charge, which means there is no fear of losing a patent or a trademark.