- There are several types of business structures individuals can register their company in the USA as, each with their unique set of pros and cons. In this blogpost, we will explore the pros and cons of LLC company registration in the USA along with necessary steps to register company in USA.
- A limited liability corporation is a business entity that protects an individual or group of individuals from being personally liable for debts or liabilities of the company. The LLC allows for the separation of identity between companies and their owners.
Pros and Cons of LLC Company Registration in the USA
- Limited liability: The main advantage that comes with LLCs are the protection of the owner’s personal assets from business debts, lawsuits and other acts against the company.
- Taxation Options: LLCs have flexibility when it comes to their taxation. By default, they are commonly taxed as sole proprietorships or partnerships depending on the number of individuals in the LLC itself, resulting in reporting their share of business income and expenses and then paying personal income tax on the profits. Additionally, if the business entity wishes, they may be elected to be taxed as a corporation (C-corp) or subchapter corporation (S-corp). However, not all LLCs are eligible to be taxed as an S-corp, they must meet the respective IRS requirements.
- Versatility: LLCs are not required to have annual shareholder meetings or form a board of directors allowing its members to manage the business entity as they see fit without the pressure of board members that a normal corporate company would possess.
- Credibility: Through the formation of an LLC, its members are given the exclusive right to utilise their name as a business entity name.
- Cost: Due to the fact that LLCs company registration are done at the state level, the whole application process can amount of a few hundred dollars.
- External Investment Restrictions: Certain states require LLCs to be dissolved should ownership change, making this business structure less attractive to investors resulting in more difficulty when it comes to external funding of the company.
LLC Company Registration in USA
- The registration process for company registration can be tedious for many, but with Tetra Consultant’s lean-and-mean mentality we aim to provide a seamless experience for LLC company registration in the USA. With that said, here are 5 key steps in for LLC company registration in the USA:
Step 1: Choosing a state of location & reservation of a company name
Choosing the state of location
- The first key step after deciding the optimum business structure is to decide the state location that the US LLC company registration occurs in. With options of up to 50 states in the US, each state has its own set of company and tax rules.
- Therefore, selecting the most suitable location will be dependent on the corporate objectives of the company. Tetra Consultants’ team of experts will recommend the suitable location and state based on your long term business needs and goals.
- A key rule in selecting the state of location must be the same state that the company does business in.
- If a company does business largely in a single state, local incorporation would be the most suitable as supposed to incorporating in another state and acting as a foreign company in the state it actually operates business in.
- For instance, if our client’s goal is to minimise taxes and effective cost of LLC company registration in the USA, we usually tend to recommend our clients locations such as Delaware or Wyoming.
Reservation of company name
- The second key step will be the reservation of the company name through the respective Secretary of State, whereby our team here at Tetra Consultant’s will be able to reserve your company name for up to 120 days.
- The selected company name should be distinguishable from existing company names in the state.
- Aside from company incorporation, company secretarial services and provision of local registered addresses, Tetra Consultants also provides nominee director services should certain states in the US require a residential director.
- Tetra Consultant’s inhouse legal team will prepare the nominee director agreement whereby the elected nominee director will be passively involved with the business activity of the company.
Step 2: Designate a registered agent
- Each state in the US requires LLCs to have a registered agent who is an individual that receives official documents on behalf of the LLC, to then pass it on directly to the members of the LLC.
- Every state may have slightly differing requirements as to who can be the registered agent for the LLC, however, general guidelines are that the individual should be either a state resident over the age of 18 who has a physical address in the state or a designated company that provides registered agent services.
- LLC members do have an option to act as their own registered agent, but this puts their name and address on the public record. Additionally, this would put the responsibility of handling crucial documents by the LLC members. Unfamiliarity with local laws may increase the difficulty of managing the documents which is also why it is commonly discouraged despite being able to save costs for the LLC.
Step 3: Preparation and submission of relevant documents
- To register a company in the USA as a LLC, you will have to file for a corporate document called ‘Article of Organization’
- If you are registering a corporation instead, the required corporate document will be titled the ‘Article of Corporation’.
- The ‘Article of Organization’ typically includes the name, address, duration and purpose and the LLC
- Subsequently, Tetra Consultants will register your company with the respective department of state. After successful registration of your company, you will receive the Certificate of Incorporation
- Preparing an LLC operating agreement also serves as a beneficial document to prepare although not required by the law during the incorporation process. The document expands on the business structure, profit distribution and how the contributions of LLC members function. This internal documents helps create a shared vision among all the existing stakeholders of the company and assist in possible conflict resolution should issues arise in the future.
Step 4: Application for a business licence
- When registering a LLC company in the USA, the majority of the states will require the company to obtain a business licence. Tetra Consultants will assist our clients throughout the whole process from applying to obtaining the business licence required.
- Depending on the type of the business, the permits and licences may vary.
- For example if a company sells good and services taxable by the state, they may require a seller’s permit or sales tax licence in order to operate.
- Other licences include: general business licences, industry-specific licences.
Step 5: Tax registration & corporate bank account opening
- Tetra Consultants will assist throughout the whole process, from the start to the end of obtaining the Employer Identification Number (EIN) which is required for tax filing and payment in the US.
- Tax planning is a vital aspect of any company’s financial success in the future, hiring a tax adviser in the initial stages of company incorporation may help set up the company to handle taxes as efficiently as possible.
- After your company has been fully registered for tax, Tetra Consultants will provide ongoing tax and accounting services should your business needs require it.
Corporate bank account opening
- Upon registering the business entity, you may then proceed to corporate bank account opening
- Majority of the banks in the United States require you to open the bank account in person, however this does not apply to all local banks.
- Should our clients be required to be physically present to open the bank account, a representative from Tetra Consultants will accompany them to the bank meeting.
- After successful bank registration, Tetra Consultants will courier the access code and internet banking token to an address of our client’s choosing.
- Additionally, if our client requires any assistance in obtaining offshore financial licences, Tetra Consultants are well equipped to assist throughout the whole process
- In summary, LLC company registration in the US may seem like a daunting task given the amount of documentation, laws and fees associated with it. However, Tetra Consultants aims to take on its complexity for its clients and and support them throughout the 5 key stages:
- With Tetra Consultant’s vast experience in business incorporation in over 50+ international jurisdictions, our team is well equipped to ensure a smooth sailing process for our clients. Feel free to contact us should you have any questions.