It's common for business owners looking to incorporate a business outside their home country to consider the most popular jurisdictions. Countries like Switzerland, The Caribbean’s, Caymans, Belize, and various British Isle's countries such as Bermuda are very popular. However, these choices are primarily for North American owned businesses. If you don't hold a US passport, the United States is actually one of the best places to incorporate. Over $800-billion in foreign wealth is housed in the United States.
Business and financial transparency initiatives like AEoI/CRS are heavily enforced elsewhere, as the US government seeks to recoup lost taxes from US companies hiding assets in offshore tax havens. Thing is, the US hasn't yet agreed to AEoI. Fact is, America wants your business, and most states make it super easy to incorporate, and won't stick their nose into your financial or company data -- so long as you plan on doing business legally!
It's a given that if you plan to physically move your foreign business to a specific state (Ie., you're moving and planning to live there), you're best off incorporating the business in that location. With all that said, whether you're setting up a business entity, or looking for a place to physically move your business too, here are the top American states to choose from.
1. Delaware
While there are a lot of facts that are arguable in life, the fact that Delaware is the most popular country for foreign businesses to set up a corporation isn't one of them. Not only is it super slick and easy to set up a corporation in Delaware quickly, corporate law is also very straight-forward and easy for those coming from other countries to understand. They don't charge sales tax and have one of the most helpful set of incorporation services available anywhere in the country.
Due to this and other factors, such as very lax legal requirements, angel investors and venture capitalists are also most attracted to investing in Delaware incorporated companies. Privacy of information is a big deal here and as long as you are above board, you won't have to worry about local governments getting in your business.
2. South Dakota
South Dakota is another top incorporation destination for overseas business owners looking for a state to establish their business. incorporation here is inexpensive, fast, and South Dakota has very little ongoing legal filing burdens for companies seeking to save money by reducing legal fees. Privacy laws are also strict here, meaning you can mind your business with little worries about government oversight.
South Dakota also doesn't have income tax. Best, your personal assets and income are completely protected from legal action in the case of your company running into monetary issues such as bankruptcy. Capital gains taxes aren't enforced here either, as if you need any other reason to incorporate here.
3. Wyoming
Wyoming has no corporate or personal income taxes. Shocking though that may seem, it's one of the best places to incorporate if you are a small business - even a sole proprietor - and like saving money! They do have Federal income tax that needs to be paid, but this is unavoidable regardless of wherever in the states you choose to incorporate your foreign business.
The state isn't terribly highly populated, has few initial and ongoing legal requirements (Ie., paperwork filings), and a small company can do business here for as little as $50 a year in franchise taxes. Sales and property taxes are also low if you plan to physically move your business here. Wyoming also does not enforce any capital gains tax on your business.
4. Nevada
Nevada has a lot going for it in terms of attractiveness as a place for foreign businesses to incorporate. It's hot, and only habitable due to the advent of air conditioning. Business is also hot enough to fry an egg on the streets, too! As with all the states on this list, you can easily file for your business license online.
The Nevada State court system proudly states they're processes about incorporating and running a business year-to-year is THE easiest in the country. Incorporation happens quickly, zero personal or corporate income taxes are collected -- nor are corporate share's taxed.
5. Florida
Florida is a popular state for all businesses to operate. Many California businesses fled to Florida when the state raised state taxes on the wealthy back in 2012. Foreign businesses will enjoy a very fast and easy process to get their business registered in the state, along with few regulatory snafus.
While many states claim to have the easiest filing process, experts often point to Florida as being the official king, with one of the most navigable websites of all online government sites. You can find all the documents you need in seconds. The tax benefits here aren't as great for all businesses, however. Only S-corps are exempt from state taxes, though individuals enjoy no income tax.
6. Montana
If you notice a trend toward zero to low taxation among the states on this list, Montana won't disappoint either. Strangely, number 6 on this list of the best US states for incorporating a foreign business is also ranked number 6 on the top states for minimizing taxes paid by business owners. Corporate taxes are only 6.75 percent. While this might seem unattractive compared to the first 5 mentioned, there are numerous other tax benefits offered by Montana that other states do not.
First, property taxes are the 10th lowest in the country, should you plan to hold property here. Legal issues are almost nil, and oversight is very slight for legitimate businesses. There's also zero sales tax, no gross receipt's tax, and a slew of potential deductions including job credits, R and D remuneration, investment credits, and deductions for the cost of goods sold, depending on if you plan on manufacturing or selling goods in the state.
Takeaway
It might seem easy to choose a random state from the list above on gut instinct alone. However, incorporating in another country isn't a choice to be made lightly. Further, only a few of the benefits and potential drawback of each of the top 6 states to incorporate overseas have been mentioned on this page.
It's important to research each and determine how their advantages and disadvantages match up with your business entity before making a final decision.
SEP
2018
Table of Contents