Steps to Business Entity Formation in United States by mytaxfiler


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									                   Steps to Business Entity Formation in United States

Globalization has provided scope for business houses to expand their business across geographical
boundaries and oceans. Irrespective of the type of business, be it manufacturing unit or a service,
most forward looking organizations tend to look out for newer markets in the United States.
Entering into the U.S. market is a great venture for many foreign businesses.

Business refers to continuity and the initiating point for this incessant procedure is through
incorporation. Business entity formation, in the US can incorporated either as

  ●    Sole Proprietorship,
  ●    Partnership
  ●    Limited Liability Company or
  ●    A Corporation

Sole Proprietorship is a type of entity formation owned and operated by an individual, with no legal
difference between the business and owner. Set up at a reasonable cost, it is simple to dissolve and
usually involves no tax planning as the profits and losses are a part of the individual owner's income.
Partnership business on the other hand involves two or more people or business entities sharing
the profits and losses equally. Every partner has a joint responsibilities to the partnerships and
further, any partner might be held responsible to pay off the total debts of partnership regardless of
his participation in capital contribution, profit or losses.

The Limited Liability Companies (LLCs) are the highly flexible kind with the option for the members
involved to have limited liability. They can choose to be taxed either as partners or corporations or
can also be disregarded for tax aspects like that of a sole proprietorship. The corporations are the
complex business entities in comparison to others and needs a new legal entity distinct from its

With each type of business entity formation offering a discreet tax and business advantage; it
also demands the business entity maintain a corporate compliance. Eminent tax planning service
providers besides offering the necessary guidelines regarding business entity formation , also helps
the entities with services to meet the inherent requirements of business operations in the United
States. From registration of agencies and business name, application of EIN, maintenance of minute
books and drafting of resolutions, Business Licenses & permits, Bylaws and Operating Agreements,
providing certificates of Good standing, Corporate & Compliance kits as well as filing of annual taxes.

However, it is mandatory for every business entities, in the US to report of all income sources
worldwide, irrespective of them receiving a business tax return statement or its foreign equivalent. In
addition to this the individuals and entity with any financial interest in, or with signature authority, or
other authority over one or more accounts in a foreign country must provide a Foreign Bank Account
Report (FBAR). Non reporting of such financial sources is a crime and IRS examiners in collaboration
and their international partners focus on aggressive international tax planning by entities and
structures established in foreign jurisdictions to evade taxes.

Read Also On: Overseas voluntary disclosure, IRS Amnesty

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