Incorporating what's right for you.

Generally, an individual does not need to be a United States citizen or resident to form a business entity, such as a corporation or an LLC, in the United States. However, the entity generally is required to have a registered agent in the state in which it is formed, and in the states in which it owns property and/or conducts business. See also response to question #9. Also, as a result of owning an interest in a United States corporation or LLC, a foreign individual may be required to file tax returns in the United States and pay certain taxes.

Choosing the best entity to own assets and/or operate any business, is typically dependent on the particular circumstances involved, such as the size and nature of the company's business, and the number of owners or members and their respective rights and obligations. Although forming and properly maintaining either an LLC or a corporation can help protect you from liability with regard to the operation of the business, we find that many of our customers choose an LLC to operate their business. An LLC can offer more flexibility in how the owners can manage the company, and may not require some of the typical formalities of a corporation, such as annual meetings of stockholders. For example, the owners of the LLC can expressly set forth and/or limit the rights, powers and obligations of the LLC's managers and members. Essentially, LLCs are contractual in nature, and therefore, the owners have broad "freedom of contract" in connection with how the entity will be managed and how profits will be allocated and/or distributed. An LLC also may have tax advantages over a corporation with respect to United States federal and/or state taxes. For example, an LLC with only one owner may not have to file a separate United States federal tax return and its profit or loss can be included on the owner's United States federal tax filing. In contrast, a corporation must file a separate United States federal tax return.

The reporting and/or filing requirements, if any, in an individual's home country will depend on the laws of that country. Therefore, it is advisable to consult the laws of your home country to determine the obligations resulting from the formation and ownership of the business entity in the United States.

A nonresident alien may not be a stockholder of a U.S. S-Corporation. Generally, there is no restriction on who may own shares in a U.S. C corporation or own an interest in a U.S. LLC.

A nonresident may serve as a corporate officer or director of a U.S. corporation, or as a manager of a U.S. LLC.

The mere ownership by a nonresident of stock of a United States corporation typically does not create individual filing obligations. See also response to question #4. However, a nonresident may be subject to U.S. Federal income tax on dividends (or other distributions) paid to him or her by the corporation. It is important to note, however, that the corporation will need to file a federal tax return.

United States LLCs typically do not pay taxes directly, but may be required to file tax returns. The earnings and/or losses of an LLC are allocated to the members (who each receive a form K-1 from the entity), and the members are required to report such income or losses on their individual tax returns and pay applicable taxes. As a result, the members may have filing obligations and incur individual United States tax obligations due to their ownership of an interest in the LLC.

To the extent that a nonresident is required to file a United States federal tax return, he or she will most likely also be required to file a tax return in one or more states.

In light of the numerous potential filing requirements and other obligations associated with forming, operating, and/or owning an interest in, a United States corporation or LLC, it is advisable to seek the advice of a qualified accountant to provide assistance with regard to all tax matters.

United States business entities, such as U.S. corporations or LLCs, are usually recognized as distinct legal entities, separate and apart from their owners. Thus, U.S. business entities generally can hold title to property and assets, such as boats or planes, and register the property and assets, in the name of the entity. The tax consequences associated with the business entity owning the boat or plane may be addressed in a tax treaty between the United States and the foreign country.

How does the Double Tax Treaty impact me as a nonresident who owns an interest in a United States corporation or LLC?

The United States has entered into tax treaties with most industrialized countries. While each treaty is different, many treaties provide some form of relief against double taxation (that is, tax obligations to more than one country on the same income). It is important to identify and review any such tax treaties to fully understand the tax reporting obligations.

The business entity statutes of virtually all U.S. states require a business entity to (1) specify and maintain a registered office and (2) specify, appoint and maintain a registered agent, in the state in which it is formed and/or qualified to conduct business. Failure to maintain a registered agent and registered office in a state may result in administrative dissolution of the entity or revocation of its certificate of authority to conduct business in a state.

Registered agent service consists of providing a U.S. corporation, LLC or other business entity with a registered agent and/or registered office in the state where the entity is formed and/or the states in which it is qualified or registered to conduct business. A registered agent receives legal process and compliance mail (e.g., annual reports and tax documents) on behalf of a business entity at a business entity's registered office in the applicable state and will forward such items to the entity's designated contact for handling.

The Company Corporation can provide not only the basic registered agent services as required by statute, but also a suite of integrated services that, among other things, will help a business entity keep in compliance with law and file necessary corporate forms. For a more complete description of the registered agency services that The Company Corporation can provide, please visit www.corporate.com/registerAgent.jsp.

The Hague Convention, originally ratified in 1961, is an agreement among countries to abolish the requirement of legalization of public documents. An apostille is used to certify the documents for use in the countries party to the agreement.