Table of Contents
Why Choose America for Your Business?
The USA is one of the most business-friendly countries in the world. Among the essential advantages of America as the place to start your business are the following:
- The USA consistently tops the list of countries ranked for their ease of doing business.
- The American most business-friendly environment is backed by a long tradition of pro-business regulations and independent courts.
- Starting a business in America lets you enter the most developed market as a domestic company.
- A “domestic company” status will give you access to US institutional investors and venture capitalists.
- Being a US company lets you open a bank account in one of the US banks.
- As a US company, you can also open a client brokerage account with a US brokerage firm to invest in the US stock market.
- Every year it’s getting harder to open a bank account anywhere in the world for an offshore company.
- The US investors and venture capitalists usually prefer to deal with US companies rather than foreign ones.
Why Register Your Startup in the USA?
If ranked by the number of startups, the USA would be the number one country globally by a long shot. About half of all the most expensive startup companies are set up in America. The benefits of forming your startup in the United States are the following:
- America has the most significant market of venture capital in the world.
- The startup industry – setting up and raising new companies – is the most experienced in the USA.
- Whether your exit strategy is to sell your company to the highest bidder or launch an IPO, statistically, you will have better chances of success if you start in the United States.
- America has more big institutional investors than any other county.
- Many American institutional investors invest only in American companies.
- Most advanced startups in leading technological fields such as Fintech, Artificial Intelligence (AI), eCommerce, and Healthcare are set up and working in the USA.
- Having registered your company in the USA, you can access new markets and enhance your reputation and brand awareness in the US and abroad.
- You will enjoy the highest level of copyright, trademark, and patent protection in the USA.
Why Should it be Registered as C-Corporation?
The most popular forms of setting up a business in America are LLC, small corporation (S-Corporation), and C-Corporation (regular corporation). For company founders who are US tax residents and are planning to set up a close corporation with a small number of owners, S-Corporation is a good choice. For non-residents, it is usually LLC. However, unless you play big and plan to grow fast, attracting outside investors on the venture capital market and possibly planning an IPO, then you probably should be registering a C-Corporation. The reasons for that are:
- The C-Corporation is traditionally considered the best choice for a startup in America. It is by far the most well-known and considered appropriate among many investors. Other types of companies raise more questions, which many investors prefer not to face.
- Some big institutional investors have limitations about the type of companies they invest in. Usually, they can invest in C-Corporations and not LLCs or S-Corporations.
- A “pass-through” status of an LLC or an S-Corporation is suitable for their owners if they are running a small or medium company. Still, it may be a significant deterrent for venture capitalists who usually don’t want to handle the administrative headache of filing separate tax forms itemizing their income from many different companies.
- A “double-taxation” of a C-Corporation is usually not a disadvantage for them, because most of the startups do not have any profit for a long time. And then, after they become profitable, they prefer not to distribute the profit as dividends, using other forms of profit-sharing.
- The status of C-Corporation is better for fundraising. A C-Corporation can issue an unlimited number of stocks, which can be of different types.
- The C-Corporation allows you to have an entity with well-structured management and transparent decision-making, including a board of directors, CEO or/and President, Vice-Presidents, corporate officers, regular shareholders’ meetings, etc.
- The C-Corporation is usually a structure of choice for large companies because it offers more opportunities in developing and implementing sophisticated tax strategies.
Why the State of Delaware is a Safe Bet for Your Startup?
Delaware is considered a preeminent forum for registering various startups with the highest potential. The key features of the State of Delaware are:
- Delaware has the oldest in the USA traditions of business-oriented regulations.
- There is a special Court of Chancery , which has jurisdiction to hear all matters in equity. It has the most extended precedents base and the most experienced judges.
- The laws and regulations of the State of Delaware are well-known and widely accepted by the venture capitalist community. So, if you plan to raise capital in the venture capital market, you’d be better doing it if you registered in Delaware.
- The Delaware mature legal system attracts a lot of corporations. About two-thirds of the Fortune 500 companies are registered here.
- The Delaware corporate law is progressive and flexible enough to make it a predictable and dependable place to start and run your corporate business.