How Can an American Attorney Help You Open a Startup in the USA?

We usually start our relationship with new clients by helping better understand why and how to form a startup company in America. This initial analysis usually includes a practical adjustment of the goals and expectations in the US market, choosing a type of company that better fits the client’s needs, the State where to register it, etc.

Forming a US startup is a multilayered process that requires solving many legal matters and implementing rigid timing. We are here to help. We will guide you from the very beginning when you start thinking over whether to form a startup in the United States and up to the moment when your dreams come true.

Every foreign entrepreneur will probably need legal advice on every step of the process, be it company registration, making a business plan, secure appropriate funding, formalizing the relationship between founders, etc. The better you plan, the fewer problems you will have in the future. We can accommodate your legal needs from the moment you open a startup in the USA through the growth, development, elaboration, and exit strategy implementation.

What Type of Company Is Best for a Startup?

The most popular business entities in the United States are partnerships, corporations, and limited liability companies (LLCs). Partnerships are easy to form and manage. They don’t have to pay taxes on a corporate level. At the same time, the partners have unlimited liability for the partnership’s losses.

In the case of corporations, the shareholders have limited liability, but corporations (C-Corporations) have double taxation. It means that the corporation first pays taxes on its profit on a corporate level. And then its shareholders pay their taxes on distributed dividends.

Small corporations (S-Corporations) do not pay taxes on a corporate level. However, they have significant limitations:

-their shareholders can be only US citizens or residents

-the number of the S-Corporation shareholders is limited to 100

-S-Corporations can issue only one class of stock

So, foreign entrepreneurs cannot use this form of business structure. For this reason, many foreigners who want to form a US company register an LLC. The LLC does not have any restrictions for foreign members and does not pay taxes on a corporate level. It is a hybrid business entity with some partnership benefits, such as pass-through taxation and flexible management, and some corporation benefits, such as limited liability.  

However, if your aim is not just to register a company in the USA, but to form a startup, you should register a C-Corporation. The reason for this lies in the traditional framework in which startups in the United States arise and operate. First, taxation on the corporate level is not a disadvantage for startups because they don’t have any profit for some time. And when they have profit, they usually don’t distribute it as dividends. Their main goal is to increase market capitalization, not to distribute dividends.

C-Corporations can issue an unlimited number of shares, which can be of different classes. It is a crucial feature if you want to attract many outside investors. In addition to that, C-Corporations have a well-structured and transparent corporate management, including the board of directors, corporate officers, shareholders’ annual meetings, etc. Thus, the C-Corporation is an excellent vehicle for attracting venture capital and other types of equity financing.

Where to Register Your Startup?

When foreign entrepreneurs want to incorporate in the United States, they usually look to the States that do not have corporate taxes unless other critical issues determine their choice. While it is clear that the States that do not have taxes are attractive to many entrepreneurs, it is slightly different in the case of a startup.

Once you decide to open a startup in the USA, you must think about all the pieces of the puzzle. One of the most important of them is financing. Unfortunately, many venture capitalists and institutional investors will not consider investing in a startup unless it is a Delaware C-Corporation. So why do they want the startup to be a Delaware corporation?

Primarily because the State of Delaware has the following benefits:

-the oldest in the United States commercial court – The Delaware Court of Chancery – which has the most experienced judges and expedited procedures

-the Delaware corporate law is well-known to every US lawyer and is a model law for many other States and territories

-no State taxes for Delaware companies that operate out of State

-no inheritance tax on corporate shares owned by non-Delaware residents

-no need to live or have a physical address in Delaware to incorporate there

one person can be a sole owner and hold all the corporate positions

-Delaware is one of the most cost-effective States in terms of corporate registration and maintenance

After You Incorporate Your Startup

Once your startup is incorporated, you will face many challenges on your way to success. We will be by your side every step of the way . We are ready to solve legal issues and offer strategic consulting and logistics support.

We are very flexible in how we work and how we structure our fees. First, you decide the way you want our services and their scope. Second, we can work either on an hourly or fixed-fee basis. We firmly believe that mutual trust and a responsible approach to every detail is the foundation of any long-term relationship. We strive to earn the trust and respect of our clients by trying to exceed their expectations.