Establishing a company in the United States
We arrange for the establishment of your company in the United States and take you through the motions. The establishment of the company, for example a corporation, ensues within 48 hours. We would also gladly assist you with the formation of a partnership – a General Partnership (a general or ordinary partnership comparable with the OHG), a Limited Partnership, LP for short (a limited partnership comparable with the German KG), a Limited Liability Partnership, LPP for short (a partnership with limited liability, which constitutes a compromise between the German KG and GmbH) – or the establishment of a Limited Liability Company, LLC for short (companies with limited liability, comparable to the German GmbH to some extent).
In the case of business operations occurring exclusively outside the United States, a lump sum in taxation is incurred annually. This lump sum taxation is included in the annual management fee (see Prices).
Hints on the various legal structures:
American company law, which originally came about via jurisdiction, is now regulated statutorily to a large extent. Even so, a uniform company law does not exist in the United States. This area falls under the jurisdiction of every individual state. However, most states base their statutory provisions on a prototype that has been developed nationwide.
Joint partnerships is the widely used term under which the various business types – General Partnership, Limited Partnership, Limited Liability Partnership and Limited Liability Company – are consolidated. What they all have in common is that their existence is dependent on their members and that basically any business carried out, is conducted by the associates themselves.
Partnerships
Partnerships differ from corporations, particularly with regard to liability and taxation. In principle, partners are liable for the liabilities incurred by the Partnership, while the liability of an associate of a corporation is limited to his investment in the corporation. The Partnership per se is not subject to tax. The Partnership’s profits are declared directly by the partners as their personal incomes. As a rule, a corporation’s profits are taxed as the company’s income. Any dividends and other payouts are taxed separately as private income received by the associates. Since no provision is made for dealing with allowances, Partnerships in the United States have a tax advantage over corporations.
General Partnerships - GP
Partners belonging to a General Partnership assume the liabilities of the partnership with their entire fortunes. Through their actions, every partner entitles and binds the other partners at the same time. Not only are the members liable for their own contractual obligations, but they are also liable for the mistakes any of the other partners may make and the ensuing demands resulting from breach of contract or tort liability. By the same token, they vouch for damages that may arise from mistakes made by employees of the partnership. A partner is liable to the partnership’s creditors for the entirety of the partnership’s commitments, but as a rule where the internal relationship is concerned, can demand to be recompensed proportionately by the other partners.
Limited Partnerships - LP
The legal framework of a Limited Partnership makes it possible for individual partners to participate in a partnership, however limiting their liability to their capital contribution. However, at least one partner must accept unlimited liability. As in the case of the German GmbH&Co.KG, the unlimited partner can also be an LLC or a corporation under United States law, so that the personal liability of the individual can be circumvented. The restricted liability partner cannot however make an appeal for limited liability if he is actively involved in the leadership and management of the partnership.
Limited Liability Partnerships - LLP
The Limited Liability Partnership is another form of partnership and a relatively new type of business. In contrast to a General Partnership, in most states the partner of an LLP is liable for the wrongs of his associates and those of the partnership’s employees who are not under his supervision. In some states a partner even becomes liable if he knowingly fails to prevent or if he knowingly tolerates a tort liability by another partner. The extent of the limitation of liability varies considerably from state to state in the United States. Some exclude responsibility for tort liability only, while others include a “no bail-out from contractual liability” clause. Entrepreneurs should seek advice on the laws of the states they intend to establish their businesses in before deciding on a legal framework. What must be taken into account in an LP and in an LLP is that the partners must be treated like those of a General Partnership, if the businesses are not established in line with legal provisions. In this case, they lose their safeguard from liability.
Business Corporations – Inc., Corp., Ltd., Co.
As a rule, Business Corporation associates can only be held liable for their investment into the business, or if this investment is still forthcoming, up to the amount that is still outstanding. Jurisdiction has however come up with some exceptions to this basic rule, which coincides with the legal position in Germany. The most significant examples of this are cases in which the corporation did not have any of its own assets right from the get go, or where it had become obvious that the corporation’s capital outlay was insufficient, and the associates thus passed the entire business risk on to their creditors. In cases like these, jurisdiction can call for transparency regarding the fortunes of the associates, which may mean that they become personally responsible for the corporation’s liabilities. This is called: Piercing the corporate veil.
The company associated with the corporation must be identifiable by business type. In addition to the identification Corporation” (Corp.) this could include Incorporated (Inc.), Limited (Ltd) or Company (Co). The Articles of Incorporation deed must be handed in at the relevant offices of the Secretary of State (a kind of register of companies) at a fee. He then issues a Certificate of Incorporation (establishment certificate), the granting of which does however not represent the constitutional establishment of the corporation. This already occurs when the Articles of Incorporation are filed. In an initial meeting that follows, a founding assembly of the board of directors and shareholders (stockholders and shareholders), many decisions have to be made. Here the first directors and officers of the corporation are named and the by-laws (rules of operation) are passed.
The seal, the Corporate Book (stock register) and a master copy of the deed must be accepted. Market analysts, tax consultants, a commercial bank and attorney must be stipulated. Registration for taxation purposes and the transfer of the business establishment costs must be arranged. The founders (in this case, US AG 24 Inc.), who will not be taking on any further roles within the business, retire from their positions. A record of the proceedings of the meeting must be compiled, i.e. the Minutes of the Initial Meeting. The entire launch process for your company in the United States will obviously be prepared for you by us within the framework for establishing a company, so that all you will need to do is provide the necessary signatures. This is what a company launch service should be all about. Unfortunately, it has come to our attention time and time again, that other service providers do not offer this, let alone consider it part and parcel of what they should be offering.
Closely Held Corporations – C-Corporation oder S-Corporation
Even if what we are essentially being offered, is the establishing of a Business Corporation or an LLC in the American state of Florida, for the sake of doing a proper job, we would still like to go into the specific regulations that govern so-called Closely Held Corporations – in other words corporations that are run by a negligible number of associates. The pre-requisites for a corporation qualifying as a Closely Held Corporation differ from state to state. Generally they may have a maximum number of associates that may not be exceeded. This limit varies. The main advantage of a Closely Held Corporation is its simplified administrative regulations that allow its associates to run the company themselves without having to appoint a board of directors.
With regard to taxation, the United States differentiates between so-called C-Corporations, the basis of which is represented in the description, and S-Corporations, whose profit is not taxed on a company level as opposed to the profit of C-Corporations’ profit, but as a direct income of its associates. The S-Corporation therefore has a tax advantage over the C-Corporation. To be categorized as an S-Corporation, the associates must make an application to this effect. Moreover, the firm has to be established in accordance with the regulations that govern firms in American states, with less than 75 associates. The firm may only give out one type of stock, i.e. no preferential stocks. Only an individual with American citizenship or with a long term resident permit qualifies as an associate of an S-Corporation. For this reason an affiliate of a European principal cannot file a request to become an S-Corporation.
Limited Liability Companies - LLC
Likewise, the Limited Liability Company is a relatively new type of business. One of the ways in which it distinguishes itself is by the limited liability of its partners, the so-called members. Their liability differs from that of the partners of a General Partnership only when it comes to their investment in the company. Another distinguishing factor is that an LLC enjoys the privilege of being treated like a partnership for taxation purposes i.e. the profits are not taxed on a LLC level. Instead, as in the case of a partnership, they must be taxed as personal income of the partners or members. The participation of the associates in the management of the company, unlike in the case of an LP and an LLP, has no influence on the liability of the associates for the liabilities incurred by the company. In this case, their liability remains limited to their investment.
The LLC has one disadvantage: Its short legal history. It has not been subjected to extensive jurisdiction and therefore offers a certain amount of uncertainty regarding matters legal. For example, what remains a mystery is whether, as in cases involving corporations, it is conceivable for jurisdiction to call for transparency, which may mean that the associates could become personally liable. Even so, Limited Liability Companies are becoming increasingly popular. For tax classification of Limited Liability Companies founded in Germany based on United States state legislation.