An S corporation is a corporation with profits passed through to the shareholders as personal income. This means that you and your co-owners avoid double taxation (taxes on both your business and personal earnings).
Instead, the business owners are required to pay income tax on the profits that are distributed to them. As I’ve already mentioned, sole proprietors and general partners don’t need to be registered.
How to register your business
If you are a solopreneur or a small business owner, an LLC is probably the best fit. They are by far the most common choice among foreign small business owners wanting to establish their business in the USA. After writing about the best place to incorporate an online business, I’ve spoken with people of all walks of life who, for one reason or another, cannot run their online business in their home country.
Talking to a Business Attorney
The management structure is also more rigid than an LLC, which can be a deterrent for those seeking flexibility. Lastly, the amount of paperwork and regulatory oversight can be daunting, adding an administrative burden that not all small business owners wish to shoulder.
Should you incorporate as a multi-member LLC, you may need to make extra considerations on what you’re able to pay yourself and when you’re able to pay yourself. The main difference between an LLC and a corporation is that an LLC is often owned by a smaller collection of individuals compared to a corporation. Each company has personal limited liability, though an LLC may be a cheaper option to form. Read more about USA company formation here. Because an incorporated business can issue and trade shares, this allows for easy transfer of ownership to another party.
Ensure you’re familiar with the rules of your chosen state of incorporation. And if any questions linger, feel free to seek advice from an attorney or an accountant. If you start an LLC for a home-based business, you can start at a low cost (almost $0). So, the cost might be very low, but it will not be completely $0. In some states, there is a tax deduction on the state filing fee. However, starting a business requires at least $10,000 in capital.
This means members are protected from personal liability for business decisions or actions, and personal assets are safe if the company incurs debt or is sued. Go Global World’s founder platform offers our end-to-end incorporation and setup services as an expressway to start your US company. You get all the essentials from an instant EIN to a US address with a representative. We also provide partner links to Brex and Mercury Banks with a setup bonus to your account. If you would like to conduct business under a brand name that is different from your official company name specified in incorporation documents, you can file for a DBA.