This is an important question, since many states of the U.S. offer no advantage over European countries and have legislation that is so outdated, that a new business start is almost impossible. However, since there are probably as many dissimilarities in state laws between the different U.S. states as there are between Belgium and Belize, you as a non-U.S. citizen incorporator, have an important advantage over domestic incorporators, because unlike many old and established businesses in the U.S. who are doomed to remain in the high-tax States such as New York or California, you still have a choice of domicile. Because of the significant differences between the business laws and tax rates of the various states (of which the legal modifications are continually and very critically monitored by our attorneys), we recommend that corporations be set up only in those states of the U.S. whose laws permit the following conditions:
- A single person must be able to act as the sole director and officer of the corporation (most States require six persons: Three directors plus President, Vice President and Secretary/Treasurer). The ability to wear the hats of the directors, of President, of VP and of Secretary as a single person, is of paramount importance to any sole corporation owner (sole owner of the corporate stock), who does not wish to take on partners or unnecessary employees.
- The owners of a corporation must be able to remain anonymous. While the officers and directors of a corporation have to be disclosed to the state of domicile, there must not be a disclosure requirement for the share holders of the corporation. This is not necessarily possible in all states of the U.S., as in Alaska, for example. Alaska seems to be very favorable at first, since it has no income tax, but it is nevertheless unsuitable for foreigners who want to remain anonymous, since there, all foreigners that own more than 25 % of the stock of a corporation must be registered with the state.
- The state must allow a clause in the articles of incorporation indemnifying the officers and directors against claims for liabilities and obligations of the corporation except in cases of fraud or knowing violation of the law.
- Capital investment must not be required. Many U.S. states, like most countries worldwide, require proof of a capital investment before a corporate charter is issued. This is unacceptable, and we only form corporations in states, where our clients cannot be forced to submit proof of capitalization. Once the articles of incorporation and bylaws, as drafted by our attorneys, have been registered with the state, our clients must have the ability to immediately commence doing all business as provided for in the articles of incorporation and to purchase, dispose or negotiate assets and capital stock up to the amount allowed in the bylaws and to register the corporation in other countries of the world without having to submit proof of paid-in capital.
- Personal presence of the incorporator must not be required. America is a beautiful country, but a visit just for setting up a corporation should not be required. It should be possible to clarify all necessary details by fax, telephone, or airmail. For this, we have even set up toll-free numbers in Germany, Austria, Switzerland, and Liechtenstein through which you can discuss important questions with us at any time, without it costing you a cent. However, in case you want to come to us for a one-on-one discussion in order to conclude a transaction or you just want to „size up“ your American business partner, we would be very happy to have you visit us. Since we are located in a suburb of Sacramento, you should plan your flight either to Sacramento or San Francisco (two hours by car). We will be happy to assist with your accommodations.
- The State should have a pro-business climate with few restrictions and regulations on the conduct of business and a modern business legislation. This requirement is obvious. What good is it to incorporate in the U.S. if conditions are no better than at home.
- The state should be income tax free, should levy no sales-, trade-, inventory-, inheritance-, property-, franchise-, use-, or value-added taxes, and the annual corporation fees should be less than $2,000.
While this may sound like a Santa Claus wish list, there are actually some U.S. states which meet one or several of the above criteria, although sales taxes are only paid by purchasers of merchandise and would not concern you, nor would a property or use tax concern you, if you have no property in that particular state. More than likely, you will probably be interested in a state which has no income taxes. However, even if the state which best meets your corporate needs does have an income tax, we can simply establish an additional address for your corporation in Nevada which has no income tax. Thus, as long as you don’t do business in the state of incorporation, you still pay no state income taxes.
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