Starting a Business Project in the USA

BRIEF NOTES ON PERSONAL TAXATION OF LEGAL RESIDENTS

A.Y. 2024

Key Points

Planning a business project in the United States requires consideration of several aspects, such as:

• Immigration and business laws of the state where the project will take place.
• Type of business: determining the appropriate type of entity.
• Adequate corporate structure: this must consider business goals, member expectations, taxation, and the most suitable state for the business.

The United States of America is a federation of 50 states and two districts, each with specific and independent rules, taxation systems, and government plans, which include investment incentives. These incentives can be extremely helpful to entrepreneurs, as many states offer various forms of support for new businesses established within their jurisdictions.

The support of professional experts in both Italian and U.S. legislation is crucial to avoid serious, potentially irreparable mistakes and to take advantage of all available benefits.

The most common types of companies in the United States are:

1) LLC (Limited Liability Company) – Similar to the Italian “Società a responsabilità limitata” (SRL)

Key Points:

a)Partners: An LLC can be formed with a single or multiple partners, who do not need to be U.S. residents. They benefit from limited liability for corporate obligations, typically limited to the company’s assets. The taxation of the shareholders depends on their status (individual or corporate).
b)Corporate Capital: There is no minimum capital requirement to incorporate.
c)Administration: LLC administration is primarily the responsibility of its members, although state law allows non-members to assume administrative roles.
d)Tax Treatment: The LLC offers tax transparency, meaning that annual profits are taxed at the federal and state levels (or, in some cases, solely in the shareholder’s country of residence rather than the United States) on the shareholder’s tax return, regardless of profit distribution.

LLC taxation is flexible, allowing different options:

Pass-through Taxation:

• Single-Member LLC – Individual: A single-member LLC is transparent for tax purposes, similar to a sole proprietorship. Profits and losses are reported on the owner’s personal tax return.
• Multi-Member LLC: A multi-member LLC is treated as a partnership by default, where profits and losses are allocated to members and reported on their personal or business tax returns, avoiding double taxation.
• LLC with a Corporate Partner – Corporation: If a partner of the LLC is a corporation, profits are taxed at the corporate level. For U.S. corporations, taxation follows U.S. tax laws; for foreign corporations, it depends on the tax laws of their country of residence and applicable U.S. tax treaties.

It is possible to change the LLC’s tax classification to that of a regular corporation, making it subject to the same tax rules outlined above.

2) Corporation (INC) – Equivalent to the Italian joint-stock company (S.P.A.)

Key Points:

• There is no minimum capital requirement to incorporate.
• Ownership is represented by shares.
• Taxation Responsibility: The corporation is subject to taxation on profits, typically at a federal flat rate of 21%, plus varying state rates.
• Dividend Taxation: Shareholders must declare dividends in their personal returns and pay applicable taxes on these earnings (resulting in double taxation).

Other types of companies:

3) Partnership: Equivalent to the Italian “Società in nome collettivo”
4) Limited Liability Partnership (LLP): Equivalent to the Italian “Società in accomandita semplice”

Taxation in the United States operates on three distinct levels:

a)Federal Taxes: Managed by the federal government to fund national services and operations.
b)State Taxes: Imposed by each state to support local programs and infrastructure.
c) Local Taxes: Occasionally imposed by cities or municipalities, they support local governance and services.

Beyond the legal and fiscal advantages, establishing a company under U.S. law signals commitment and reliability to American clients. It demonstrates engagement and provides a sense of security and connection to the market.

PROVIDED SERVICES

Our firm guides entrepreneurs and investors from the initial concept through the establishment and management of their business ventures in the United States. Our comprehensive services include:

Company hosting, application for the American Tax Identification Number (EIN), support in establishing banking relationships and opening accounts, incorporation of corporations (including preparation of articles of incorporation and bylaws), appointment of directors, tax and corporate advisory services, immigration support (in collaboration with leading American and Italian law firms), and accounting software setup suitable for invoicing, bookkeeping, tax filings, and financial statements.

We further support startups in identifying, preparing, and submitting applications for U.S. government incentives, grants, and funding opportunities. This initiative facilitates investment opportunities in the U.S. market, which are often more advantageous than traditional foreign venues.

 

DOTT.SSA ANNA MARIA BONESI