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United States of America | Company’s Incorporation

United States of America | Company’s Incorporation

 

Brazilian companies frequently turn to the American Market as an option to expand their businesses because it is an economy with constant growth and it offers various advantages. The United States is one of the most technologically advanced countries and it has the greatest economy in the world. Although it is going through some rough period of commercial conflicts, its Gross Domestic Product (GDP) has increased 3.2% in the first quarter of 2019, greatly caused by the strong progress in exports. Comparing to last semester of 2018, GDP’s increase reached 2.2%. Contrary to what a lot of people think, the process of incorporating a company in the US is easy and fast; the greatest difficulty is regarding the understanding of the Market works.

In order to reduce risks it is important to find qualified professionals who will support the incorporation process and have knowledge in international law, accounting, tax and investments. After the incorporation in US lands, it is possible to reduce costs of import, purchase in higher volume, keep stocks in the US – speeding the customer’s supplying -, obtain exemption in taxes of purchased products, besides setting place in a solid and safe economy.

When the foreign company starts its entrance in the US, there are three common types of entities: Representation, Branch and Subsidiary. The Representation is the simplest way of entrance into the American market because it is not a requirement to create a company and be subject to Income Tax; however, the activities are restricted to research, support, publicity, promotion and purchase of items on behalf of the foreign company. The Branch also does not require the incorporation of a company and it is subject to a 21% income tax (reduced in dec/2017) and the remittance of profits is subject to a 30% tax rate depending if the destination country has or not a double taxation agreement. In the Subsidiary structure, it is created a company in the foreign country and in this case the Brazilian company – holding of the American company – needs to change its tax regime to actual profits.

There are no restrictions on foreign ownership of a company formed in the US and the procedures to form a company are the same as for a US resident. However, owning an American company does not give the right of residing in the country. For that, it is necessary a work visa. The visa which currently fits more properly Brazilians who wants to establish a branch/subsidiary in the US or transfer employees is the L-1 Visa, because it allows the US company to transfer executives, managers and key employees from other country or someone to establish a new office.

The employees entering the USA to establish a new office have a maximum initial stay of one year while all other L-1 employees have a three-year initial stay. All them may request an extension of this period of stay up to the limit of seven years.

Once the company is established in the US, the investor has all benefits and obligations that American legislation determines. Therefore, some precautions are recommended:

  • Get to know the American market and know how to position the goods and services offered;
  • Choose carefully the place where the company will be open, because the tax might be different for each city and state;
  • Get to know the labor and immigration legislation;
  • Make sure you have some knowledge of the language and the country.

The internationalization of the company is something that may cause some concern to entrepreneurs; however it is an option that should be considered because it brings various benefits. The entrance in north-America market will allow the company to be less dependent of the internal market and will maximize the sales which shall have a greater economic coverage. Therefore, the internationalization of the company in the US may represent an advantage with growth of the market competitiveness.

Gabriela Kauer

 

Sources: Revista Exame e U.S Citizenship and Immigration Services

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