We’ve talked to literally hundreds of international business owners over the
past 18 years. If there’s one thing I’ve learned beyond the shadow of a
doubt from those who have been sued, needlessly poured money down
bottomless tax or expense holes, or whose businesses have failed, it’s
NOT ONE was excited over the few bucks they saved by using a low cost
incorporator -- or worse, flying solo -- to incorporate or establish a U.S.
entity for their business.
Years and untold dollars later, they sorely regret the hard work, stress,
and many, many lost hours of time with family and friends -- consumed
instead by lawyers, bankers, accountants and creditors, while picking up
the pieces of the wreckage from a devastating lawsuit or bankruptcy.
All those losses could have been prevented by proper planning with the
right company to support them. All those losses were the indirect and
sometimes direct result of “penny-wise, pound foolish” thinking. They’ve
learned (the hard way) the value of having a company like NCP to be at
their side, constantly guarding against missteps and roadblocks.
I hear the same basic horror stories told over and over again. And while
I’d never say “I told you so,” I’ve learned from them as well.
Let me share with you the 5 most costly mistakes they’ve made during the
process of establishing a U.S. Entity.
1. Selecting the wrong state for their entity. You may know that the big
three are Delaware, Wyoming and Nevada. But what is best for your business
from a state tax point of view? Did you also consider which state provides
the best liability protection for you as a manager of an LLC or the
director or officer of a corporation? Nevada is by far the best and offers
the best value. Yes, Wyoming may be $400 less on the front end but with
less protection is that worth it? If your U.S. business is raising capital
or going public Delaware may not be a bad option.
2. Selecting the wrong type of entity for their business. If you go online
and invest $99 for a formation and guess as an LLC and don’t understand the
tax ramification or the U.S. tax treaties with your home country you may
end up paying thousands in unnecessary taxes! An LLC may be taxed in four
different methods (even most American don’t even know that). Each one has
its own pluses and minuses. A corporation may be an option only if you
manage the taxes on an annual basis and don’t do something that will
trigger an audit (like a big year end expense back to your home country to
reduce your U.S. profits).
3. Not having a complete formation. Filing articles, obtaining an EIN and
having a U.S. mail address may get you started but by no means is that a
complete formation. If that entity was attacked by the IRS or a lawsuit it
would not hold up for 15 minutes, according to U.S. attorney, Lee Phillips.
You must have a complete formation along a legitimate U.S. business address
that sends the proper business message.
4. Not having tax support for their U.S. entity. Not taking into consider
what type of entity and who should be the owner in the U.S. only means you
are going to be disappointed when you realize how much extra taxes you may
be paying that was unnecessary. We have had clients who have saved $10K,
$20K or $50K or more by working with NCP and through our CPA
recommendations to operate their U.S. business properly. Some countries
like Canada don’t even have a tax treaty for a U.S. LLC and you may be
double taxed. There is a strategy around that but you must know it up
5. Not working with a company with the best resources to operate a U.S.
business. Never underestimate the power of working with a company like NCP
with great resources and connections when it comes to U.S. banking, legal,
taxes, merchant accounts, immigration and top business connection to help
your U.S. business succeed! Recently with one legal connection we saved a
client over $20K in legal fees (from the other U.S. attorney who was going
to take advantage of his situation). That type of resource will add up
quickly to your bottom line.
Doing business in the U.S. is one of the best opportunities to grow,
especially if you are operating online. The U.S. has the largest online
consumer market in the world! The key is to develop trust with a legitimate
If you are looking to form a complete formation for a U.S. company please
send us an e-mail with a few details on your needs and we will follow up
for a free consultation on Skype® and share with you our current fees to
help you out. You may also call our offices at 001-702-367-7007 during
business hours (8 am to 5 pm) Monday-Friday. Our company is based in Las
Our goal is to simplify the experience (and help you avoid these costly mistakes) and
help you launch with confidence in the U.S. so your U.S. business will get off to a
fast start to profits!