Selecting the Right Business Entity 

Selecting the correct business entity saves you from many headaches & troubles in the long run.

Remember not to underestimate it if you want to avoid any unnecessary risks in the future.

Business Entity

To establish business credibility, you first must have a business!

One of the first steps is to officially file/register your entity with the Secretary of State in the USA.

The filing process and fees are different in every state. Some states require your entity to be renewed annually to stay in good standing.

Keep your entity updated with your correct business information, address, and ownership.

Make sure to consider all the following items before you file because some will need to be included in your filing:

Business Structure

When setting up your business entity, you will likely ask yourself what entity to establish. Each entity has its own tax and liability differences.

There are four (4) major structure types:

Corporation (C Corp) – generally for larger, complex, and established companies with employees

This is an entirely separate legal business entity from you individually, just like an LLC.

However, if you own a C Corp, you get double taxed on the money. your business earns as profit in the C Corp and on the money you earn personally as a salary or in dividends.

A C Corp is great if you want to avoid paying tax on ALL the profits in your business and if you’re going to build up cash for reinvestment.

Taxes: Corporate income tax (up to 21%) + Personal income tax on salary or dividends you get.

Limited Liability Company (LLC) – offers efficient tax options, Limited Liability, and the flexibility of partnerships.employees

Sole proprietorship – the owner is personally liable and responsible for the business. Many people don’t consider a sole proprietorship or DBA an actual business entity.

Partnership – several variations will allow parties to combine into a partnership

Why Incorporate or Form an LLC?

Incorporating or forming an LLC is a significant first step in starting your business.

Both the Corporation and the LLC act as a separate legal entity that can:

We’ll review the differences between the two as you read on, but let’s focus on the good stuff for now.

Which Business Entity is best?

As a Non-Resident, We always Recommend going with a Limited Liability Company (LLC)tity is best?

The #1 main benefit of forming a USA LLC is

Tax Obligations for Non-Resident Owners.

The USA can be considered one of the biggest tax havens in the world. The earnings of a US-based LLC can be entirely tax-free for non-US citizens or residents.

For the sake of simplicity, we suggest going with a single-member LLC.

In your case, You only want to consider creating a C Corp if you plan on building an extensive business, for example, taking outside investment money from venture capital (VC) or hiring 5-10 employees or more.