Corporate Creations

Incorporation can help limit your personal liability as a business owner. In general, creditors of your corporation must satisfy their claims by seizing the assets of the corporation rather than your personal assets. Other benefits of incorporation can include greater tax deductions for health insurance and medical expenses, lower payments for social security tax and medicare tax, and greater opportunity to raise capital for the business through the issuance of stock.

If you incorporate for the purpose of owning and operating a business, the general rule is that you should incorporate in the state where your main business office is located. Most states have revised their corporate laws based on the laws of Delaware. For companies that are privately owned (not publicly traded), generally there are no substantive differences any more between the corporate laws of Delaware and those of other states.

Under state law, every company is required to have a registered agent located in the state of incorporation and in all states where the company is qualified to transact business. The role of the registered agent is to receive legal papers (i.e. service of process) and government notices on behalf of the company. As part of registered agent service, you will receive upon request updates regarding the status of the company and information about the procedure to amend the company.

Generally, there are no restrictions on foreign ownership of a company formed in the United States. The procedure for a foreign citizen to form a company in the United States is the same as for a U.S. resident. Under U.S. tax law, a nonresident alien may own shares in a C corporation, but may not own any shares in an S corporation. But since profit distributions made by a C corporation are subject to double taxation, many foreign citizens form a limited liability company. A foreign citizen may be a corporate officer and/or director, but may not work or receive a salary or compensation in the United States unless the foreign citizen has a legitimate work permit.