Investment Guide

Investment Guide

INTRODUCTION

To enter the American market, the investor or entrepreneur must act by setting up a company in the U.S.A. There are various types of companies, but they all relate to the model of the Limited Liability Company (LLC) or of the Corporation (INC). The advantages offered by the American company can thus be listed: 1. Responsibility limited to the assets of the company; 2. Recourse to credit; 3. Absence of the requirement of payment of the share capital; 4. Particularly low constitution and management costs; 5. Promptness in the constitution; 6. Tax benefits. The investor, or the entrepreneur, who wants to start a business in the U.S.A., will be able freely to choose among the above listed company forms. For more detailed information regarding the various types of US companies, see Chapter II of this guide. Generally speaking, it is sufficient to know that the LLC is a structure similar to our company, while the INC. has a structure similar to the S.p.A. It is suggested to set up an INC if the investor, that is, the entrepreneur, wishes to start a real business with real current activities. So, on the other hand, if you want to buy a single property, we suggest setting up an LLC. To set up an LLC, an Article / Certificate of Organization, similar to our memorandum, must be filed with the Secretary of State, Division of Corporations. Subsequently, an Operating Agreement must be signed, the content of which is similar to a statute of an Italian corporation. The constitution process is completed by the request to publish an LLC notice of formation in two newspapers indicated by the County Clerk for about 6 weeks. Note that the actual constitution of the LLC company can also take place in 24 hours; the requirement of the aforementioned publication is provided only for certain States and if the company wants to take legal action against a third party for any reason. The constitution of an INC follows a similar process to the one described above for the LLC . After the submission of an Article / Certificate of Incorporation, the members must draw up a By-laws - a similar act to our by-laws - and sign it. Furthermore, it will be necessary to draw up the corporate resolutions and issue the share certificates. Both the companies analyzed above, in order to operate in the U.S.A. market, will need a TIN (our tax code), which must be requested from the American Ministry of Finance. With said TIN, the company will be able to open a current account with an American bank and therefore be - under a practical profile - active in all respects. On the cost side, both companies have very low costs both in terms of establishment and management. The establishment of a company varies from a law firm to a law firm, however, in principle, it does not exceed $ 3,500.00 including expenses (except for special situations or particular social groups). As mentioned, unlike in Italy, American companies do not need the payment of social capital; therefore, in practice, a company can be set up at zero cost. Finally, it is worth noting that, still differently from Italy, the lawyer he has established the company will perform a very important function; in fact, the same will be the holder of the corporate documentation, including share certificates, without resorting to any registration of the ownership of the company at the Chamber of Commerce or other bodies.

Types of US Companies

Before embarking on a new business in the United States, you need to determine the means by which to make your investment. This is important in order to establish, right from the start, the structure suitable for the type of commercial activity to be carried out, to avoid cumbersome last-minute changes.
There are numerous facilities that foreign investors can use to set up their business in the United States.

The most common are:

– Sole proprietorship;
– Corporation;
– Partnership;
– Limited Liability Company.
Most investors will choose between a corporation and a limited liability company; even if, in the face of specific circumstances, a sole proprietorship or partnership will be the most appropriate means to carry out the designated commercial activity. Which structure best fits your specific business depends on numerous factors, such as:
- US and foreign taxation;
- The legal and administrative requirements of the company;
- The number of current and potential owners;
- The limitation of personal responsibility.

In order to determine which business structure best fits your needs you should consult a tax advisor. But for the moment, let us go into more detail the corporate structures indicated above.

Sole Proprietorship

The term sole proprietorship means a company with a single owner. The administrative requirements and formalities required are minimal. The only legal requirement is the compilation of the so-called DBA (Doing Business As) through which the name under which the company carries out its activity is indicated, this in the case in which the real name of the person who owns the business is not used. The sole proprietorship is not a separate entity from its owner. In other words, the business owner has unlimited personal responsibility for all the debts of the business. The life of the business is also linked to that of the owner. The sole proprietorship ceases to exist when the owner ceases to carry it out or in the event of his death. From a fiscal point of view, this is the simplest form of business activity. There is only one level of taxation without additional tax requirements. The sole owner will only be required to present an additional document along with his annual tax return.

Corporation

A corporation is the most familiar business structure. It is the most commonly recognized structure in the world. Unlike in the sole proprietorship, the corporation can have more than one shareholder (ie owner). The corporation is a separate entity from its shareholders, in fact, it guarantees its shareholders limited personal liability. This allows the activity to have an unlimited life, since the dissolution is not linked to the life of the shareholder. The structure of the corporation also allows flexibility in ownership of the property, through the issue of different classes of shares. Moreover, the legal and administrative requirements of the corporation are numerous. These requirements range from annual meetings to the demerger of the corporation. Furthermore, numerous formalities (such as those related to the calling of the meeting) are established by law. From a fiscal point of view, the traditional corporation, the so-called C Corporation, has two levels of taxation; one at the corporate level, on the profits generated by the company and the other at the level of the shareholders, when the dividends are distributed to them. This second level of taxation can sometimes be eliminated if the company chooses to be considered as an S corporation. In this case the income and charges pass through the company and are reported on the annual tax returns of the individual shareholders. This special treatment is, however, limited to a certain number and type of shareholders. Unfortunately foreign citizens (non-US) do not qualify for this special tax treatment. The sole fact of being a foreign investor, however, does not immediately disqualify your company; therefore, this is an option that should be evaluated.

Partnership

A partnership consists of an activity undertaken by two or more owners. The owners are commonly known as partners. The two most common types of partnerships are the General partnership and the Limited partnership.
As for the corporation, partnerships are separate legal entities. This legal separation status, however, does not immediately give partners limited personal liability. The limitation of personal liability depends on the status of the partners within the partnership. In a general partnership, all partners are personally responsible for the debts of the partnership. The partners are not only responsible personally but also jointly. In other words, if partner A cannot pay his share of the debt of the partnership, partner B will be responsible for all debts of the partnership even if partner B is only a minority partner. In a limited partnership, only so-called limited partners have limited personal responsibility. However, in order to receive the benefit of limited liability, the limited partner cannot take part in the daily management of the activity as the general partners do. The limited partners are therefore mere investors.
The administrative and legal requirements of the partnership are not as strict as those of the corporation; however, they are greater than those of sole proprietorship. Unlike sole proprietorship, the partnership provides a longer duration for the activity as long as the company always has a general partner. From a fiscal point of view a partnership has only one level of taxation. The partnership itself is not subject to taxation but the partners are. Income and charges go through the partnership and are reported on the individual annual tax returns of the partners. Of great importance is the possibility that the partnership gives partners in terms of flexibility to make special assignments; this allows the parties to make distributions that are not proportional to the percentages they hold in the partnership. This special assignment is a unique feature of the partnership.

Limited Liability Company

A limited liability company (LLC) is one of the newest business structures available for business owners. It is a hybrid of partnership and corporation. It offers business owners both characteristics of the aforementioned corporate structures. As a corporation, it can have one or more owners. Owners are known as shareholders.
An LLC is a separate legal entity that offers limited liability to its members. Furthermore, since the duration of the activity is not linked to the life of the owner, the LLC exists until its dissolution. According to Florida law, the LLC has a wide flexibility in terms of administrative requirements as well as a strong limitation of liability. From the fiscal point of view, the owner of the limited liability company can decide how the company should be taxed. If the company has a single member, the individual can decide whether the LLC should be considered, from a tax point of view, as a sole proprietorship or a corporation. If the LLC has multiple shareholders, they can decide whether the LLC should be considered as a partnership or a corporation. Usually the LLC will have only one level of taxation. Income and expenses pass through the company and are reported in the annual tax returns of the individual shareholders.

Tax planning

To determine the appropriate corporate structure for your business in the United States, you need to make sure that the tax planning is correct and be sure, that in your home country the tax liability has not increased due to the corporate structure chosen in the United States. Even if the United States offers a great investment opportunity for foreign investors and / or entrepreneurs, careful planning must be done before creating a new business or creating a US branch of an existing business. With proper legal and fiscal planning, you can minimize legal and tax liability.

The Application for an Immigration Visa

One of the first steps for those wishing to undertake an activity in the United States is to request a non-immigrant visa in order to be able to stay in the United States for a long time, to be able to work legally and receive a salary in the American territory. The types of American visas are varied and are distinguished from the American Immigration Services by letters of the Latin alphabet (eg A for diplomatic visas, B for tourist and business visas, C for transit visas, and so on). The most interesting non-immigrant visas for those interested in opening an activity in the United States are without a doubt the E1 / E2 visas and the L-1A and L-1B visas.

E-1 visas (Trade treaty), E-2 (Investor treaty)

Section 101 (a) (15) (E) of the US Immigration and Nationality Act provides for the issue of a non-immigrant visa to foreigners who are citizens of those countries with which the United States has a Trade and Navigation treaty, if they travel to the United States to carry out significant business activities, including service and technology areas, mainly between their country and the United States or to develop and manage a company in which they have invested (or are about to invest) a substantial capital. The requirements for non-immigrant visas for trade, category E1 (Treaty Trader) are: The applicant must be a citizen of a country that has entered into a Trade and Navigation treaty with the United States. The company, on whose behalf the applicant travels to the United States, must have the nationality of a country with which the Trade and Navigation Treaty is in force. Note: At least 50% of the company must be owned by citizens of that country. The shares owned by citizens with permanent residence in the United States do not contribute to determining this 50% necessary to enable the company to apply for visas E. The international volume of business must be "consistent", in the sense that there must be a considerable and continuous commercial activity. The turnover must be mainly between the United States and the treaty participating nation. This means that more than 50% of the international business volume must take place between the United States and the applicant's country of nationality. Trade "means the international exchange of goods, services and technology. Rights to traded items must pass from one side to another. The applicant must hold, either within the company, the position of supervisor or manager or he must have professional qualifications that make it indispensable for the good functioning of the company. Lower-ranking staff, qualified or not, have no right to be classified as a "Treaty Trader". The requirements for non-immigrant visa for investment, category E2 (Treaty Investor) are: The person making the investment whether it is a natural person or a company, must have the nationality of a country that has a Trade and Navigation treaty with the United States. The investment must be "consistent", in the sense that it must be sufficient to ensure the success of the operation. The percentage of investment for a low-cost company must be higher than the percentage of investment for a high-cost company. The investment must promote a real business activity. Speculative or poorly productive investments are not considered as such. Unrestricted bank or similar funds are not considered as investments. The investment will not have to be marginal but will have to generate an income higher than that required for the sustenance of the investor and his family as well as being of economic importance for the United States. The investor must have control of the funds and the investment must be, commercially speaking, at risk. Loans guaranteed by company capital are not recognized. The investor must enter the U.S.A. to develop and manage the company. If the person applying for the visa is not the main investor it must have the status of supervisor, manager, or possess highly specialized qualifications. Ordinary, qualified or unqualified personnel are not entitled to be considered as an "Investor". Generally, type E visas are issued for a period of 5 years and are renewable for the duration of the employment of the person sponsored by the company.

L-1A and L-1B visas (corporate transfer of a highly specialized manager or employee)

This category refers to personnel transferred within the same company who, during the three years prior to the visa application, worked continuously for at least one year for the company abroad and who is about to be assigned to a branch , affiliated or subsidiary in the United States, with managerial, managerial or highly specialized duties. This visa is of particular interest to those who have the possibility or interest in creating an American branch of an Italian company already underway. The activity in the United States does not necessarily have to match that of the Italian company. An Italian company operating in the industrial sector, for example, can safely undertake a food business through the American branch. The requirements for issuing the L 1 visa are essentially the following: Existence of a qualified "affiliation" relationship between the company in the USA and the foreign company from which the worker is transferred. This relationship is normally present in relations between the subsidiary and the subordinate or branch office, but can sometimes be satisfied in the case of property identity and / or by companies both controlled by the same holding company; The person who will be "transferred" must have been employed by the company for at least 1 year in the last 3 years before the transfer; The worker must have executive, managerial or highly specialized duties. If the American branch has been in business for less than 12 months, the L visa will be issued initially for a period of 1 year. Otherwise, the L visa is generally granted for an initial period of 3 years. The L visa can be extended with extensions of 2 years for a total of 7 years (5 years for highly specialized employees). Of particular interest is the possibility for the transferred person to apply for the Green Card (permanent residence) once the latter has worked in the American branch for at least 12 months and assumes that it carries out a management and / or supervisory role within the 'company.

Conclusion

American immigration laws are often complex, difficult to understand, and difficult to apply. It is essential that the entrepreneur who wishes to operate in the United States applies to an American lawyer who specializes in immigration laws. Do-it-yourself approaches are almost always bankrupt and more expensive. People interested in starting a business in the United States should turn to a lawyer who is resident in the United States, preferably near the place where they intend to move and / or operate, and who has already assisted a large number of clients with needs similar to theirs.

Distribution Agreements

As mentioned, once the market research has been carried out and a business plan has been prepared, alternatively to the corporate route, it is also possible to simply search for American distributors - in relation to the sector to which they belong - and to stipulate distribution contracts with them. In this regard, attention must be paid to the solvency of the U.S.A. In the distribution contract it will be necessary to insert clauses aimed at safeguarding the payment of the goods supplied and the representations aimed at the automatic termination of the contract in the event of insolvency of the distributor. During the distribution period, it is suggested to document the whole process from the first instances. In fact, it will be necessary to keep adequate and specific documentation concerning the distribution, with particular reference to the delivery notes for the goods and related invoices, email exchanges or other communications between the parties. This documentation will be useful for the purposes of a possible recovery of sums in case of non-payment.

Authorization Request

Once the company is established, it is necessary to interest the various competent authorities in order to obtain the authorizations required by the law in order to carry out the requested service / trade. It should be noted that in the United States there can be two levels of authorizations, the federal level and the state level. Sometimes, in addition to the levels indicated, you can also add the local level (City or Town). Said authorizations, where required by law, must be promptly requested. An example of this can be the Food and Drug Administration, federal authority, which controls and manages food products, tobacco products, medical prescriptions and medicines or substances not subject to medical prescription.

Brand Registration

Simultaneously with the analysis and request of the authorizations described above, it is necessary to proceed with the registration of the trademark. The competent office is USPTO, and the procedure is quite simple. The filing of the trademark registration application can be made online, and the registration times vary up to 6 months.
From a purely legal point of view, the c.d. theory of the prior use of the trademark / distinctive sign in commerce. In this case, the company holding the prior use of the distinctive sign will have a right c.d. preventive on registration and ownership of the brand.

Job contracts

The American labor market has quite peculiar characteristics in terms of dynamism. First of all, the regulation allows temporary hiring, hourly, daily, or on a continuous basis and the relative entry of the worker takes place, more often than not, through private agencies specialized in the search for the worker and of his placement with employers. Some formalities must be respected before hiring an employee. In fact, it is necessary to verify that the subject in question is qualified to work (if, if not resident in the USA, and not an American citizen, the government authorizations required for the job (EAC or work visa or other). The relevant form - certifying the authorizations at work - which the worker must complete must be maintained by the employer at his registered office and made available for immigration for any checks. Subsequently, the worker must complete a subsequent form on the basis of which the related withholding taxes will be applied to the worker, to be paid - withholding tax - to the IRS. The employer will have to perform duties of particular importance, including: (i) maintenance of a daily entry-exit register of the worker, where there is also evidence of breaks - provided for by law - to which the worker will be entitled; (ii) maintenance of all pay slips for remuneration; (iii) preparation of the company policy on work; (iv) posting of the notices required by law on the subject of work. Finally, according to the FLSA, the employer will have to pay the worker at least a sum equal to or greater than c.d. minimum wage (ie, minimum wage). The minimum wage is expected at the federal level, and subsequently, at the state level.

Office Rental Contracts and Operating Unit

The rent of a room where to establish the operational headquarters / operating establishment of a company requires the stipulation of a rental contract for commercial use of the property. These contracts have a duration of about 3-5 years and require the payment of a deposit of about 2-3 months (sometimes they take about 6 months in addition to a personal guarantee), in addition, of course, to the first month of rent. Notarial formalities are not required for the stipulation of these contracts, however, it should be noted that the landlord (lessor), being new companies and without the c.d. credit history (a history of the credit / debit of the company in the USA) could request the provision of ancillary guarantees before signing the lease / rental agreement for a business unit. In terms of termination of the commercial lease agreement, particular attention must be paid to the clauses concerning the rights of the lessor / tenant, respectively, to terminate and terminate said contract, before the expiration.