A Guide to Understanding Key Concepts for U.S. Company Owners
What is Stock Ownership in a Company?
Stocks are financial instruments that signify partial ownership in a corporation. The amount of a company's assets and profits you own is directly proportionate to the number of shares you hold.
Procedure for Issuing Stock
To issue stock, the company's Board of Directors needs to give their approval, either through a majority vote during a meeting or through unanimous written consent. The would-be shareholder is then required to pay a specified amount to the corporation for the stock. Additionally, companies must comply with securities laws, which means providing prospective investors with adequate information about the corporation and associated risks.
Understanding Vesting and Vesting Schedules
Vesting refers to a plan that outlines when and how employees can acquire shares in the company. Vesting schedules are designed to incentivize employees by gradually granting them equity in the company over a defined period. It's crucial for business owners to research and implement a vesting schedule that aligns with their company's needs.
Employer Identification Number (EIN) Explained
An Employer Identification Number (EIN) is essential for federal tax filings and for opening company bank accounts. If your company is foreign-owned, acquiring an EIN usually takes up to ten days after the necessary paperwork has been completed. If any of the founders are U.S. residents or have an SSN or ITIN, the EIN can be obtained almost instantly.
Special Requirements for Foreign Founders in the U.S.
Foreign founders must designate a registered agent in the U.S. to receive official correspondence. Despite not being a legal part of your entity, the registered agent plays a crucial role in facilitating communication within the U.S. It's also necessary to file certain tax forms annually even if you have no U.S. tax liabilities.
Importance of Documentation Maintenance
Proper documentation is essential for business success and regulatory compliance. Businesses are required to keep income tax returns for at least three years. If you have employees, maintain their records along with payroll tax records for a minimum of seven years. All corporate and ownership documents should be safely stored; electronic records are considered as valid as paper ones.
Navigating the U.S. Tax System
For Companies With U.S. Income: Income generated through activities like having full-time U.S. employees or a physical presence in the U.S. may be subject
U.S. taxes. C Corporations are required to file corporate tax returns and pay taxes on profits. LLCs have various tax classification options, depending on their specific circumstances.Understanding Ongoing Expenses
In Wyoming and Delaware:
- Both states have an annual bundle fee of $99, which includes Registered Agent service, Annual Report filing, Franchise Tax filing, and Service of Process.
- For $35 per month, you can avail of the Startco Mailroom service, which offers a premium U.S.-based business address and mail management services.
All ongoing fees can be conveniently paid online using a corporate debit card.
While the information provided here is a guide, it's important to consult with legal and financial advisors to address your specific needs.
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