Real Estate - Where To Incorporate?

A lot of people remain curious for where they should incorporate. There exist so many jurisdiction promoters. From the point of view of the favorable corporate law, Nevada and Delaware limit the liability of the directors.

In several cases, the law applied in lawsuit depends on the working of the corporation.

Nevada and Delaware offer maximum protection from the liability of director. Shareholder privacy is most secured in Nevada as there is no state corporation income tax returned filed.

In almost all the cases, the benefit that we have described above can not be applied to your decision to incorporate. This is because you are doing most of your business in your home state only.

A corporation that is doing business in its own state only has to register here as a 'foreign corporation' with the secretary of the state.

This is a process that involves some terms and conditions as well. You will have to pay an annual processing fees in both the states of incorporation and home state.

If you see some other states, such as Texas, you will find that filing fee is quite higher for a foreign entity than that for a domestic corporation.

Moreover, whatever you earn in your home state is taxable and your organisation has to file a return at the end of year.

The income earned in a foreign state is taxable too. You cannot expect yourself to avoid tax in a state with Nevada corporation. You will have to show the identity of your shareholders if you file a return there.

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How To Incorporate Offshore

This article takes some of the mystery of the offshore incorporation process. It brings you a summary of the different stages which the incorporator goes through when setting up an offshore company.

JURISDICTION

There are many optional offshore jurisdictions in which you can incorporate your business. In this guide we focus on two of the most popular jurisdictions and list other separately.

Cayman Islands

The Cayman Islands consist of a group of three islands in the Caribbean. The main island- Grand Cayman- is situated at approximately 1100km south of Florida. The three islands have a total area of 260km², the Grand Cayman by itself having an area of 200km² . The population of all three islands is of approximately 30 000 inhabitants most of which reside on Grand Cayman where the capital, Georgetown, is located.

The Cayman Islands are a British colony and the United Kingdom retains the right to legislate. They have a special statute that has allowed them to become an important Offshore Financial Centre where all the big banks are established or represented for years. In this jurisdiction there are no income tax or currency exchange controls. Approximately 50 000 companies, 450 to 500 insurance companies ( most of which are captive of great International groups ) and between 600 and 700 offshore banks are incorporated in The Cayman Islands. The islands are an appealing jurisdiction to open offshore banks.

During the year 2000, the Cayman Government decided to negotiate a "Goodwill" agreement in order not be listed as " Non Cooperative Country" by the OECD's Financial Action Task Force. The name of Cayman Islands was not anymore on the June 2001 report (the latest one) probably as a result of negotiations with the FATF. Will this lead to the removal of bank secrecy and exchange of tax information with the members of the OECD ? This yet unanswered question leads us not to recommend this jurisdiction as an alternative on a long-term basis.

However, it is correct to say that this situation will cause no problems whatsoever to our existing clients since all the companies created for them were done with Nominee Shareholders, Nominee Directors etc. The names of the Beneficiaries are not registered on Public or Private Records in Cayman Islands. Actually, and this is true for all of our tax-optimizing structures, the only entities that know the names of the Clients are the banks themselves, those chosen for the opening of the commercial accounts. For obvious reasons of confidentiality and assets protection we always recommend to select a different Jurisdiction for locating the Bank operations of your newly formed company.

Seychelles

Seychelles International Business Companies are useful alternatives to offshore companies established in jurisdictions such as the British Virgin Islands. In December 1994 the Seychelles enacted legislation enabling the registration of International Business Companies, International Trusts and the licensing of International (free) Trade Zone Companies. More recent legislation covers the licensing of offshore banks, offshore Insurance, mutual funds activities and the regulating of a securities industry. The new laws were a result of intensive studies of long established offshore jurisdictions and world-wide trust legislation.

Although not dissimilar to those of the well-established offshore jurisdictions such as the Cayman, the laws take a most comprehensive, modern and attractive approach to the establishment and operation of offshore companies, mutual funds, offshore banking, offshore insurance and freeport activities. Seychelles is one of the fastest IBC registrar in the world. The International Business Companies Act, 1994, governs the operations of offshore companies. The registration process in Seychelles is straightforward.

LIST OF OTHER OFFSHORE JURISDICTIONS

-Andorra

-Anguilla

-Bahamas

-Belize

-Bermuda

-British Virgin Islands

-Cayman Islands

-Cook Island

-Cyprus

-Gibraltar

-Guernsey

-Hong Kong

-Ireland

-Isle of Man

-Jersey

-Labuan

-Liechtenstein

-Luxembourg

-Madeira

-Malta

-Marshall Islands

-Mauritius

-Montenegro

-Nevis

-Niue

-Panama

-Samoa

-Seychelles

-Singapore

-Switzerland

-Turks and Caicos

-Vanuatu

ENTITY TYPE

International Business Companies - IBC

What is IBC? A term used to define a variety of offshore corporate structures. Common to all IBC's are the dedication to business use outside the incorporating jurisdiction, rapid formation, secrecy, broad powers, low cost, low to zero taxation and minimal filing and reporting requirements. An increasing number of offshore jurisdictions are permitting the use of nominee shareholders, directors and officers.

ENTITY name

Your entity's name must not match or be too similar to the name of an existing company registered in your desired state.

Officer

Officer is appointed by the board of directors and responsible for the daily operation of the corporation. The titles and duties of each officer are usually listed in the company’s bylaws. Common officer titles are president, vice president, secretary, and treasurer. An officer can be one of the shareholders, owners or employees of the entity. Officer is part of the entity's management.

Shareholders

Shareholders: Owners of the issued stock of a corporation. Shareholders do not own specific corporate property; they merely own an interest in the corporation. Shareholders appoint the entity's board of directors which oversight the entity's management (officers).

Bank account

Once the incorporation has been completed the entity can set up a bank account.

The information we need to collect from you includes:

Proof of Identity

To establish the identity and signature of directors, account signatories and beneficial owners you must provide a copy of a current valid full passport. Such copy must bear a photograph, a signature and the number and must be certified by:

Passport photographs of each party - The passport copy you send to us must be sent by mail or courier (not Fax) and it must bear the ORIGINAL signature of the person certifying the identity document; it must not be a copy.

Proof of Residential Address - To validate the home address of directors, account signatories and beneficial owners please provide one of the following, for each party original recent (not older than three months) credit card statement or three original utility bills (telephone, electricity etc.) showing the residential address.

References - All the banks require original bank references from the personal bankers of the directors, account signatories and beneficial owners.

Merchant account

A Merchant Account is simply a relationship between a retailer and a merchant bank that enables retailers to accept web-based credit card payments from their customers. This is the account into which a Merchant Account Provider deposits payments into your business checking account from the transactions made online. To qualify for a merchant account, retailers must meet the bank's requirements.

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Tax USA, Inc. is a complete tax, accounting and financial management firm specializes in small businesses, corporations and high income individuals. Tax USA Inc.'s mission is to exceed clients' expectation by providing superb tax, accounting & financial Management services. We offer our clients tax, accounting and bookkeeping services, CFO Outsourcing, Budget Review and Business Plans, Cash Flow Management, Payroll Services and Entities' Incorporation.

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We focus on small and mid size businesses, non-profit organization and high income individuals. Client list comprised of corporations, non-profit organizations and high-tech employees. Our corporate clients operate in various industries:

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Incorporate Business

According to the US Bureau of Census, 550,000 new businesses were formed in 2002. It is not known how many were incorporated. There were approximately 22.9 million businesses in the US. These are small businesses that form the backbone of the American economy. Small businesses represent 99.7% of all employers and create more than 50% of non-farm private gross domestic product.

Most businesses start out small. In the beginning, data reveals that 82% of the small businesses are financed by personal loans or savings and loans from friends and relatives. Hence, when these firms grow large, it is important that easier access to finance from banks and the public is available. Moreover, the owners’ liabilities have to be reduced to decrease personal and business risk.

A checklist for starting a business runs like this: select a business structure, choose a tax year, select accounting method and payment of business taxes. The need for incorporation arises if the business structure chosen is either a LLC or corporation. Either of these requires mandatory filing with state authorities. If it is sole proprietorship and partnership, registration is not required, and business activities may begin immediately. In the cases of LLC and corporation, a lot of legal counsel, understanding the filing procedure, tax compliances, formation of business structure as per the type of corporation and the role of management and members are required.

The actual filing procedure is filling out proper forms and handing them over to state authorities where incorporation is done. Filing the papers can be done by hiring the services of an incorporating agency. These agencies file the papers in all the states required and provide some value added services including information of fees and duration calendars that vary from state to state. States like Nevada and Delaware are corporate friendly; therefore, most firms incorporate in either of these states.

Incorporate provides detailed information on Incorporate, Why Incorporate, Incorporate Business, Incorporate Llc and more. Incorporate is affiliated with Business Incorporation Services.

Incorporate

A natural person is one who is born in a land and enjoys the civil rights of the society where he or she is living. Before the industrial revolution, man depended on farms and crafts for a living. The advent of the industrial revolution and the discovery of new lands opened up opportunities for new ways of living. One struggled hard, ventured to form new businesses, employed people and succeeded in the business. Very often, these businesses failed, and the profits or debts were borne by the individual. Furthermore, society had to find to way to regulate these businesses.

These businesses were registered as separate legal entities and enjoyed certain rights as bestowed by the society. They were registered as partnership, proprietorship and corporations. Proprietorship and partnership were limited by the number of people and unlimited liability. Corporations held a greater number of people and limited liability.

The word ‘corporation’ is derived from the Latin root ‘corpus’ meaning group of bodies. The businesses founded became a legal entity separate from the founders. There are corporations, limited liability companies (LLC) and non-profit organizations like churches. Even though corporations are founded by a group, it is the corporation that does transactions with the government, other corporations and individuals. The founders have liabilities only to the extent of their investments.

The main benefits to the corporation are limited liability and perpetual lifetime. The corporation lives or continues as a legal entity even after the founders are gone, giving it stability. Furthermore, the corporation enjoys benefits in the form of tax deductions and concessions. Corporations are entrepreneurial in nature. According to an estimate, there were 22.5 million corporations in the United States in 2002. Ninety-nine percent of these corporations are small in nature employing fewer than 500 people.

Incorporate provides detailed information on Incorporate, Why Incorporate, Incorporate Business, Incorporate Llc and more. Incorporate is affiliated with Business Incorporation Services.

Incorporate Delaware, Incorporate Nevada, Incorporate Online, or Incorporate Businesses in Any State

No matter in which country or state you and your company are based, you can incorporate in states within the United States. You can even incorporate online. The most common form of business organization, a corporation in the United States has many of the same rights and responsibilities as a person. The corporation is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a “going concern.” The process of becoming a corporation is referred to as incorporation.

The biggest advantages of incorporation are the protection afforded by limited personal liability and the corporation’s ability to exist beyond the lifetime of the original owner, members, or founders. A corporation can be sued just as an individual or any other business can be sued. However, limited personal liability means (in most instances) that if the corporation is sued or files bankruptcy, the assets of the corporation may be seized and sold—but not those of the owners. For example, creditors could not attach your personal assets. There are some instances in which a court might be convinced to impose personal liability.

While it is possible to incorporate by yourself, it may be wise to retain the services of a competent firm or attorney to assist you with this legal matter. Among the first things you need to do are:

• Choose in which state you plan to incorporate.
• Make a decision on your corporate officers—most states in the United States require two or three parties to form a corporation. These officers can be friends or family members.
• Decide if you will remain the sole shareholder. As the sole shareholder, you will control the corporation’s activities.

In summary, the three main reasons why business owners incorporate are:
• To protect personal assets such as their home; to limit personal liability
• To enhance credibility for their business
• To take advantage of possible tax benefits

Regarding corporations owned by non-US citizens who will not have officers who are US citizens

A corporation can be formed in the United States, but the corporation will need to apply for and obtain a taxpayer identification number. The Chief Executive/President of a corporation must have a social security number or obtain an individual taxpayer identification number. This is required to fill out and submit the corporation’s application for its taxpayer identification number. Obtain form W-7 with instructions on how to fill out and submit the form. Once you have obtained your individual taxpayer identification number, you will then be able to obtain one for your corporation.

Incorporate: Delaware

A very corporate-friendly state, Delaware offers unique benefits for business incorporation. Assume you want to conduct more than one type of business, but you don’t choose to create a separate corporation for each. Forming a “Serial” LLC (limited liability company) in Delaware allows different lines of business to be treated separately from each other from a liability standpoint.

According to the Delaware Division of Corporations, “More than half a million business entities have their legal home in Delaware including more than 50% of all U.S. publicly-traded companies…” There are many other reasons to choose this state in which to incorporate: Delaware offers a comprehensive package of incorporation services including modern and flexible corporate laws.

Incorporate: Nevada

Another favorite state to incorporate businesses in, Nevada has favorable corporate laws. Often called ‘the corporate capital of the United States,’ Nevada and its Secretary of State offer this helpful list detailing Why Incorporate in Nevada? Reasons many choose to incorporate in Nevada include:

• No corporate income tax
• No taxes on corporate shares
• Stockholders, directors and officers need not live or hold meetings in Nevada, or even be U.S. Citizens
• No franchise tax
• No personal income tax

Incorporate: Online

It is possible to incorporate online. There are any number of companies and law firms that can assist you in this simplified process. You don’t have to personally travel to the state; you may retain a company or firm to file your papers for you.

Subchapter S Corporation

A subchapter S is a form of corporation that meets IRS requirements for taxation under Subchapter S of the Internal Revenue Code. A corporation with 75 shareholders or less (and meeting qualifications* as a small business corporation) can receive benefits as a corporation, yet be taxed as a partnership. In other words, profits are taxed at the level of the shareholders and not at the corporate level. This makes a big difference since it can pass income directly to shareholders, avoiding double taxation.

*Qualifications:

1) A domestic corporation
2) No more than 75 shareholders
3) Includes only eligible shareholders
4) Only one class of stock

Incorporate Businesses in Any State

For more information on incorporating businesses in any state in the United States, visit the federal government’s website, firstgov.gov.

An experienced freelance and staff writer, editor, and copywriter, Sally Hansley Morton is Senior Writer with Partners Online, LLC (d/b/a http://www.myoffice-usa.com and http://www.womenbizmentors.com).