The United States ranks 6th for ease of doing business & 13th in the Human Development Index. Being the largest in the world, the US economy accounts for almost half of the world GDP. The country’s population is mostly employed in the service sector. Foreign exchange regulation is quite liberal. The transport infrastructure is extremely well developed.
Thanks to its consumer-oriented policies & strong protection of IP, the US attracts more investors than any other country in the world. Hence, individuals seeking to open a business in the US have plenty of opportunities to do so
According to the 2017 World Bank rating, the US ranks 36th in terms of simplicity of taxation. Foreign individuals & companies seeking to register a company in the US should keep in mind that the country’s tax system is somewhat similar to that of Switzerland. In fact, it’s divided into 3 levels: federal, regional & local one. At all levels, taxes, particularly those referred to as primary ones, get levied in parallel, i.e. there’s three income taxes for physical persons, three for corporations, two property taxes & so on.
Those interested in registering a company in the US will be required to pay 2 kinds of taxes - a corporate tax & a personal income tax. So, let's have a closer look at them.
A corporate income tax is levied in forty four states. Despite the fact that all foreign investors wishing to launch a business in the US are required to pay a corporate income tax, it only accounts for 5% of all tax revenues & 2.6% of total revenues.
The highest corporate tax rate is in Iowa (twelve percent). Next come Pennsylvania (where it stands at almost ten percent( & Minnesota (where it stands at nine point eight percent). Three more states (i.e. NJ, AK & DC) have taxes levied at the rate of nine percent (and more). The tax rate is the lowest in the state of North Carolina where it stands at three percent. Then come Colorado (four point six) & North Dakota (four point three percent). In four other states (i.e.Mississippi, South Carolina, Utah & Arizona) taxes get levied at the rate of five percent.
In four more states (i.e. NE, OH, TX & DC) an income tax was completely replaced with a gross profit tax. Economically, the said taxes are more damaging, which is why individuals considering incorporating a company in the US (and more specifically, in any of these three states) should keep that in mind.
All individuals having a business in the USA must pay federal income taxes. Depending on income level, it can range from 15 to 39% & is calculated on the same principle.
Personal income tax lies at the core of all federal budget revenues. It must be paid by individuals, sole entrepreneurs & partnerships that have no legal status. Both residents & non-residents must submit a tax report.
There’s no comparing between corporate rates & income earned by company owners (& vice versa). What this means is that companies earning higher income can be owned by persons earning lower income; however, persons earning higher income can own companies earning lower income. Hence, income taxes (both corporate & individual ones) in 27 states & D.C. get levied at a roughly identical rate.
US farmers enjoy extensive privileges in terms of taxation. Under certain conditions, some companies can achieve zero taxation.
The US government provides support to investors seeking to make investments in the US economy, and more specifically, in innovative businesses.
Seeking to register a business in the US? Need advice on company registration in the US? Why not contact IQ Decision UK?