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01
Nov 2019
  • BY: italiancpafirms
  • TAG: Documents, Business, tax
  • 01 COMMENT

Main differences between LLC and Corporations.

You’ve decided to create a company in the US, great! Now you have to choose what business entity would best suit your needs.

It’s a crucial decision to make. It’s very complex since it depends on many factors, including the medium and long-term goals you have set for your business.

You’ll need detailed information from a skilled professional, anyway, here we would love to outline the main features and differences between the most common business types in the US.

LLC (LIMITED LIABILITY COMPANY) and CORPORATIONS (S-CORP or C-CORP).

Both are limited companies with many differences though; let’s see a few examples.

Structure and flexibility.

C-Corps have a set corporate structure. They must have a Board of Directors handling the major decisions. They also have corporate officers who deal with daily business operations. Shareholders are considered the owners of the corporation but don’t participate in business decisions (except for the approval of the most important ones). Shareholders may be elected as directors or appointed as officers. LLCs have a leaner structure. Each member can act as a manager, and there is less bureaucracy to handle.

Taxation.

LLC’s taxation is “pass-through.” With this type of taxation, taxes are not paid at a corporate level, they are paid at the individual level. Profits are considered to be individual income, for each owner.  Profits and losses are not filed by the company; they are filed by each member individually. The same thing applies to S-Corps. C-Corps are taxed as separate entities, at the corporate level. In addition to that, when profits are distributed to shareholders as dividends, they are taxed a second time. It’s a double taxation. To recap: C-Corps pay taxes on their profits at the entity level first. And then owners pay taxes at the individual level.

S-Corps offers an advantage regarding losses. Owners can use them as deductions in their personal tax filing. With S-Corps it’s also possible to have savings on self-employment, medical care, social security taxes. Owners can compensate their income (originating from non-business activities) with losses arising from the business. This is not possible with C-Corps.  There are also combined forms of business entities. As an example: it’s possible to create an LLC choosing to be taxed as a C-Corp or an S-Corp (if specific requirements are met).

Ownership.

LLCs and C-Corps have no restrictions regarding the number of owners. S-Corps can have a maximum of 100 owners, and they cannot be “nonresidents aliens.”

Shareholders are the owners of a corporation. Members are the owners of an LLC.  The main difference is that an LLC can decide to distribute its ownership stake regardless of the capital contribution of each member. This will have to be outlined in an operating agreement. This also applies to C-Corps. S-Corps can have just one stock class structure, and dividends are distributed proportionally to shareholders, according to each one’s investment.

Legal issues.

Corporations have been around for centuries. They have developed a lot, and the laws governing corporations have gradually become uniform in all the States. LLCs are much younger. They have been recognized in the 1970s. States have similar LLC laws, but sometimes these laws differ from State to State. This situation will probably change, and LLC’s laws will gradually be harmonized too, but currently, it might be convenient to open an LLC in a State and not in another one.

After this brief overview, it’s evident how crucial is the decision. Complex assessments are necessary to make the best choice. Make sure to rely on expert professionals who will guide you through this delicate process. Our studies are at your disposal to erase your doubts. Get in touch! 

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01
Nov 2019
  • BY: italiancpafirms
  • TAG: Documents, Business, tax
  • 01 COMMENT

Expats, the first steps.

Deciding to move abroad is certainly a fantastic opportunity to grow both personally and professionally. Becoming an expat requires plenty of research and bureaucracy to handle to make sure to be in order before, during, and after the relocation.

Here are the first steps to take to become an expat.

It’s not an exhaustive list, and as usual, we recommend applying to professionals who will help you evaluate all involved aspects. Anyway here’s a quick overview of what you need to think about before taking the plunge.

VISAS

Depending on the country you’re moving to, there might be different types of visas to apply for. It’s important to get correct and up to date information to apply for the most appropriate one considering your nationality and reason for moving. Get to know well ahead of time which documents are necessary to apply for the visa so that you can take action on time. In some cases, it’s possible to enter the country with a tourist visa and apply later for a different type of visa to stay longer. It’s much better to know all your options in advance.

HEALTH SYSTEM

Are you eligible for medical care in your new country? There might be specific agreements between the two countries. It’s essential to know it so that you can take private health insurance policies if needed.

HOME

Will you sell or rent your home? And what about the new one? Are you planning to buy it? Or just rent? Get in touch with a trusted real estate agency (with a local presence preferably) as soon as you can. They will help you understand the local market and find the most suitable solution meeting your requirements.

THE MOVE

It might be a great occasion to declutter. What will you take with you? You might decide to sell or discard something. Consider that for some items (motor vehicles for example) you might be asked to pay high custom duties when importing them into the new country. Sometimes purchasing new ones is cheaper than moving the old ones. Relocation companies can offer their advice and experience to handle all these cases in the best way.

FAMILY

Moving with the whole family adds other factors to take into consideration. It’s a big step for the children. It’s necessary to prepare them on different levels, also emotionally. And there are also practical issues to think about. Where will they go to school? How long before do you need to apply to the school of your choice for their enrollment? If you are considering an international school, just keep in mind that some of them receive many requests and have long waiting lists.

PETS

What are the quarantine restrictions and required immunizations? Presenting health certificates might be necessary.

DRIVING LICENCE

If you plan to drive in the new country, make sure to know all the relevant rules. Will you take your car with you? Is it worth it? Or will you sell it and purchase another one in the destination country? Do all necessary evaluation well ahead of time.

TAXES

In some cases, after the move, you will have to file your tax returns, or even pay taxes, in your home country anyway. Each country has specific tax laws. Inquire with your CPA about it. Don’t take unnecessary risks because of ignorance or superficiality.

BANK ACCOUNTS – PENSIONS – INVESTMENTS

Will you keep your old bank accounts open? That might be useful if you plan to go back after a certain time abroad. What type of bank account will you open in the new country? What are the requirements for an expat to open an account? Before moving it’s useful to meet your financial consultant and go through your current investments’ clauses, to make sure that after the move you will be getting the best return on investment anyway. In general, for all legal, tax and financial aspects, it’s highly recommended to apply to your trusted CPA and lawyer. Don’t forget to verify that your legal documents (power of attorney or will, for example) are up-to-date.

MAIL

As soon as you have a new address, activate a redirection service, so that the mail sent to your old house will reach you in the new place.

VOTE

As an expat, you will still be able to vote for your home country. Make sure to get all the required information.

CULTURE

Try to learn the basics, at least, of the language spoken in your new country. Do you know something about the local culture? Do you have any friends who live there? Having someone to rely on during the first days, is really useful.

To sum up, there are many aspects to consider. Our studies provide specific services to US expats, offering tax consulting and preparations, complying with FATCA regulations and obligations in Italy.

Please feel free to get in touch for more information. We’ll be glad to help.

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01
Nov 2019
  • BY: italiancpafirms
  • TAG: Documents, Business, tax
  • 01 COMMENT

How to internationalize your business

Internationalization can be a great opportunity for small businesses.

It is not just a way to tackle the economic crisis, but also a great growth opportunity that can be put in place in many different ways.


For example, hiring foreign suppliers can lead to cost reduction or accessing new markets can result in increased revenue.

There are so many ways to internationalize your business.

In addition to showing a greater interest in international events and the possibility to attend international fairs and conferences, the process may start with an increase in exports or imports from foreign suppliers.

Relations with international partners can be improved by signing new agreements, creating joint ventures, business branches and, eventually, manufacturing your products abroad.

Another important way to internationalize your company is to start a new one abroad.

Of course, any possible economic or fiscal benefits can differ from state to state. But, in general, we can say that starting up a company abroad can help attract foreign investors and start new collaborations as well as, of course, access the local market more easily.

Besides, an international company branch can help receiving funding from the local government. Indeed, at this historic moment, many states are offering economic benefits to foreign companies investing in their country, including tax reduction.

Whatever your business internationalization will be, however, it will require some prior, deep research and planning. The investment impact needs to be preceded by a thorough cost-benefit analysis.

One of the first steps to be taken should be contacting an industry consultancy firm who can provide accurate and detailed information about the local market, the costs involved and the administrative and fiscal obligations of the targeted country.

INITIAL ANALYSIS

It is essential to start by studying and evaluating the opportunities offered by the new market. And then continue by assessing the company’s organizational and financial resources.
It is necessary to understand if the company can really afford the investment. Do not forget about local government funding possibilities, though: they can literally provide a great boost to the project.

DEFINE A STRATEGY.

The second step would be to develop a strategic plan by contacting partners of the local market. This is the time to choose the products, set the prices, organizing product distribution and transport logistics. And include the possibility to, eventually, relocate the production.

FLEXIBILITY

Dealing with new economic realities and markets may require a strong ability to adjust the company’s offer and communication.  You might need to adapt to new customers’ needs and think of new ways to market and sell our company’s products or services. New experience and knowledge can also be gained by following this path. And that can certainly help the overall company growth.
Internationalizing your business involves many aspects that vary according to the country you want to target. Legislation can be considerably different and sometimes very complex. In the United States, for example, it can deeply differ from a State to another.

Being able to count on a professional team who can handle all the necessary authorizations and the administrative aspects is of primary importance. You can read more on internationalization in our previous article: 6 Steps to be successful in international markets.

Our studies are available for further information. Please feel free to contact us.

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