Tax Services
Foreign Business Expansion
A primer for foreign companies weighing their first move into the US market.
Your First US Entity Sets the Tax Path You're On for Years
Here's a general overview of entity choice and tax setup for foreign companies moving into the United States. Get the structure right at the outset, and it shapes how cleanly profits move back home and what you're filing well into the future.
A US entity and tax setup designed around efficient repatriation from the outset - built right so you don't have to rebuild it later.
Key Things to Know
- The basics of entity and state choice
- How repatriated profit gets taxed
- Filing requirements worth planning around
Ready when you are
Operational Milestones
Advise
We recommend an entity type, state, and ownership structure based on your goals, your home-country tax position, and any relevant treaty.
Establish
From there we register the entity, secure the EIN, and make the necessary tax elections, working alongside your legal and banking contacts.
Operate
We build out transfer pricing, a compliance calendar, and the ongoing filings - 1120, 5472, state returns - that keep your US operation running cleanly.
Included Services & Outcomes
Unwinding a Bad Structure Costs More Than Setting Up the Right One
Pick the wrong entity, state, or ownership setup at launch, and you can end up locked into double taxation, branch-profits tax, and an expensive restructuring project down the line. The structure needs to be right before your US operation earns its first dollar.
Questions
Foreign Business Expansion FAQ
Corporation, LLC, or branch - which one fits my US business?
It comes down to your home country, any applicable treaty, and how you plan to bring profit back. A C-corp keeps US tax capped at the corporate rate but adds another layer when dividends go out; an LLC can pass through; a branch skips a second entity but brings branch-profits tax into play. We run the numbers on all three against your actual situation.
Do I have to incorporate in Delaware?
Not necessarily. The better question is where you'll actually have employees, property, and customers, since that determines nexus and which state's tax rules apply. We pick the state that keeps your total tax and compliance burden lowest, rather than defaulting to the usual choice.
What's the most tax-efficient way to send profits back to our parent company?
Usually some combination of dividends, royalties, interest, and management fees, each taxed and withheld differently. We use treaty rates alongside transfer pricing to bring profit home while keeping the combined tax hit as low as possible.
What is Form 5472, and does it apply to us?
Any US corporation with 25% or more foreign ownership must file Form 5472 to report transactions with related foreign parties. The penalty for missing it is a minimum $25,000 per form. We keep it filed accurately and on time.
Realistically, how long does setting up a US business take?
Forming the entity and getting an EIN usually wraps up in 2 to 3 weeks. Getting fully operational - banking, transfer pricing, tax elections, a compliance calendar - typically takes another 6 to 10 weeks, depending on your timeline.
Resources
Foreign Business Expansion insights
Talk to MK Tax & Accounting about foreign business expansion
Book your free consultation. We'll review your situation, quote a flat fee, and lay out exactly what we'd set up differently.