Startup and large business in the USA - main types of taxation

Startup and large business in the USA - main types of taxation

Establishing own business in the USA is not as difficult as it may seem. For new and young companies, taxes are accrued according to understandable transparent system and are not so high.

But the more the organization and its revenues develop and increase, the higher the tax will be and the more difficult it will be to understand the tax returns.

The developed economy of the USA allows the government to establish the rigid frameworks of the taxation.

Therefore, even residents of the country sometimes open companies abroad to keep the company's revenues from high taxes.

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If you have difficulties with registering and doing business in the US or any other country, if you can not understand the specific principles of taxation or need professional legal assistance - the experts of Law&Trust International will provide you with prompt professional assistance.

The main aspects of taxation of the US companies

In the USA, there are 2 types of taxation, depending on the organizational and legal form:

• legal entities with transparent status, for example, small companies, corporations with S-status, partner organizations and LLC;

• legal entities with the status of a corporation, rarely LLC (after filing the form 8832 in the Federal Tax Service).

The largest tax burden refers to companies with the status of corporations. But the foregoing does not mean that transparent organizational and legal form is the most beneficial for business owners.

In fact, there are many pitfalls, information on which you can find out during legal consultation. The company receives a tax number, after filing a request for registration with the federal tax authorities.

Tax categories for the US companies

The US tax code approved a three-tier system - local, federal and state taxes.

The most significant are federal taxes, because they account for the main percentage of payments. These are:

- Gift tax;

- Excise tax;

- FICA Tax;

- Accumulated Earnings Tax;

- Alternative Minimum Tax;

- Federal Income Tax;

- Corporate Income Tax.

The main aspects of the taxation conditions at the federal level are described in the Internal Revenue Code (26 U.S.C.).

Taxes at the state level are divided into 2 subtypes:

- Sales and Use Taxes;

- Corporate Income and Franchise Tax.

And, finally, local taxes that imply Property Tax.

Features of certain forms of taxation

Corporate Income Tax is charged on the net profit of the company for 12 months of activity. Expenses for business development are deducted from the total annual profit of the company, (they must be legally justified and documented) and the remaining amount is taxed accordingly.

Depending on the level of net income, the rate can vary from 15 to 35%.

It should be noted that there is a special niche in tax legislationfor foreign companies that operate in the United States through branches. The income from such branches is classified as dividends and is taxed at a rate of 30% of the total amount.

Accumulated Earnings Tax is a specific form of fine for non-distribution of income from business. Since 2009, unused and spare assets in excess of $ 250,000 are subject to a penalty charge of 35%.

Corporationswith a profit over 7.5 million dollars for 3 calendar years are subject to Alternative Minimum Tax.

The mechanism for calculating the tax is structured in such a way as not to allow large corporations to use all the loopholes of the regular tax and to save decent amounts with regard to the foregoing.

State-level taxes - such a tax on the organization's income varies between 1 and 12%, depending on the state. It is charged in accordance with the mechanisms similar to federal taxation.

Obviously, America has developed a competent and strategically thought-out tax plan for companies starting from their foundation and to the maximum development.

With the increase in revenues, opening of new branches in the states of the country and outside the country, the taxes will increase, replenishing the American treasury.

Subject to professional and responsible relationships with tax structures, the business owner can avoid separate charges and penalties.

You can contact the lawyers of Law&Trust International for more detailed information on the forms of taxation of various types of business in the USA. Leave an application on the website and get a competent consultation in just a few minutes!