Business Structure – NATTAM Consulting

Choose a Business Structure

Deciding on the Stucture of your business is crucial to its' success. NATTAM Consulting can help you decide the best path for your business in the U.S.

Choose your Business Structure

Let us help you when choosing the structure of your new business.

Corporation (C Corporation)

A C Corporation is a legal entity separate from its owners, offering limited liability protection. It can have an unlimited number of shareholders and is subject to corporate tax rates. This structure is ideal for businesses planning to reinvest profits or go public.

Limited Liability Company (LLC)

An LLC combines the liability protection of a corporation with the tax benefits and flexibility of a partnership. It is a popular choice for small to medium-sized businesses due to its simplicity and operational flexibility.

Partnership

A partnership involves two or more individuals or entities conducting business together. There are several types, including General Partnerships (GP), Limited Partnerships (LP), and Limited Liability Partnerships (LLP), each offering different levels of liability protection and management structure.

Branch Office

A branch office is an extension of a foreign company that conducts business in the US. It is not a separate legal entity, so the parent company is liable for its operations. This structure is suitable for companies testing the US market before making significant investments.

Representative Office

A representative office allows a foreign company to establish a presence in the US for non-commercial activities such as market research, liaison, and promotion. It cannot engage in profit-generating activities and is primarily used for establishing a foothold in the market.

Corporation (C Corporation)

A C Corporation, or C Corp, is the most common type of corporation in the United States, particularly for larger companies.

Foreign entities often choose this structure because it offers strong liability protection and the ability to raise capital through the sale of stock. Shareholders are not personally liable for the debts and liabilities of the corporation, which protects their personal assets.

The major advantage of a C Corp is its potential for unlimited growth through the sale of stock. This makes it an attractive option for businesses looking to raise significant capital or eventually go public. However, C Corps face double taxation, where the company pays taxes on its income, and shareholders also pay taxes on any dividends received.

Despite the complexity and regulatory requirements, the C Corp structure provides credibility and permanence, which can be appealing to investors, customers, and partners. Additionally, it allows for various classes of stock, offering flexibility in ownership and profit distribution.

Limited Liability Company (LLC)

A Limited Liability Company (LLC) is a hybrid structure that provides the liability protection of a corporation while allowing profits to be taxed directly to the owners (members), avoiding the double taxation that C Corporations face. This structure is particularly appealing to foreign entities because it offers flexibility in management and profit distribution.

LLCs are relatively easy and inexpensive to set up, with fewer formalities compared to corporations. They do not require a board of directors or annual meetings, making them less bureaucratic and easier to manage. The profits and losses of an LLC are passed through to its members and reported on their personal tax returns, which can simplify the tax process.

The flexibility of an LLC extends to its ownership structure. It can have an unlimited number of members, including individuals, corporations, and other LLCs, making it a versatile option for various business arrangements.

This adaptability, combined with strong liability protection, makes the LLC a popular choice for foreign businesses looking to establish a presence in the US.

Partnership

Partnerships are business structures where two or more individuals or entities come together to conduct business. They are straightforward to form and offer various configurations to suit different business needs. The primary types of partnerships include General Partnerships (GP), Limited Partnerships (LP), and Limited Liability Partnerships (LLP).

In a General Partnership (GP), all partners share equal responsibility for the business's operations and liabilities. This structure is easy to establish but offers no liability protection, meaning partners' personal assets can be at risk.

A Limited Partnership (LP) consists of general partners, who manage the business and assume liability, and limited partners, who invest capital and have limited liability up to their investment amount. This structure is beneficial for those looking to invest without getting involved in day-to-day management.

Limited Liability Partnerships (LLP) offer a middle ground, providing liability protection to all partners while allowing them to participate in management. LLPs are particularly popular among professional services firms, such as law and accounting practices.

Partnerships offer flexibility in management and profit sharing but require clear agreements to prevent conflicts and ensure smooth operation. They are often chosen for their simplicity and direct tax benefits, as profits are passed through to partners and taxed on their personal returns.

Branch Office

A branch office is a direct extension of a foreign parent company, established to conduct business in the US. Unlike a subsidiary, a branch office is not a separate legal entity. This means that the foreign parent company retains full liability for the branch's operations, debts, and legal obligations.

Setting up a branch office is a relatively straightforward process, often requiring fewer formalities and lower costs than creating a new entity like a corporation or LLC. It allows the foreign company to operate under its existing name and utilize its existing business model and branding. This can be advantageous for maintaining brand consistency and leveraging the parent company's established reputation.

However, the main drawback of a branch office is the exposure to liability. Since the branch is not legally distinct from the parent company, any legal issues or debts incurred by the branch can directly impact the parent company's assets. This structure also subjects the parent company to US taxation on the branch's income, which can complicate tax reporting and increase tax liabilities.

Despite these challenges, a branch office can be a practical option for foreign businesses looking to test the US market or establish a physical presence without the commitment of forming a new legal entity. It offers a way to build relationships, understand market dynamics, and make informed decisions about further expansion.

Representative Office

A representative office serves as a non-commercial presence for a foreign company in the US, primarily focusing on activities such as market research, promoting the parent company's products or services, and acting as a liaison between the parent company and US stakeholders. It is not permitted to engage in any revenue-generating activities, making it unsuitable for conducting actual business transactions.The primary advantage of a representative office is its simplicity and low cost of establishment. Since it does not conduct commercial activities, the regulatory and tax requirements are minimal compared to other business structures. This makes it an attractive option for foreign companies looking to explore the US market, establish business contacts, and gather valuable market intelligence without committing to a full-scale operational setup.A representative office can serve as a preliminary step for companies considering future expansion into the US. By providing a physical presence, it allows the company to build brand recognition, understand local market conditions, and develop relationships with potential clients, partners, and regulatory authorities.However, the limitation on commercial activities means that a representative office cannot generate revenue or directly contribute to the company's bottom line. Therefore, it is best suited for businesses that are in the initial stages of market entry and are primarily focused on research, promotion, and networking activities.

Deciding on the Stucture of your business is crucial to its' success. NATTAM Consulting can help you decide the best path for your business in the U.S.

Let us help you when choosing the structure of your new business.

Corporation (C Corporation)

Limited Liability Company (LLC)

Partnership

Branch Office

Representative Office

Our Company

Working Time

Contact Us