Company Formation

Israelis who are interested in doing business in the US should choose a legal entity that suits the type of business they wish to do. The different options differ in the level of taxation, the form of taxation and reporting to the tax authorities, disclosure obligations and the liability of the entity. One of the common forms of incorporation for conducting business in the US is the LLC, with its full name being Limited Liability Company.

What are the differences between a company in Israel and a company in the US?

Many entrepreneurs and business owners from Israel are familiar in one way or another with the tax laws in Israel, a familiarity that makes them think that these are the same tax laws as those in the US. In practice, there are a number of fundamental differences between a company in Israel and a company in the US:

1. A limited liability company in Israel constitutes a separate legal entity, as opposed to an LLC, in which the owners of the company are personally liable for the company’s financial situation.
2. The corporate tax rate is different between Israel and the US, with Israel at 23% and the US at 21%.
3. In the US, there are a variety of options for opening a company in the US and the different types of companies.
4. The costs of establishing and operating a limited liability company in Israel are considered more expensive than the costs of establishing and operating an LLC in the US.

Official steps in establishing an LLC in the US

Anyone can open an LLC in the US, they do not have to be American citizens. The steps in the process of establishing a company in the US are:

• Choosing a country: This does not have to be the US state where you will conduct most of your business (although sometimes this also makes sense), but it is important to choose a country that offers you good conditions in terms of taxation, business regulation and a legal system that is convenient for international entrepreneurs. That is why many entrepreneurs choose to establish a company in the state of Delaware.
• Choosing a name for an LLC: Each state has its own rules regarding the names of companies established in their territory.
• Official support from a professional for registering an LLC: The general recommendation is to use a professional from the beginning of the process to manage and carry out all stages of incorporation as an LLC in the US. For Israeli entrepreneurs, this involves a CPA/attorney specializing in establishing companies abroad and sometimes also a US incorporation registration agent.
• Filing incorporation documents with the state: The first practical step in establishing a company in the US, filing incorporation documents that include details about the company, business activities, whether there is one or more owners, etc.
• Company operating agreement: Not required in every state but can be useful in various aspects of conduct. In essence, this is a legal document that describes the ownership structure and the operating and conduct procedures of an LLC.
• Obtaining an EIN: (Employer Identification Number Part of the tax identification components of an LLC is the EIN, this is an employer identification number. You do not need a US National Security Number or a personal identification number from the US Internal Revenue Service, nor a US address to obtain an EIN number.
• Opening a US bank account: To establish a company in the US, you also need to open a bank account for the LLC, which is sometimes the most complicated part because it may definitely require your physical visit to the bank.

Our offices assist in establishing a company in the US in an experienced and fast manner.