Why create a company in Florida, Miami, Orlando… and not in Delaware?

Whether in Miami or Orlando, entrepreneurs from large European cities are particularly fond of the West Coast of the United States to set up their business. The state of Florida (where the cities of Miami, Tampa, etc. are located) offers a good international image, which favors the establishment of a company in this region. In addition, you will be able to open a bank account for your entity in the USA.

Why choose LLC in Florida rather than Delaware?

There are several reasons why you might want to form an LLC in Florida rather than Delaware. One is that Florida has no income tax, which can save you money if your entity generates a large amount of income. Another reason is that Florida is one of the states that has more flexible rules for LLCs than Delaware. For example, in Florida, you only need one member to create it, whereas in Delaware, you need at least two. You also do not need to register your business in Delaware if you choose to register it in Florida.

One of the disadvantages of setting up in Florida is that it is not considered an offshore company. Therefore, you will not receive the same tax benefits as if you were to set it up in a jurisdiction like the Cayman Islands. However, if you operate primarily in the United States, Florida is still a good choice for your Limited Liability Company.

Many French people, when talking about tax havens, automatically think of Delaware.

The advantages of creating a company in Florida and opening a bank account

Starting your business in Florida has many advantages. The State of Florida offers an ideal setting for doing business. Florida has a good image and a favorable environment for businesses because it offers many tax advantages (especially regarding taxes). In addition, starting your own business gives you access to a large market. Orlando is a great place to start your business. The city is home to a large number of businesses and offers a variety of business resources (co-working space, etc.).

Once you have gathered all the documents, decided on the headquarters of your company, you can move on to the banking stage.

Many people want to know if it is possible to open a bank account in the US without being a resident or US citizen. The answer is YES, it is possible to open one with Mercury or Chase for example.

However, opening a personal bank account requires proof of residence in the USA (water, electricity, telephone bill, etc.) even if you are not a resident/citizen of the USA.

Starting your own business in Florida is a great way to get started in business.

Everything you need to know about starting a business in Florida: the highlights

The first step is to choose a name through the public registry to see if that name is available in Florida. Once your company is domiciled in Florida, you will then obtain an Employer Identification Number (EIN) from the IRS. Our firm will take care of all the procedures. You will use this number to open a business bank account and to declare your taxes by May 1st.

The creation of a company in Florida allows you:

• Save on taxes, an LLC is not subject to the same taxation as other corporations (you must pay before May of the current year for example);
• Limit your liability, which means that you are not personally responsible for the debts and liabilities of the company;
• Opening accounts at the bank is facilitated;
• Have a reduced sales tax rate (the tax you owe is reduced compared to another state);
• To benefit from a brand image of this state.

All of these elements make LLCs a popular choice for small businesses and startups.

Overall, forming an LLC in the state of Florida is a relatively simple and straightforward process. After doing a good market study and business plan, it will be easy to get started. In addition, it offers many benefits and protections to its owners, making it an excellent choice for those looking to start a business.

Legal forms to create your company in Florida

For people wishing to create a company in the United States because it is more advantageous, there are two types of companies recommended in the United States, the LLC and the C Corporation. The choice of the legal form depends on the jurisdiction in force.

The most common form in the USA is the Limited Liability Company, better known as LLC.

The French who want to settle on the West Coast are particularly fond of the LLC.

Choose Florida and choose Merritt Middle East

Florida is the state of choice when you decide to start a business in the United States.

Our firm in Orlando, Florida takes care of all the administrative procedures for the creation of a company in the USA and the opening of bank accounts in reputable institutions in the USA.

For more information, please contact us at support@merritt.group

Have you heard about “the American dream”? Well, many of you have taken the plunge and conquered the American market. The United States is one of the favorite destinations when you decide to boost your career, create your company, etc.

If you decide to settle in the Sunshine State (Florida), you will need to familiarize yourself with the rules and laws of the country but also and especially with the tax system.

Although Florida offers a much more flexible tax system than France, it is still very specific unlike the 49 other states in the United States.

In the United States, the tax system is a bit complex. People have to pay different taxes at the federal and state level. But not only that, there are also taxes at the city and county level… taxes in the United States are endless.

Translated with www.DeepL.com/Translator (free version)

Which tax treaties between France and the United States?

here are two (2) tax treaties between France and the United States. The first one dates from 1978 and the second one from 1994.

A double taxation treaty (DTT) is a treaty concluded between two (2) States, which aims to avoid double taxation of persons and companies. An important point is the determination of the tax residence, i.e. the place of taxation. The goal is that the person or company is not taxed once in each country for the same income. There are of course conditions, which can be found in article 4 of the Franco-American convention of 1994 to determine the country of your tax residence (in hierarchical order):

• The country where you have your permanent home
• The country where you have your center of vital interests*
• The country of your habitual residence
• The country of your nationality

To be considered a U.S. tax resident, you must meet at least one of the following criteria:

• Be a U.S. Citizen;
• Be a Green Card holder;
• Be present in the United States for at least 183 days;
• Be present in the United States for 183 days according to the following calculation
• Number of days spent in year N: + 1/3 of the number of days spent in year N-1 + 1/6 of the number of days spent in year N-2.

A tax treaty therefore avoids double taxation and makes the transfer of assets easier.

Taxes in the United States are administered by the Internal Revenue Service, better known as the IRS. State taxes are administered at the state level.

Taxes in the USA

What about the wealth tax in the US?

Good news, there is no wealth tax. The United States, unlike France, avoids any mechanism that could scare away the wealthiest.

Federal Tax

The federal tax in the United States is also called the national tax. As in France, the scale varies according to family situation and income. It is a progressive tax imposed on income that varies from 10 to 35%.

There are possibilities to reduce this tax through the deductions for professional expenses. If you are the manager of a company that makes less than $50,000 in income, then the rate of this tax will be 15%. The advantage is that this tax is based on the possibility of deducting professional expenses (within a certain limit).

Income tax

Income tax is deducted at source, i.e. the employer collects the tax and remits it to the State. Before the tax is deducted, deductions and allowances are applied.

What is the tax rate in the United States?

• For individuals: Rates vary from 10% if you earn less than $8,925 to 35% if you earn more than $398,350 to 39.6% for incomes over $400,000. This can also change depending on your family situation.
• For corporations: The rates vary from 15% if your taxable income is less than or equal to $50,000 to 38% if your corporation has more than $15 million in taxable income.

The state tax

• Individuals: The state tax is more commonly known as the “state tax”. In the State of Florida, it is mentioned in its constitution that there was no personal income tax.
  In reality, it did exist but was abolished in 2007. At that time it was called the “intangible personal property” tax.
• Corporations: Corporations in the State of Florida are subject to a 5.5% tax on their net income.

Other taxes: local taxes

The calculation of these taxes is based on declared gross income. Both residents and non-residents are affected by these taxes. In brief, some of these taxes:

• The Property Tax: in French we speak of the property tax. The basis of this tax is the real estate of individuals and companies.

This tax amounts to approximately two percent of the market price of the property in question. Note that this tax is tax deductible.

In Florida, there is also the Homestead Exemption, which allows a Florida homeowner to benefit from a tax abatement of up to $50,000 on the property tax of their principal residence.

• There is also the “Sales and Use Tax” which is similar to the local VAT that is added to the purchase price of any type of consumer goods. This tax is seven percent in Miami County…a far cry from the 20 percent applied in France.

In contrast to VAT, companies do not deduct Sales Tax. Companies pay this tax to their supplier if they are the final users of the goods. But, if the company collects Sales Tax, it can obtain a certificate that will allow it not to pay tax on goods purchased for resale. Also, it should be noted that there is no sales tax on services.

• Taxes on rental income: According to Article 6-1 of the Convention, rental income from real estate located in the United States is taxable. This income is exempt from taxation in France, but if you are a French tax resident, France reserves the right to take this income into account when calculating its tax rate.

Tax residency is not a subject to be taken lightly, especially in countries such as the United States. An omission or attempt at fraud could cost you dearly. We advise you to get in touch with a tax lawyer in your country of origin to validate all your questions regarding tax residence.

For all matters related to the creation of a company, our local team can welcome you and accompany you. For more information: support@merritt.group.

Choose Florida

More and more entrepreneurs choose Florida and more particularly Orlando to develop their business.

Setting up a business in the United States is not something you can improvise, you have to weigh the pros and cons and take an interest in the potential tax optimization that could result from it.

Fact! The decision to set up in America has been made, you are now hesitating as to the choice of the state in which you will set up your company.

As many choices as there are states!

Your choice is between two states: Florida or Delaware.

In both cases, Florida and Delaware offer zero income tax.

However, these two states have many differences. To know:

1- If you choose Florida to locate your business then you will benefit from a physical address for your offices which will allow you to open a bank account locally much more easily and quickly

2- Having your company in Florida means benefiting from the notoriety of this state and its good image. Delaware suffers from the image of a tax haven that is associated with it. Read here: Why you should avoid Delaware.

3- It is true that the cost of creating a company in Florida is higher than a company in Delaware, but this difference is that of banking and fiscal tranquility!

Do not hesitate to contact us to validate that Florida is the right place for your business needs.

Your final choice is to start your business in Florida

            Why Florida, why Orlando

In the USA, Florida is known to be one of the favorite destinations for Europeans and Quebecers.

The main reason is the time difference. Indeed, there is only 6 hours time difference with Europe which is very advantageous to do business with European companies. One should also not neglect the daily flights between the USA and Europe.

If expatriates choose Florida, it is not by chance. Indeed, in general, the cost of living is much lower than in New York for example. Also, the economy as well as the tax rates are much more advantageous which offers more benefits for foreign entrepreneurs.

Finally, with rates of return much higher than other major U.S. cities, Florida is the ideal place to start a business.

            Studying the American market

Before starting a business in the U.S., make sure you have done a preliminary study to validate the viability of your business. Many companies close after only a few months because they did not know the market.

If you prepare your installation and if you do your market research correctly you could quickly start generating very large profits. Indeed, the state of Florida is known to host some of the biggest American companies: Burger King, Disneyland, etc.

This is why early research is more than essential to the success of your business.

            Choosing the LLC in Florida

Once the idea is found and studied, it is time to choose the legal structure and to start the administrative steps to incorporate your company. The most common legal form used by expatriates is the LLC. (See the article on LLC).

The LLC is the quickest and easiest form of incorporation in the US to create a company. This type of structure is the ideal choice for start-ups and medium-sized companies.

It should be noted that Florida has one of the lowest taxes in the United States, which makes it the ideal place to do business.

            Taxes in Florida

There is no state income tax in Florida. There is only a 5.5% sales tax.

If you are not resident in the USA and you have an LLC, this type of company is tax transparent (it is not the company that is taxed but its partners).

This is why this destination is favored by entrepreneurs but not only, retirees also come to enjoy the sun and the tax advantages of living in Florida.

            Florida, an excellent asset for your business

Florida has an excellent reputation in the business world. Although the income tax is zero and the rest of the taxes are low, the state of Florida is not on any of the OECD’s risk lists. It is therefore possible to manage your company from the USA or from abroad.

If you are ready to take the plunge, our firm offers its assistance for the creation and administrative follow-up of your company in the USA. We are registered as a Registered Agent and can therefore represent your company on American soil with the American authorities.

In the eyes of the law, we are your legal representative.

But not only that, in addition to this Registered Agent mandate, we can also take care of your company’s accounting in order to comply with American standards.

Contact our Orlando office at support@merritt.group .

Within your company, you may need to use a tampon.

How to use a company stamp correctly is one of the dilemmas you may face if your company has lots of documents to decide on.

• What is a seal?

A corporate stamp is a way to confirm that a document is certified and accepted by all parties involved in the decision making. It is considered as the signature or official mark of the company. A company stamp will include:

– The name of the registered company

– The year of incorporation

– The state in which it was legally deposited

The company stamp should only be used with the permission of company officers. When the company stamp is affixed to a document, the signature of the Manager may also be required.

Traditionally, sealing wax has been used to imprint the stamp on company documents. More common today is the use of two metal plates engraved with the company stamp. The embossing leaves a clear mark on the paper when the plates are pressed firmly together. Alternatively, the stamp can be affixed using an ink pad and rubber stamp. It can also be digitized, this is called an “e-seal”.

• When might you need a company stamp?

Important documents that might require a company stamp are:

– Employment contract

– Agreements with suppliers

– Sales contracts

– Minutes of meetings

– Leases

– Loan documents

– Government requests

– Legal documents

– Membership certificates

– Share certificates

• Is a company stamp necessary today?

As many businesses change over time and transactions take place electronically, the company’s stamp is used less and less. Some states will now recognize the signature of an individual who has been authorized to act on behalf of the company rather than a company stamp. This is the case with Florida.

After more than a decade of talks, 130 out of the 139 countries that had entered into negotiations signed the new OECD reform concerning a harmonization of the new global tax treaty, this July 10 in Venice. These 130 jurisdictions alone represent 80% of GDP

The idea of ​​this reform tends to make multinationals pay a tax qualified as “fair” regardless of the country where they operate.

For years, a debate has animated the OECD: what international tax rules to impose on multinational companies?

The beginning of the month has been hectic. The member countries of the Organization for Economic Co-operation and Development, also called the OECD, have agreed on the full implementation of a global minimum tax.

This new international tax scheme puts in place a global minimum corporate levy of 15% to deter large corporations around the world from set up in tax havens with low tax rates.

Statutory corporate tax rates in OECD countries

In fact, in the current system the American government considers itself to be at a disadvantage with certain American multinationals.

How and why?

Some multinationals have their headquarters in the US and their actual activities in countries where they have real business and customers. The result is that American multinationals would pay less tax to their government and more to others. In addition, the overseas profits of these same companies are taxed much more.

From 2000 to 2018, American companies made half of all foreign profits in seven low-tax jurisdictions: Bermuda, the Cayman Islands, Ireland, Luxembourg, the Netherlands, Singapore and Switzerland.

This is why the new OECD agreement forecast for capping a minimum overall tax of at least 15%, which would have the consequence of making more taxes payable to multinationals that generate significant profits in jurisdictions with low taxation.

All the G20 countries such as the USA, the United Kingdom, China and France have supported the initiative.

But some countries preferred to keep their own tax rate, as it is below 15%.

For example, we have Ireland with a corporate tax rate of 12.5% or Estonia which only applies a tax on distributed corporate profits.

These new rules call into question a century-old flawed international tax system that is not suited to the globalized economy of the 21st century.

US Treasury Secretary Janet Yellen said: “Today is a historic day for economic diplomacy.”

One reform, two pillars

Pillar 1 aims to redefine where multinationals pay their taxes and Pillar 2 sets the minimum tax rate.

• Pillar 1: this pillar concerns multinationals and aims to make the distribution of tax payments fair. The aim is to reallocate taxing rights to the company’s country of origin and not let the countries where the companies operate, make their profits, control the tax payments. It was specified that multinationals making a profit of more than 100 billion dollars would be taxed in the country where the profit is made.
• Pillar 2: this pillar concerns the global minimum tax. The new minimum tax rate of at least 15% would apply to companies with turnover above the 750 million euros ($ 889 million) threshold. It was the G20 countries that agreed to the 15%, while other countries are trying to get higher tax rates.

This historic agreement is supposed to come in support of the various governments who need these taxes to revitalize and revive their economies while investing in public services, infrastructure and all the measures necessary for post-Covid-19 reconstruction.

This deal could bring in more than $ 150 billion in tax revenue each year.

It has been implied that companies “in the initial phase of their internationalization” would be exempt from this minimum tax.

Certain sectors of activity would not be affected by these new laws – still under negotiation.

French Finance Minister Bruno Le Maire described it as “the most important international tax deal in a century” during a press conference.

US Treasury Secretary Janet Yellen spoke in stressing the US’s willingness to lower its corporate tax rate despite responses from other countries lowering their rates even further in return.

Multinationals tend to locate where tax rates are low, which represents a significant loss of revenue for governments in a race to the bottom for tax rates.

Within the European Union, for example, the average rate has fallen from 50% in 1985 to 22% today.

Evolution of the average corporate tax rate in the European Union

This agreement is finalized after years of discussion and ends the race for who will have the lowest tax rate.

The final and detailed plan is scheduled for October 2021.

The aim of this plan is to discourage multinationals from transferring their profits to jurisdictions with favorable taxation, regardless of the country where their activities are carried out.

The signing of this historic agreement marks the start of a “new world”. The intention behind this agreement is to prevent companies from seeking low and favorable tax rates. The goal is to get them to pay their fair share of tax regardless of where they conduct their business and where their head office is located.

The implementation process is likely to be long and is expected to come into force in 2023. Note that the last time the international tax rules were changed was in 1928.