To attract investments in your startup from the USA, you need to register a company in Delaware. Why exactly there? The fact is that most professional investors invest only in startups registered in the form of C Corporation (when the business is owned by shareholders who bought the company’s shares) in the state of Delaware. When registering a startup in the USA, seeking professional assistance can make the process more manageable; using the Best LLC Services can provide valuable guidance, support, and resources to help you establish your business on a strong foundation.
It is an established practice in the US. Corporate law in Delaware is the most developed and understood by both investors and startup founders. It is also considered the most business-friendly. Consequently, all parties benefit from registering a startup in this state.
You can register a corporation in Delaware both with the help of lawyers and using the services of online registrars. This SmallBusinessHQ review will help you figure out the best business formation service for your business. The cost of online services is usually around $700-1,000. Lawyers will charge you $1,200 – $1,500.
If you launched a startup and started your activity, you must pay taxes. Let’s give general info on taxes on the example of a Californian enterprise registered as a C Corporation. If you have employees on staff, including yourself, and pay them a salary, you need to pay taxes, both federal and local. It can be done either with the help of an accountant or one of automated services, such as ADP or QuickBooks. Payroll taxes in the US are relatively low compared to other countries. In California, it will be about 12%.
Since 2019, corporate income tax has been significantly reduced from 35% to 21%. However, in addition to the federal tax, you still have to pay California tax. This is about 9% of the profit. Annually, you also need to pay the so-called franchise tax of $800.
The annual tax return must be submitted by April 15 of each year. During the year, the company must pay taxes on current profits. This is done in four installments until April 15, June 15, September 15, and December 15.
Where to look for money for a startup
There are two main sources of money for start-up businesses:
- Loans that must be repaid on time with interest.
- Angel investment in a startup in exchange for a share in the company.
According to statistics, at an early stage of development, startups rarely get bank loans because startup entrepreneurs do not have the necessary credit history, and their projects have a high degree of risk. In rare cases, startups can receive financing in the form of loans from both banks and services that provide comprehensive assistance to new startup businesses. This is possible if the new company has guarantors with a good credit rating and liquid assets.
High-tech startups can apply for government grants under the SBIR/STTR program. But in this case, US residents must own at least 51% of the capital of a startup.
The primary sources of funding for most startups in the first stage of development are investments from angels, incubators, accelerators, angel associations, crowdfunding, and venture capitalists’ money.