Foreign Direct Investment in the United States plays a major role in shaping the U.S. economy and attracts foreign investors for being an investment friendly destination.The United States with a population of over 300 million people remains the largest single recipient of FDI in the world.
Facts
Official Name: United States of America
Capital: Washington, D.C.
Population: 318,892,103
Area:9,826,630 Square Kilometers
Currency: U.S.Dollar
Major Mountain Ranges:Rocky Mountains, Appalachian Mountains
Major Rivers: Mississippi, Missouri, Colorado
Languages:English, Spanish (No Official National Language)
U.S.A is one of the strongest economies in the world and embodies one of the most important markets in the world. Productive workforce, legal protections, a flexible business atmosphere that encourages innovation undoubtedly makes United States a popular destination for foreign direct investment (FDI).
According to the US Department of Commerce, the United States is considered to be a prime location for international investment. According to UNCTAD, World Investment Report 2017,USA received around USD 391 billion in the year 2016 (compared to USD 348 billion in 2015), which made it the largest FDI recipient in the world.
The development of regional clusters is also offering attractive opportunities to foreign investors in USA. As a result, leading foreign firms are regularly investing on a regular basis by establishing new operations, or providing additional capital to their existing U.S.operations.
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United States is considered to be the most popular country in the world mainly because of it’s leading consumer market, and for its business culture that supports innovation, which greatly motivates and encourages foreign investor for investment and greatly benefits the US economy.
Presently to secure a business registration certificate the following investment opportunities are available to foreign investors.
The U.S. offers number of advantages which makes it easy for foreign investors to get their company registration easily in the United States.That includes open and free regulatory environment to conduct business, strong private equity and capital markets which greatly has benefited foreign investors in the past.
The business structure for company formation is well defined. Following are three main options, companies can opt for
Limited Liability Company (LLC)
One of the most common structures followed in USA for setting up a company is LLC. In USA a Limited Liability Company can prove beneficial as it has no limit or restriction on number of owners and in the origin of the owners. There is no taxes levied especially for business profit at entity level. LLCs offer flexibility to owners in allocating profits and losses.
C – Corporation
Similarly like LLC there is no limit on number of owners and there’s no restriction on becoming the owner(s) in USA for company incorporation under Corporation model. However, profit of C Corporation or Standard Corporation is taxable at entity level.
(Please note, S corporations, which are corporations elected with a special tax status within the Internal Revenue Service, are not allowed to have non-U.S. citizens as owners.) C corporations are audited less frequently than sole proprietorships.
Nonprofit Corporation
Nonprofit Organization are charities and organizations established for public welfare and social cause and are formed for purposes other than making a profit.Directors are not typically responsible directly for the nonprofits’ debts and liabilities.
Nonprofits can apply for both federal and state tax-exempt status. Some nonprofits are eligible to receive public and private grants, making it easier to get operating capital.With 501(c),(3) nonprofits, donations made by individuals to the nonprofits corporation are tax-deductible.
Single largest market
Despite the rapid expansion and swift growth of markets across the globe,USA with around 300 million customers,is considered to be one of the largest markets in the world.This undoubtedly is one main reason making USA one of the top most destinations amongst foreign investors for international investment.
Biggest foreign investors from leading Companies of Europe, Korea, Japan, are trying to secure manufacturing bases in the United States.US government on the other hand is encouraging such initiatives making it easier for investors to choose USA as an investment destination.
Economists recognizes the significance of Foreign Investment
Foreign investors will greatly benefit by investing in USA as setting up a company will enable them to expand their business operations. Moreover they will get the status and reputation of being a stable global organization.
According to a study conducted by the International Trade Association (ITA) (released in the year 2016),highlighted despite all sorts of economic slowdown leading companies and foreign investors like Toyota, Volkswagen, LG, BMW chose to set up their manufacturing base in USA.
Ranked no. 1 in inward FDI
The USA offers premier location to foreign investors for new investment opportunities.Govt has undertaken bold policy reforms which has greatly benefited the investor.According to Department of Commerce in USA figures, (released in the year 2014), foreign investment in USA under FDI regime rose from $160 billion in 2012 to $187.5 billion in the year 2013 as far as net inflows are concerned.
As a result USA is witnessing more investments from overseas companies who are investing billions of dollars in the United States.Specially by expanding their branches, & adding new facilities, its creating more job opportunities in USA
Skilled and highly educated workforce
Overall venturing into the markets of USA could be one of the highly rewarding investments for any foreign business.The United States is truly competing with the entire world in attracting skilled professionals which is greatly attracting foreign investors for global investments.Americans skilled workforce is considered to be one of the most productive workforce in the world, as the country offers diversity with work experience.
Forty-two percent of Americans between the ages of 25 to 64 are seen to have completed a level of education beyond high school, thus making it one of the most attractive labour markets globally.
Top universities and highly talented graduates
The United States is an attractive foreign direct investment (FDI) destination for diverse reasons. Top universities in the world are located in USA including Stanford University, Harvard University, University of Chicago, and Yale University.
According to QS World University Rankings, 2018–31 top US universities features in the top 100 and a further 28 institutions are in the global top 300.All this factors are motivating investors to look for investment opportunities in USA.
Most Competitive Investment opportunities
According to a 2017 report, published by the World Bank, the U.S. ranked eighth out of 190 economies of the world specially in terms of its quality of business climate. According to a business survey conducted by UNCTAD amongst multinational enterprises (MNEs), the United States has ranked as the number one country in terms of FDI for the period 2017-2019 which is one of the big motivating factors for international investment.
U.S has topped the 2014 and 2015 Kearney Foreign Direct Investment Confidence Index.Ernst& Young and IESE Business School’s 2013( Global Venture Capital and Private Equity Country Attractiveness Index )rated United States as the world’s most attractive market for venture capital and private equity funding.
American Polices
The United States provides a transparent judicial system which makes it favourable for Foreign investors.As per the Global Investment Trends Monitor, ranks United States first amongst counties in terms of FDI for the period 2016–2018.
Setting up a company in USA is easier as investment regulations in USA provide investors with significant management freedom. Moreover the regulations are fairly transparent as far as exporting is concerned.
USA undoubtedly is one of the top most destinations for foreign investment as the United States greatly welcomes foreign investors and maintains its commitment of open markets which greatly benefits foreign investors.
Business Plan
The basic and foremost activity for incorporating a company in USA will be to prepare a business plan in order to determine the way business will be operated. The business will have a vision with set objectives.
Business Location
Foreign investors in USA have to consider whether the company incorporation and its business are reaching to the mass which is one of the major factors that determines the growth and success of a business entity. Hence, careful selection of the location following US guidelines is essential.
Financing Business
Finance/capital is the most crucial element for a business startup. Venture capitals, Banks can prove to be viable options for financing. USA provides big support regarding finance which greatly is like an incentive for foreign investors.
Legal Structure of Business
It’s very important to decide about the structure of the business before applying for company registration. Mainly to check whether it will be a sole proprietorship company, or Partnership Company, or Limited Liability Company (LLC), corporation, nonprofits or cooperative considering the overseas investment.
Registering Business Name
It’s important to register the business name with the state government for making investments in USA.
Obtaining Tax Identification Number
It’s imperative to obtain tax identification number from the IRS and state revenue agency for international investments
Registering for State and Local Taxes
Registering with state in order to obtain a tax identification number, workers compensation, unemployment and disability insurance is vital for incorporating a company in USA.
Obtain Business Licenses and Permits
Getting a list of federal, state and local licenses and permits to obtain business registration certificate is required to invest in USA.
Understand Employer Responsibilities
Once the business license and business registration certificate is granted; owners must thoroughly study and understand their responsibilities and expectations as employers. It will help them in running the organization smoothly.
Irrespective of economic slowdown, United States of America remains to be top most choice for international investors for foreign investment opportunities because of its tax system.
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