Startup Nation: Why the US Is the Favorite Startup Country in the World

Newly established businesses can be a daunting and terrifying task for entrepreneurs. A lot of personal investments are risked on as startup business, while still operating against the backdrop of failure, income tax reform, changing socio-economic policies and legislation, buyer influence, and political agendas. Yet Handel “Del” Henri, a U.S. startup advisor and finance expert who deals with payment processing says that “When you consider how many global startups base their world facing operations in the U.S, versus Hong Kong, Malta and Europe, there is actually no comparison to be made - America remains the obvious choice. I tell all my foreign clients to use resources like TRUiC and government portals to do thorough research”. 

What sparked this trend?

Although the U.S. has long been a favourite for foreign startups, the acceleration of this trend may also have something to do with the action of the current administration. During his term, President Trump has created a platform on which entrepreneurs and new business owners can operate with better-reformed tax legislation. It’s a domino effect that has given American citizens more traction, adding towards their economy, creating jobs, and holding down their global affluence.

TRUiC CEO Nagabhushanam "Bobby" Peddi says that they now provide information to over 1 million visitors per month seeking to start a U.S. business, with statistics showing that 40% of all visitors originate from abroad.

To become a front runner in global influence, countries and governments are finding better ways for citizens to play an active role in the economy. Over the last two decades, many industries have started to change their traditional understanding of business and trade – making space for newer and better ingenuity. Today, the United States has become a world leader in science, technology and military, holding the world's largest Gross Domestic Product, cashing in around $20.5 trillion in the 2019 financial year.  Corporations, S Corps, nonprofits and similar businesses have started to enjoy better tax privileges in the last few years of the Trump Administration, with lowered tax deductions and better freedom for international investors.

Let’s have a look at some of the things that make the U.S. one of the best start-up nations in the world.

Improved tax-reforms

Americans are holding out to see whether Trump will win the re-elections in the November elections, although there’s a lot of aired opinions around it, it’s important to look at how Americans have gained more confidence to start and operate a business within the nation’s economy. The Tax Cuts and Jobs Act (TCJA) were signed into law by President Trump in December 2017 and have managed to create a single corporate tax of 21%. This made space for more permanent tax cuts for individuals, and making the market more socially fluid.

TCJA  has been successful to some capacity in terms of suspending miscellaneous itemized deductions such as business bad debts, laboratory breakage fees, and moving expenses to name a few. More notably, TCJA allows businesses and corporations to instantly and fully deduct the cost of new capital investments. This gives them the chance to invest more money in their operations. Additionally, this has enabled more business owners and entities to deduct a larger percentage of their business income and receive better capital investment.

How does it benefit American businesses?

Depending on whom you ask, but a lot of small and medium business owners in high tax states saw some change in their returns. The latter is that TCJA has restricted the amount of net business interest, meaning that a business can deduct around 30% of business income before interest. Additionally, the new law also gives space for reduction and payback adjustments. The reform has flocked more investors to the economy, as many corporate businesses will enjoy better tax rates, bringing the previous rate down from 32% to 21%.

Why should you consider starting a new corporation in America?

Subject to your capital resources and the needs of your company, the U.S. market makes it possible for both citizens and non-citizens to easily start a corporation. Each state will entail separate state legislation, upon this, considering the very low corporate tax rate imposed by the Tax Cuts and Jobs Act these business structures are said to be taxed firstly on their profits and additionally file taxes on dividends paid to shareholders. TCJA has opened more opportunities for local investors, business owners, and also young entrepreneurs looking to start their newly formed business ventures.

The process of starting a corporation in the U.S. in brief

Before setting off, there are some important factors you should review. Understanding the procedures and legalities will help you decide whether it’s better to start a corporation or an LLC. A big difference between the structures boils down to tax benefits and the amount of time it will take to raise capital once it’s established.

Final take:

Forming a corporation in America can offer unlimited capital generation, better corporate tax benefits, and can become relatively appealing for more domestic and international investors. Depending on the capital needs and/or ownership arrangement you’ll need to consider which structure will suit your business the best. You can learn more about how to start a corporation, by reviewing the formation guidelines procedure online.