Essential Tax Knowledge After Registering a Company in the U.S.

Tax Knowledge You Must Know After Registering a Company in the U.S. A Comprehensive Guide

With the deepening of global economic integration, more and more entrepreneurs choose to register companies in the United States to expand into international markets and enhance brand visibility. However, registering a company in the U.S. is only the first step. The key to long-term and stable business operations lies in understanding and complying with the local tax system. This article provides a practical guide on U.S. corporate tax knowledge for entrepreneurs who are planning or have already established businesses in the U.S., based on the fundamental structure of the American tax system and recent developments.

I. Overview of U.S. Corporate Taxes

The U.S. tax system is complex and multilayered, consisting primarily of federal, state, and local taxes. Common types of taxes relevant to businesses include

1. Corporate Income Tax

According to the Internal Revenue Service IRS, C Corporations are subject to corporate income tax at a flat rate of 21%. This rate has remained stable since the Tax Cuts and Jobs Act was implemented in 2018 and remains one of the major attractions for foreign investment.

2. S Corporations and Partnerships

These entities are generally treated as pass-through entities, meaning that the business itself does not pay corporate income tax. Instead, profits are passed through to shareholders or partners, who report them on their personal income tax returns. This structure helps avoid double taxation.

3. Sales Tax

Sales tax is determined by individual states and varies widely-from less than 3% to over 10%. For example, California imposes a sales tax rate of 7.25%, while Oregon has no sales tax at all. Businesses must understand the applicable rates in their operating jurisdictions and comply with registration and reporting requirements.

4. Employer Taxes

If a company hires employees, it must pay employer-related taxes such as Federal Insurance Contributions Act FICA taxes and Federal Unemployment Tax Act FUTA taxes. Additionally, employers must withhold federal and state income taxes from employee wages.

II. Filing Deadlines and Reporting Obligations

U.S. companies typically file their annual tax returns within three months after the end of their fiscal year or by April 15 for calendar-year taxpayers. Specific forms include

Form 1120 for C Corporations

Form 1120S for S Corporations

Form 1065 for Partnerships

Businesses with employees must also submit W-2 and Form 941 regularly.

Notably, the IRS has intensified its scrutiny of corporate tax compliance in recent years. In early 2025, the IRS announced an expansion of its automated audit system, using artificial intelligence to detect potential tax evasion. As a result, any irregularities in tax filings significantly increase the likelihood of being selected for an audit.

III. Special Considerations for International Businesses

For entrepreneurs from China or other countries, several additional considerations apply after establishing a U.S. company

1. Foreign Shareholders and Ownership Structures

Foreign individuals setting up U.S. entities may be subject to special rules such as the Foreign Investment in Real Property Tax Act FIRPTA and Passive Foreign Investment Company PFIC regulations. It is advisable to consult with a professional tax advisor early on to optimize equity structure and profit distribution strategies.

2. Cross-border Financial Transactions and Reporting Requirements

The U.S. maintains strict oversight over cross-border capital flows, especially those involving foreign bank accounts. Required filings include the Foreign Bank Account Report FBAR and Form 8938 Statement of Specified Foreign Financial Assets. Noncompliance can lead to significant penalties.

3. Double Taxation Agreements DTAs

The U.S. and China have a bilateral tax treaty aimed at reducing double taxation. Under this agreement, certain types of income may be taxed in only one country or allow for tax credits for taxes paid abroad. Businesses should take full advantage of these provisions to optimize their tax positions.

IV. Common Misconceptions and Recommendations

Despite growing awareness of tax issues, many entrepreneurs still fall into common traps

Misconception 1 Small companies don’t need to file taxes.

Even if a company did not generate profit during the year, it is still required to file a zero return. Failure to do so may result in fines or even revocation of the business license.

Misconception 2 Pay taxes only in the state of incorporation.

In reality, if a company operates in multiple states, it may be required to register and pay taxes in each state where it has a substantial presence-known as nexus.

Misconception 3 Using personal accounts avoids taxes.

This practice is illegal and likely to draw IRS attention. All business transactions should be conducted through the company’s bank account, with complete financial records maintained.

V. Conclusion

Registering a company in the U.S. presents great opportunities but also comes with regulatory challenges. To ensure sustainable growth, entrepreneurs must thoroughly understand the U.S. tax system and strictly adhere to compliance requirements. It is highly recommended to establish a robust financial framework early on and seek assistance from qualified accountants or tax advisors to maximize benefits within the bounds of the law.