US Company Registration Guide Tax Types You Need to Know

Essential Guide to U.S. Company Registration A Comprehensive Overview of Tax Types

Registering a company in the United States is a crucial step for many entrepreneurs and businesses looking to expand internationally. However, the complex U.S. tax system often leaves newcomers confused. Understanding various types of taxes and their applicability not only helps with tax planning but also reduces compliance risks. This article explores several common tax categories, incorporating recent economic and policy developments, to provide a practical tax guide for companies considering establishment in the U.S.

1. Federal Income Tax

The federal income tax is one of the most fundamental and important taxes applicable to U.S. corporations. According to the Internal Revenue Service IRS, C Corporations are subject to corporate income tax on their profits, currently taxed at a flat rate of 21%. This rate has remained stable since the Tax Cuts and Jobs Act was implemented in 2017.

In contrast, S Corporations are not directly taxed at the federal level. Instead, they follow a pass-through taxation structure, whereby business income flows through to shareholders’ personal tax returns. This structure has gained popularity among small and medium-sized enterprises, especially startups and family-owned businesses.

2. State Corporate Income Tax

Beyond federal taxation, each state maintains its own corporate income tax regime. For example, California imposes a flat corporate income tax rate of 8.84%, along with a minimum annual tax of $500. Texas, on the other hand, does not levy a traditional corporate income tax but applies a franchise tax based on gross receipts for certain industries.

When selecting a state for incorporation, companies should evaluate local tax rates, business environment, and industry-specific factors. As of early 2025, Nevada and Florida have become popular choices for tech startups and cross-border e-commerce businesses due to their lack of corporate income tax. However, these states may impose alternative fees on assets or revenue, so comprehensive tax planning remains essential.

3. Sales Tax

Sales tax is an indirect tax borne by consumers, collected and remitted by businesses. Rates vary significantly by state-and even within cities. For instance, some areas in California impose a sales tax as high as 10.75%, while Oregon levies no sales tax at all.

For retail, e-commerce, or product-based businesses, accurately calculating and reporting sales tax is critical. Following the U.S. Supreme Court’s 2018 decision in South Dakota v. Wayfair, businesses without a physical presence in a state may still be required to collect and remit sales tax if they meet certain sales thresholds. This ruling has significantly increased compliance demands for online retailers and cross-border sellers.

4. Employment Taxes

Businesses that hire employees must manage a range of employment-related taxes, including Federal Insurance Contributions Act FICA taxes, Federal Unemployment Tax Act FUTA taxes, and state-level unemployment and disability insurance taxes.

FICA taxes fund Social Security and Medicare, with both employer and employee contributing equally-totaling 15.3%. Employers must also file documents such as W-2 forms employee wage statements and Form 941 quarterly payroll tax returns.

With the rise of remote work, cross-state employment has introduced new tax complexities. For example, a company incorporated in Arizona but employing someone working remotely in New York may need to comply with tax regulations in both jurisdictions. Consulting a professional tax advisor before hiring remote workers is highly recommended.

5. Self-Employment Tax

Self-employed individuals, such as members of Limited Liability Companies LLCs or independent contractors, are responsible for paying self-employment tax, which serves as the equivalent of FICA taxes. The current total rate is 15.3%-12.4% for Social Security and 2.9% for Medicare.

In 2025, the IRS introduced updated guidelines increasing allowable deductions for self-employed individuals, including home office expenses and travel costs. These changes offer more opportunities for legal tax savings. Staying informed about evolving tax policies can help optimize personal and business financial strategies.

6. Capital Gains Tax

Companies that sell assets such as real estate, equipment, or stocks may be liable for capital gains tax. Depending on the holding period, gains are classified as short-term held less than one year, taxed at ordinary income rates or long-term held over one year, taxed at preferential rates.

With increased market volatility, many startups involved in equity transactions during fundraising rounds now face greater attention on capital gains management. Some companies are adopting deferral strategies, such as the 1031 exchange, to delay tax liabilities from asset sales.

Conclusion

Registering a company in the U.S. is not merely a legal formality-it is a strategic financial and tax planning decision. Different business structures, operational models, and regional policies can significantly impact overall tax burden. In today's landscape marked by widespread remote work, e-commerce growth, and multi-state operations, proactive tax planning is more important than ever.

For first-time entrants into the U.S. market, seeking advice from a qualified accountant or tax consultant early in the registration process is strongly advised. Developing a tailored tax strategy aligned with your business model will help ensure compliance while optimizing costs.

Only by fully understanding and skillfully applying the U.S. tax framework can businesses position themselves more competitively in the global marketplace.