How to Choose Shareholder Status When Registering a Company in the U.S. Revealing the Truth for Entrepreneurs

What Are the Shareholder Status Options for Company Registration in the U.S.? Unveiling the Truth for Entrepreneurs

For investors planning to start or expand a business in the United States, choosing the appropriate corporate structure and shareholder status is a crucial step in the entire registration process. As one of the most attractive commercial markets globally, the U.S. draws a large number of international entrepreneurs each year. According to recent data released by the U.S. Department of Commerce, the number of new businesses established by foreign investors in the U.S. in the first quarter of 2025 increased by 11.7% year-on-year, with a notable rise in entrepreneurs from Asia and Europe.

The choice of shareholder status during U.S. company registration affects not only the company’s legal structure and tax arrangements but also the investor’s legal liability and long-term development strategy. How many shareholder status options exist in U.S. company registration, and what do they each signify? This article aims to uncover the truth for entrepreneurs.

1. Individual Shareholder The Most Common and Direct Option

An individual shareholder refers to an investor who holds company shares in their personal capacity. This is the most common form of shareholder in U.S. company registration, particularly suitable for small businesses and startups. Individual shareholders can directly participate in company management, enjoy voting rights and dividend rights, but also bear corresponding legal responsibilities.

For foreign entrepreneurs, becoming a shareholder in individual capacity does not require U.S. citizenship or permanent residency. As long as they are over 18 years old and have legal status, they can register a company and hold shares. According to the U.S. Securities and Exchange Commission SEC, foreign individual shareholders must complete Form W-8BEN when filing taxes to benefit from applicable tax treaty provisions.

2. Corporate Shareholder Ideal for Multi-Layer Structures and Risk Isolation

In addition to individual shareholders, corporations can also serve as shareholders. This structure is often used by multinational enterprises or those with a multi-subsidiary structure. By setting up a U.S. company as a parent or holding company, which then holds shares in an operating company, investors can achieve better tax planning and risk isolation.

For example, a Chinese tech company recently established a subsidiary in California, with its parent company acting as the corporate shareholder holding 100% of the shares. Such a structure facilitates capital management and helps avoid the legal liabilities that individual shareholders might face. Corporate shareholders also offer greater flexibility in tax reporting, making them especially suitable for companies with long-term investment plans.

3. Trust Ownership For Asset Protection and Wealth Transfer Planning

In the U.S., trusts are a common legal tool and can also be used to hold company equity. A trust structure typically includes a settlor, trustee, and beneficiary. By placing company shares into a trust, investors can achieve asset protection, tax optimization, and intergenerational wealth transfer.

This is a viable option for high-net-worth individuals and family businesses. For instance, in early 2025, a German family business registered a company in Delaware and chose to hold the shares through an irrevocable trust to reduce estate tax burdens and ensure long-term benefits for family members.

4. Partnership or LLC as Shareholder Flexible and Popular

In the U.S., partnerships and Limited Liability Companies LLCs can also act as shareholders. This structure is common in investment funds, startup incubators, and joint investment projects.

An LLC as a shareholder offers tax advantages because it is treated as a pass-through entity-meaning profits and losses flow directly to its members, avoiding double taxation. In addition, it provides limited liability protection, reducing investment risks. According to a March 2025 report by Forbes, an increasing number of startups are choosing to include LLCs as shareholders during fundraising stages to enhance the flexibility of their capital structure.

5. Foreign Corporation as Shareholder Reflecting Global Expansion

With the deepening of globalization, more and more foreign companies are choosing to establish subsidiaries or holding companies in the U.S., with the parent entity acting as the shareholder. This approach is particularly favored by large multinational corporations and investment groups.

For example, SoftBank Group recently invested in an AI startup in Silicon Valley through its Japanese-incorporated parent company. This structure enables SoftBank to manage its global assets more efficiently and leverage U.S. capital markets for financing or exit strategies.

Conclusion

When registering a company in the U.S., the choice of shareholder status is not fixed-it should be based on the specific needs, investment goals, and long-term strategy of the business. Whether individual, corporate, trust, or partnership, each shareholder type has its own unique advantages and applicable scenarios.

Understanding these options not only helps entrepreneurs make more informed decisions but also lays a solid foundation for regulatory compliance and future business development.