Registering a US Company Tax Rates Key Considerations You Must Know

Key Tax Knowledge and Considerations for Registering a U.S. Company

In recent years, with the acceleration of globalization and the sustained growth of cross-border e-commerce, more and more Chinese companies have set their sights on overseas markets. Among them, the United States has become a top destination for enterprises seeking international expansion due to its massive consumer market, mature business environment, and highly transparent legal system. According to data from the Ministry of Commerce in 2025, the number of Chinese companies registered in the U.S. increased by more than 20% year-on-year, with the majority coming from the technology, manufacturing, e-commerce, and service sectors. However, the complex U.S. tax system remains a major challenge for many business owners.

This article outlines essential tax knowledge and key considerations for registering a U.S. company, helping businesses aiming to expand into the U.S. manage tax risks and strategically plan their business structure.

I. Basic Structure of the U.S. Corporate Tax System

The U.S. tax system is relatively complex, encompassing federal, state, and local taxes. When registering a U.S. company, the first thing to understand is the company's tax classification and applicable tax rates. According to the Internal Revenue Service IRS, different types of companies carry different tax obligations.

1. C Corporation C Corp

The C Corporation is one of the most common business structures, suitable for most independently operated companies. C Corps are subject to corporate income tax at a flat rate of 21%, a rate that has remained unchanged since the Tax Cuts and Jobs Act of 2018. Additionally, profits distributed to shareholders are subject to personal income tax, resulting in what is known as double taxation.

2. S Corporation S Corp

An S Corporation is a pass-through tax entity, meaning its profits, losses, deductions, and credits flow directly to shareholders and are reported on their individual tax returns. Therefore, the company itself does not pay corporate income tax. This structure avoids double taxation but comes with strict requirements, such as a maximum of 100 shareholders and the requirement that all shareholders must be U.S. citizens or permanent residents.

3. Limited Liability Company LLC

The LLC is the most popular business structure among small and medium-sized enterprises due to its flexibility and tax advantages. An LLC can choose to be taxed as a sole proprietorship, partnership, or S Corporation. For example, a single-member LLC is typically treated as a disregarded entity, with income reported on the owner's personal tax return. Multi-member LLCs are generally treated as partnerships for tax purposes.

II. Key Tax Rates and Filing Requirements

1. Federal Corporate Income Tax

As mentioned, C Corporations are subject to a 21% federal corporate income tax. While this rate is moderate globally, businesses must also consider additional taxes and changes in deductible expenses.

2. State Corporate Income Tax

State tax rates vary significantly. For instance, California imposes a corporate income tax of up to 8.84%, while Texas and Nevada do not levy corporate income tax. When choosing a state for company registration, businesses should consider factors such as tax policies, business environment, and talent availability.

3. Sales Tax

Sales tax is collected by individual states and typically ranges from 2% to 10%. Companies engaged in the sale of goods or certain services must collect and report sales tax based on the regulations of their state and the destination of the sale. In 2025, with the growth of remote sales through platforms like Amazon, more states now require businesses to collect sales tax on interstate transactions, increasing compliance demands for cross-border e-commerce companies.

4. Personal Income Tax

For pass-through entities such as S Corporations and LLCs, business profits are included in the shareholders' or members’ personal income and taxed at individual income tax rates, which can be as high as 37%. Additional considerations include self-employment tax.

III. Tax Planning and Key Considerations

1. Choose the Right Business Structure

Businesses should select an appropriate legal structure based on their business model, shareholder composition, and profit distribution plans. For example, startups seeking venture capital investment may find the C Corporation structure more suitable, while small and medium-sized businesses may benefit from the S Corporation or LLC structure to reduce tax burdens.

2. Leverage Tax Incentives

The U.S. federal and state governments offer various tax incentives to encourage innovation, job creation, and investment. For instance, some states provide tax credits or exemptions for technology companies and green energy projects. The 2025 Inflation Reduction Act IRA also includes tax incentives for clean energy and manufacturing companies, which deserve particular attention.

3. Subsidiary vs. Branch Office

When investing in the U.S., Chinese companies can choose to establish either a subsidiary or a branch office. A subsidiary is a separate legal entity and is taxed independently, while a branch is considered an extension of the parent company and its profits are subject to consolidated taxation. The choice should be based on overall tax planning and risk management strategies.

4. Timely Filing and Compliance

The U.S. tax filing cycle is generally annual. C Corporations must file Form 1120 by March 15 each year, while S Corporations must submit Form 1120S by the same deadline. Companies should also pay estimated taxes on time to avoid penalties and interest for late filings or payments.

5. Hire Professional Accountants and Tax Advisors

Given the complexity and frequent changes in U.S. tax law, it is advisable to hire professional accountants or tax advisors early on to assist with tax filings, compliance audits, and strategic tax planning. This is especially important for issues involving cross-border capital flows, profit repatriation, and transfer pricing.

IV. Recent Trends Cross-Border E-Commerce and Tax Challenges

Since 2025, as U.S. regulation of cross-border e-commerce has tightened, more Chinese sellers have registered U.S. companies to enhance brand credibility and compliance. However, this also presents new tax challenges. For example, platforms like Amazon now require sellers to provide valid Employer Identification Numbers EINs and sales tax registration information, or risk having their products delisted. The U.S. Customs and Border Protection CBP has also increased scrutiny on low-value goods such as those under the $800 de minimis threshold, with some states even requiring platforms to collect and remit sales tax on behalf of sellers. Cross-border e-commerce companies must complete tax registration promptly to ensure compliance.

Conclusion

Registering a U.S. company is a significant step toward international expansion, but it also means navigating a complex tax environment. Understanding the U.S. tax structure, selecting the appropriate business entity, engaging in proactive tax planning, and leveraging professional expertise are essential for minimizing risks and ensuring long-term success in the U.S. market. For companies aiming to enter the U.S., tax is not merely a cost-it is a critical component of strategic planning.