Post by sinthiya007 on Nov 5, 2024 4:39:39 GMT
We continue to analyze the topic: company registration in the USA . Having considered the advantages of the USA as a country for doing business, the advantages and disadvantages of buying a ready-made business or franchise, we will move on to the next point: the US tax system.
“The US tax system is too complicated”, “It’s impossible to understand US taxes”, etc., etc. Yes, the US tax system is different from what we on page seo service are used to and yes, it is complicated, but it is quite possible to understand it. At least at a level sufficient to decide to open a business in the US. Let’s try to put everything in its place.
The US tax system is three-tiered. Taxation operates at the federal, state and local levels (county taxes or even city taxes).
Decentralization of US Government and Its Impact on Taxation
Due to the high degree of decentralization, federal and state taxes are completely separate from each other.
That is, the federal government has no right to interfere with state taxation, and each state has its own tax system, which differs from the systems of other states. That is why it is important to choose the right state for registering a company, but we will talk about this in more detail in Part 5.
It is also important to understand that within a state there may be several jurisdictions that may also levy taxes. As administrative entities, there are almost 85 thousand districts in the United States that fall under the jurisdiction of local governments. Almost all states are divided into counties, with approximately 20 thousand municipalities.
Counties, municipalities and townships (specific territorial entities) have their own governing bodies and can form their own budget, introduce taxes and implement various actions to ensure revenue for it.
Another important detail to understand is that the US has a parallelism principle. This means that the same income can be taxed at different levels. State tax rates are lower than federal tax rates.
“The US tax system is too complicated”, “It’s impossible to understand US taxes”, etc., etc. Yes, the US tax system is different from what we on page seo service are used to and yes, it is complicated, but it is quite possible to understand it. At least at a level sufficient to decide to open a business in the US. Let’s try to put everything in its place.
The US tax system is three-tiered. Taxation operates at the federal, state and local levels (county taxes or even city taxes).
Decentralization of US Government and Its Impact on Taxation
Due to the high degree of decentralization, federal and state taxes are completely separate from each other.
That is, the federal government has no right to interfere with state taxation, and each state has its own tax system, which differs from the systems of other states. That is why it is important to choose the right state for registering a company, but we will talk about this in more detail in Part 5.
It is also important to understand that within a state there may be several jurisdictions that may also levy taxes. As administrative entities, there are almost 85 thousand districts in the United States that fall under the jurisdiction of local governments. Almost all states are divided into counties, with approximately 20 thousand municipalities.
Counties, municipalities and townships (specific territorial entities) have their own governing bodies and can form their own budget, introduce taxes and implement various actions to ensure revenue for it.
Another important detail to understand is that the US has a parallelism principle. This means that the same income can be taxed at different levels. State tax rates are lower than federal tax rates.