DOING BUSINESS IN

THE UNITED STATES

SIDNEY N. WEISS,
ATTORNEY AT LAW
675 THIRD AVENUE
NEW YORK, NEW YORK 10017
TEL: 212-986-5309
FAX: 212-986-5629
snw@weisslaw.net
DOING BUSINESS IN
THE U.S.
• COMPANY/CORPORATE
STRUCTURES
• BE CAUTIOUS
• INSURING PAYMENT FOR
SHIPMENTS
• ANTIDUMPING & CUSTOMS ISSUES
• WTO ACCENSION
COMPANY/CORPORATE
STRUCTURES

• Corporations
• Limited Liability Corporations
• Sole Proprietorships
• Partnerships and Limited
Partnerships
CORPORATIONS

• A Corporation is a “fictitious” entity with

legal standing.
• Corporations must have “Inc.”
“Incorporated” “Corp.” “Ltd.” or “Limited”
as part of the name.
• Corporations are owned by shareholders.
CORPORATIONS

• Shareholders have no personal

obligation for debt of corporation.
• Names of shareholders are not
public.
CORPORATIONS

• No minimum capitalization required.

• Takes approximately one day to establish.
• Fee for starting a corporation is minimal.
• Annual maintenance fees or taxes are
usually payable in state of incorporation.
CORPORATIONS

• Corporations require a minimum of one to

three directors depending on the state.
• Corporations must register to do business
in all states in which they do business.
• Usually at least 200 shares of stock are
required.
CORPORATIONS

• Corporations may petition U.S.

Immigration for foreign workers or
managers under certain
circumstances.
CORPORATIONS
• Corporations must pay corporate income taxes
on their profits (15%-35%), thus resulting in the
possibility of double taxation.
• A shareholder may not deduct corporate losses
from personal income.
• Subchapter S Corporations meet these
concerns. But Subchapter S Corporations are
not available to foreigners.
LIMITED LIABILITY
COMPANIES-LLCs
• LLCs give aliens the tax benefits
that Subchapter S Corporations
give to US citizens and residents:
Tax Pass throughs.
LIMITED LIABILITY
COMPANIES-LLCs
• An LLC is a “fictitious” entity with legal
standing.
• An LLC may be owned by corporations,
individuals or partnerships.
• If a foreign corporation or entity owns a U.S.
LLC, the foreign corporation or entity must file
a U.S. tax return.
• In an LLC, profits and losses are passed
through to the owners.
LIMITED LIABILITY
COMPANIES-LLCs
• Members have no personal obligation
for debt of corporation.
• Names of Members are not public.
• It takes about 1-2 months for final
establishment of LLC.
• Cost of establishing an LLC is much
more expensive than for corporations.
LIMITED LIABILITY
COMPANIES-LLCs
• LLCs must register to do business in all
states in which they do business.
• No minimum capitalization is required.
• LLCs may petition U.S. Immigration for
foreign workers or managers under
certain circumstances.
 SOLE
PROPRIETORSHIP AND
PARTNERSHIPS
• Sole proprietorship means that an
individual owns the business and is
personally liable for debts.
• Partnerships are a collection of
individuals, corporations, partnerships,
or LLCs.
• All members are liable for the entire debt
of the partnership. (Not proportional.)
PARTNERSHIPS
• Partnerships must have at least one
General Partner (which may be a
corporation) who is liable for the debts
of the entire partnership.
• Partnership may have limited partners.
• Partnerships may conduct business
under an assumed name.
BE CAUTIOUS
• Stay out of Court:
– Being involved in court is very
expensive.
– Make sure you get paid: Suing a
purchaser who hasn’t paid you often
costs more than the recovery.
BE CAUTIOUS
• Stay out of Court:
– Defective merchandise which harms people
may result in lawsuits. For these products
obtain insurance.
– Selling merchandise in a state, advertising
there, or sending a salesman there may subject
you to jurisdiction in that state’s courts.
– Prepare in advance: Obtain proper contracts
and legal advice.
 Types of
Bankruptcies
• Chapter 7
• Chapter 11
• Voluntary
• Involuntary
Effects of
Bankruptcies
• All litigation against Bankrupt stops.
• All payments received from Bankrupt
must be returned if not paid in regular
course of business.
• Merchandise in Bankrupt’s possession
may not be retrieved unless claimed
within 10 days.
• Debtor runs Business.
Effects of
Bankruptcies
• Debts incurred after bankruptcy have
precedence.
• Debtor has 6 months to present
reorganization plan.
• Two Committees appointed: secured
creditors and unsecured creditors.
• In practice, courts will permit almost
anything to keep companies in business.
INSURING PAYMENT
• The only effective method of insuring
payment is by Letter of Credit: LC
• Otherwise, strong contract terms with
guaranty of payment secured by accounts
or merchandise is the only other alternative,
which is not as effective.
• Filing of security in accounts and inventory
is required for protection. UCC-1.
ANTIDUMPING &
CUSTOMS ISSUES.
• Commercial Invoice value of
merchandise must be declared to
Customs at entry into U.S.
• U.S. Tax authorities require price
to be sufficiently high in intra-
company transfers to make profit
over time. (Transfer price.)
ANTIDUMPING &
CUSTOMS ISSUES.
• Importer has obligation to enter price and
classification of products correctly.
• Country of origin marking must be correct.
• Importer must be able to substantiate
information on entries.
• Severe penalties for incorrect information
on entries, including transshipments.
ANTIDUMPING &
CUSTOMS ISSUES.
• Dumping is the difference between
price (not cost) of product sold in home
market and product sold to U.S.
• If no home market for product sales to
countries other than U.S. are used.
• Dumping also occurs when product is
sold for less than its cost of production
(plus general expenses and profit).
ANTIDUMPING &
CUSTOMS ISSUES.
• Dumping duty must be paid by
importer and may not be
reimbursed by exporter or
manufacturer.
• Dumping is permitted if no harm to
U.S. industry.
ANTIDUMPING &
CUSTOMS ISSUES.
• Dumping is reduced or eliminated by
showing:
– No harm to US industry.
– Your company not dumping.
– There are legitimate business reasons for
differences in prices (e.g., volume
discounts, insurance and transportation
costs, different models, etc.)
ANTIDUMPING &
CUSTOMS ISSUES.
• Since dumping cases may be
fought on so many fronts, it is
essential to obtain good advice for
a dumping case, and even prior to
a dumping case to avoid
problems.
U.S. Customs Security
Programs and World
Trade
Overview
Customs Compliance

The U.S. Treasury, Terrorism, and

the International Movement of
Money

The USA Patriot Act

Customs Compliance
 The Twenty-Four Hour Rule

 Customs-Trade Partnership
Against Terrorism (C-TPAT)

 Audits
Customs Compliance
The Twenty-Four Hour Rule

Carriers and/or automated NVOCCs

must submit a cargo declaration 24
hours before cargo is laden aboard a
vessel at a foreign port
The 24 Hour Rule
 Time frames when cargo declaration data must be received
in AMS by CBP:

 Inbound – Transmission Received By CBP In AMSVessel

 24 hours (before lading)Air

 4 hours Wheels up from NAFTA and Central and South

America above the equator Rail

 2 hoursTruck

 1 hour non-Free and Secure Trade (FAST)30 minutes FAST

Customs Compliance
Customs-Trade Partnership Against
Terrorism (C-TPAT)

What is C-TPAT?

 A joint government-business initiative

designed to foster supply chain and
border security
Customs Compliance
Customs-Trade Partnership Against Terrorism
(C-TPAT)

Who can participate in C-TPAT?

 Importers

 Carriers
Customs Compliance
Customs-Trade Partnership Against Terrorism (C-
TPAT)

What does participation in C-TPAT require?

 Application
 Signed agreement committing participant to
actions or procedures encompassed by C-
TPAT security guidelines
Customs Compliance
Customs-Trade Partnership Against Terrorism (C-
TPAT)
What does participation in C-TPAT require?

 Signed agreement

– Self-assessment
– Supply chain security profile questionnaire
– Program to enhance security
– Procedures communicating C-TPAT guidelines to
other companies in the supply chain
Customs Compliance
Customs-Trade Partnership Against Terrorism (C-
TPAT)
What are the benefits of participating in C-TPAT?
 Reduced number of inspections (reduced
border times)
 Assigned account managers
 Access to the C-TPAT membership list
 Eligibility for account-based processes
Customs Compliance
Customs-Trade Partnership Against
Terrorism (C-TPAT)
What are the benefits of participating in
C-TPAT?
 Eligibility for participation in the FAST
(Free and Secure Trade) program
between the U.S. and Canada
Customs Compliance
Customs-Trade Partnership Against Terrorism
(C-TPAT)
Are there any burdens?
 Customs expects participants to follow
through on actions specified in their signed
agreements
 Failure to follow through may result in
suspension of program benefits or discharge
from the program
Customs Compliance

Audits
Customs’ “Focused Assessment”
Methodology
Customs Compliance
Audits
Customs’ “Focused Assessment”
Methodology
 Tests only areas at risk
 Is “transparent” and includes models
for compliance
 Can result in enforcement action
Customs Compliance
Audits

The Importer Self-Assessment Program

 Voluntary approach to trade compliance
 Requires membership in C-TPAT
 Participants must be resident importers of the
United States and have at least two years of
importing experience before applying for the
program
Customs Compliance
Customs-Trade Partnership
Against Terrorism (C-TPAT)
What are the benefits of participating in the C-TPAT?
 Reduced number of inspections (reduced border
times)

 Assigned account managers

 Access to the C-TPAT membership list

 Eligibility for account-based processes

Customs Compliance
Customs-Trade Partnership Against
Terrorism (C-TPAT)
Are there any burdens?
 Customs expects participants to follow through
on actions specified in their signed agreements

 Failure to follow through may result in

suspension of program benefits or discharge
from the program
Customs Compliance

Audits
Customs’ “Focused Assessment”
Methodology
Customs Compliance
Audits
Customs’ “Focused Assessment”
Methodology
 Tests only areas at risk
 Is “transparent” and includes models for
compliance
 Can result in enforcement action