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Nevertheless, in spite of the availability and transparency of the US legislative code, there are cases of misinterpretation of US corporate and tax legislation and of the status of companies incorporated there, by some organisations and even in legislative institutions. A vivid example of this, is legislation of some CIS countries, which states two separate US States - Delaware and Wyoming - as offshore territories. In actual fact, companies incorporated in either State are subject to federal (i.e. national) taxation, under the same conditions as companies registered elsewhere.
The entrepreneur should know that the simple fact of his or her company's incorporation in the States of Delaware and Wyoming does not in itself exempt the company from taxation. Zero taxation of a company incorporated in the USA is not dependant on the State of its incorporation, but can be provided only by the combination of three factors: the choice of the most appropriate type of company, the creation of a legally effective corporate structure and proper drafting of the company constitution. In particular, an LLC can have tax-exempt status in the USA by satisfying certain conditions.
Our practical experience proves that the abbreviation LLC is incorrectly perceived as being an indirect indication of the tax-free status of the American company. It should be noted that this is not the case, as the simple fact of incorporation of an American company as an LLC, does not ensure its tax-free status. More details on LLC taxation are provided under the section "Limited-Liability Companies".
The main types of business entity in the USA are as follows:
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