Professional Corporation
CROSS-BORDER SERVICES
U.S. Entity Formation for Korean Companies
From choosing the right entity and state to EIN, banking, and your first tax filings — a Los Angeles CPA firm that handles U.S. subsidiary formation for Korean headquarters, in Korean and English. Through our Korean office, Opus Advisors, clients can also contact us during Korean business hours.
Who this is for
Korean companies opening a U.S. subsidiary, branch, or sales office, Korean franchisors, F&B brands, and K-beauty brands entering the U.S. market, Korean startups considering a Delaware “flip” or a U.S. holding structure, Korean-resident individuals investing in U.S. real estate or an existing U.S. business
What we do (service scope)
1. Structure planning before formation We compare C-Corporation, LLC, and branch options against your ownership, funding plans, and Korean-side tax position — and choose the state (Delaware, California, Texas, Georgia, or where you will actually operate) based on where you will hire, sell, and pay tax, not on internet folklore.
2. Formation and setup Articles of incorporation, bylaws, initial board resolutions, EIN, registered agent, state registrations, sales-tax and payroll registrations, and guidance on opening a U.S. bank account as a foreign-owned company.
3. Foreign-ownership compliance from day one U.S. corporations with 25% or more foreign ownership must file Form 5472 with their corporate return; the penalty for a missed or late filing starts at $25,000 per form. We set up the intercompany records so this is routine, not a scramble.
4. Intercompany arrangements Service agreements, cost-sharing, and initial pricing between the Korean parent and the U.S. entity, coordinated with our transfer pricing team (see the Transfer Pricing page).
5. Ongoing operations Bookkeeping in QuickBooks, monthly or quarterly reporting to headquarters in the format Korean finance teams expect, payroll, sales tax, and the annual federal and state returns.
Frequently Asked Questions
Q1. Should a Korean company incorporate in Delaware or California?
Delaware is often preferred by venture-backed startups. For a Korean company establishing an operating subsidiary, however, the best choice depends on where the business will operate and its financing plans. A Delaware corporation operating in California generally must also register there and meet California tax obligations. California generally imposes the greater of its income-based corporate tax or an $800 minimum franchise tax, with a first-year minimum-tax exemption for newly incorporated or qualified corporations. If your operations are primarily in California, incorporating there is often simpler and more cost-effective.
Q2. Should a Korean corporate subsidiary be a C-Corporation or an LLC?
A C-Corporation is often a practical choice for a Korean company’s U.S. operating subsidiary. A wholly owned LLC that does not elect corporate taxation may expose the Korean parent to direct U.S. tax filing obligations and potential branch profits tax. An LLC can also elect to be taxed as a corporation. The right structure depends on U.S. and Korean tax treatment, ownership, and plans for financing and profit distributions.
Q3. What is Form 5472, and does it apply to our company?
Form 5472 generally reports certain related-party transactions of a U.S. corporation that is at least 25% foreign-owned, directly or indirectly. These may include loans, service fees, royalties, and purchases involving a Korean parent or affiliates. Filing may be required even without revenue if reportable transactions occurred. It is generally filed with the corporate income tax return, with a separate form for each applicable related party. Failure to file a required form properly and on time can trigger a $25,000 penalty, with additional penalties for continued noncompliance.
Related Insights
Tax and Accounting Issues to Understand Before Entering the U.S. Market
U.S. Tax Filing Guide for Korean Corporate Expatriates
Key Considerations for Korean Game Companies Entering the U.S. Market
Consultation
Share your planned U.S. launch date, business activities, ownership structure and hiring plans so we can discuss entity setup and initial accounting and tax needs.