Turkish Start-up,Turkish and American flags

If you live in Turkey and have plans to start a business in the United States, doing your research and planning up front can save you from significant costs and headaches down the line. While the process of incorporating in the U.S. is simpler than the process involved in establishing a Joint Stock Company (JSC), Limited Liability Company (LLC), or Cooperative Company (CC) in Turkey, there are far more steps involved than simply filing Articles of Incorporation in the appropriate jurisdiction. Establishing a company in the US can open the door to many new opportunities, you just need to make sure you do not expose yourself to unnecessary risks and liabilities when you do so.

Starting a Business in the U.S.: 10 Key Pieces of Information for Turkish Entrepreneurs

1. “Incorporating” Is Not Your Only Option.

While the term, “incorporating,” is often used to broadly describe the process of starting a business, in the U.S. (as in Turkey) not all business entities are truly “incorporated.” In the U.S., there are three primary forms of business entities:

  • Corporations
  • Limited Liability Companies (LLCs)
  • Partnerships

Within these categories, there are several more-specific options as well. From S-corporations and C-corporations (which each receive different tax treatment from the U.S. Internal Revenue Service (IRS)) to general and limited partnerships (which have different implications for owners’ liability), Turkish entrepreneurs have a lot to consider when it comes to making an informed decision about the type of business entity they form in the U.S. Under the right circumstances, alternative options such as forming a joint venture can offer flexible solutions as well.

2. Companies Are Formed at the State Level in the U.S.

While forming a start-up in Turkey involves establishing a business entity under the Turkish Commercial Code (TCC), in the U.S., companies are formed at the state level. Under the United State’s federal system, each of the 50 states has the power to authorize the formation of companies under the state’s own business code. Each state’s laws are different; and, when deciding to form a company in the U.S., in addition to choosing the type of business entity, you also need to choose the jurisdiction in which your company will be formed.

3. You Need to Have a Broad Perspective When Preparing Your Company’s Organizational Documents

As a start-up, it is tempting to complete the incorporation process as quickly as possible so that you can move on to actually operating and growing your business. But, while the process of forming a corporation, LLC, or partnership in the U.S. is fairly straightforward, the various steps that go along with forming a business entity require careful consideration. For example, some of the questions you will want to answer in your company’s organizational documents include:

  • Do you want different classes of shares for different owners?
  • Do you want to set your company up for outside investment?
  • Do you want the company to indemnify its owners if they get sued?
  • What happens if you and your business partners cannot overcome a disagreement?
  • How (and when) are the company’s profits distributed to owners?

4. Forming a Company in the U.S. is Unlike Forming a Company in Turkey

We already mentioned some of the ways that forming a company in the U.S. is unlike forming a company in Turkey. But, there are a variety of other notable differences as well. For example, unlike the requirements under the TCC, startup founders in the U.S. are not required to:

  • Obtain notarized or apostilled signatures (in many states)
  • Deposit capital with a government authority or public bank
  • Have proof of initial capitalization (although this will generally be required if you need to apply for a business loan)

However, due to the United State’s federal system, startups in the U.S. face certain additional burdens. For example, startups may need to register with state taxing authorities in addition to registering with the IRS. They may need to obtain certain business licenses; and, for entities that operate across state lines (for example, if you form an LLC in a business-friendly state such as Delaware, Nevada, or Wyoming but operate elsewhere), a “foreign business entity registration” may also be required.

5. You (and Your Partners and Employees) Will Need Visas to Enter the U.S.

When planning to form a company based in the U.S., startup founders also need to be preparing for their travel to the U.S. All foreign citizens travelling to the U.S. for business purposes must obtain a visa from the US Department of State. There are various types of business visas available (each with its own unique set of requirements), and if you have family in the U.S. or possess certain other qualifications, you may be eligible for other types of visas as well.

When traveling to the U.S. on a visa, there are certain tax considerations you will want to keep in mind as well.

6. Your Turkish Intellectual Property (IP) Is Not Protected in the U.S.

If you have registered any intellectual property in Turkey, it is important to understand that your registrations do not protect your IP in the U.S. In order to prevent other companies from using your company and product names, software code, designs, inventions, and other intangible assets, you will need to take appropriate measures to register and protect them under U.S. law. While state-level trademark registration is available, generally speaking, in the United States IP registrations are done at the federal level. When dealing with potential business partners and suppliers, non-disclosure agreements and other contracts can be critical to protecting your start-up’s exclusive IP rights.

7. Ignorance is Not a Defense to IP Infringement

In addition to protecting your start-up’s IP, you also need to be careful to avoid infringing on the IP rights of third parties. For example, the fact that a trademark is available for use in Turkey does not mean that it is available for use in the U.S. If you adopt another company’s trademark or use an invention that has been patented in the United States, you could quickly find yourself embroiled in costly and time-consuming infringement litigation.

8. You Need Contracts for (Almost) Everything

In the US, the risk of litigation is a persistent concern for businesses of all sizes, and many competitors (or potential competitors) will not hesitate to take advantage of a potentially-profitable opportunity. As a result, whether you are dealing with suppliers, customers, or investors, you will generally want to make sure that your company’s relationships are established pursuant to clear, written terms and conditions that protect your company’s IP and mitigate its risk of liability.

9. U.S. and Turkish Import/Export Laws May Impact Your International Business

Any time you are dealing with cross-border transactions, you need to keep in mind that import/export controls may apply. While there are various safe harbors and exceptions available, under certain circumstances, even the transfer of data can have international legal implications.

10. Forming Your Company Should Not Be Your Only Concern

Finally, as you prepare to do business in the United States, it is important not to overlook the non-business implications of setting up shop in the U.S. From protecting your personal assets to ensuring that you have an enforceable international estate plan, you will want to make sure that you have taken all of the necessary steps to ensure that your assets are secure.

Schedule a Consultation with International Business Lawyer Jiah Kim

If you are thinking about incorporating in the US from Turkey or elsewhere overseas, you can contact Jiah Kim & Associates for an initial consultation. To speak with attorney Jiah Kim about your needs, please call (646) 389-5065 or schedule an appointment online today.

This blog post is written for educational and general information purposes only, and does not constitute specific legal advice. You understand that there is no attorney-client relationship between you and the blog publisher. This blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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