As you start conducting business in the U.S, you can either establish a “branch” of your non-U.S. company or a separate U.S. entity (usually either a corporation or a limited liability company (LLC)). A “branch” in the U.S. is only an extension of your non-U.S. company and will expose your non-U.S. company to all types of liabilities without limitation. A U.S. branch is not a separate legal entity conferring limited liability on its owner. It will be subject to the jurisdiction of the courts of the state in which it operates, and possibly other U.S. courts. One of the tax reasons not to use a branch is that the U.S. tax authorities can then require complete, detailed information on the world-wide operations of the non-U.S. company. Th non-U.S. company will then have to obtain U.S. federal tax federal, state and possibly city tax ID numbers and file tax returns.
A separate company, if properly formed and maintained, will offer limited liability to its stockholders and is often required by U.S. banks and many U.S. counterparties to your business relationships.