Historically, most large scale business in the United States were conducted using a single corporate form of entity organized under the laws of one of the states of the United States. Typically, the name of the entity ended in "Incorporated" or "Corporation" or "Limited" or an abbreviation of the foregoing thereby showing third parties that the entity afforded limited liability protection to the owner/investors. This corporate entity is hereinafter referred to as an "INC".

Under certain circumstances (Internal Revenue Code Subchapter S Corporations), INCs could elect to be treated as partnerships for tax purposes where gain and loss of the INCs would be passed through to and recognized by the shareholders in proportion to their percentages of ownership, even if the shareholder owned less than 80% of the shares. However, this tax treatment is not available to a corporation and its shareholders when any of its shareholders is a non-resident alien in the United States or is not a natural person but rather a corporation, a trust or other legal form.

Finally, historically, businesses, including joint ventures (both domestic and transnational) could be organized as a partnership. Here again, gain and losses were recognized at the partner level but (with minor exceptions) the partners lacked the limited liability protection that shareholders of a corporation had.

The LLC (Limited Liability Company) has now been added as an investment/operating vehicle and might be a preferable business form under certain circumstances.

The LLC is a legal entity organized under the laws of one of the states of the United States. For United States income tax purposes, it is recognized as a partnership but it affords to its members (partners) the limited liability protection that shareholders of a corporation have. It may be used by foreign and or domestic companies which wish to conduct business in the United States as a "Joint Venture" with maximum flexibility as to control, management, and distribution of gains and losses.

In addition, the LLC is not subject to income tax at the Federal and State levels, as profits and losses are recognized by its members in such percentages as they might agree. Thus, the LLC has many of the advantages of a partnership but also a series of additional advantages previously available to corporations. What makes the LLC attractive for international ventures is that its members may be non-resident aliens, corporations or other legal entities without jeopardizing the tax status of the LLC.

N.B.: As a practical matter, the LLC is generally only used when there are two or more corporate “partners” which wish to have a shared operating company in the United States. The foreign corporate (e.g., French, German or English) investor(s) will not directly invest in the LLC for tax reporting reasons. Rather, the foreign corporate investor(s) will (each) create a 100% owned Delaware INC which in turn will invest in the LLC. Thus, the Delaware subsidiary(ies) will file the Federal tax return(s) and each foreign parent will legally avoid the need to file a U.S. tax return and accordingly avoid the burden and expense of reporting its non-U.S. income and expenses to the U.S. tax authorities. In summary, the accounting expenses will be less and the tax returns much less complicated. Since the Delaware subsidiary will be a 100% subsidiary, from a U.S. tax point of view, eventual dividends distributed by any Delaware subsidiary to its foreign parent should not involve any additional U.S. tax burden.