Legal Question in Business Law in California

Re: Where to incorporate business in Spain or USA

One up-front issue here is that the United States itself does not charter regular business corporations - that is done by the individual states - so in deciding whether to incorporate in Spain or in the USA, you also have to select among 50+ US jurisdictions.

Also, the importance (for small businesses) of being incorporated in a particular jurisdiction is somewhat overblown. For example, there is an unfounded tendency for new California-based businesses to believe it is a huge advantage to incorporate in Nevada, or Delaware, or ???. The owners can never give a cogent reason. Reasons may exist for large, publicly-traded corporations to incorporate (or re-incorporate) in particular states, but those reasons don't apply to little companies, or are overwhelmed by the disadvantages of double reporting, double taxation, red tape, etc.

I would say that, other things being equal, your business should be formed under the laws of the nation or state where it will have its headquarters and its principal operations. That sounds like Spain to me, unless the European Union has come up with a pan-European business corporation concept. You might check with a trade officer at the U.S. Embassy in Madrid or a consulate trade officer in another Spanish city to ask their views. I'd also consider joining trade-related private groups and getting to know a few of the other members; maybe there is a USA-Spain Chamber of Commerce or exporters' society.

Finally, I remember Pan Am World Airways, when it existed, had publications and a trade-development department whose purpose was to assist new trade-related businesses. So, talk to ship lines, customs houses, brokers and others in similar service industries. You'll need to develop an acquaintance with firms such as these anyway, in regard to packaging, labeling, bills of lading, customs declarations, payment of duties, and all the paperwork required for international commerce, including letters of credit, getting paid, etc.

Whether you need a U.S. entity to do the selling may depend on how you will be doing the marketing and the extent of your company's involvement here. Funnily enough, there is a leading case on the matter of local jurisdiction over non-local companies' sales activities called "International Shoe" (vs. State of Washington). It's a U.S. Supreme Court case and you can easily find discussions of it on Google. Worth a read!