LLC for Non-Residents

The opportunity to establish a Limited Liability Company (LLC) in the United States presents a highly attractive proposition for foreign entrepreneurs. Through this model of "LLC for non-U.S. residents," businesses can tap into the thriving U.S. market, gain from potential tax benefits, and foster asset protection. When it comes to forming a Limited Liability Company (LLC) in the United States, you don't need to be a citizen or resident of the country, or even be physically located in the country.

We are happy to form an LLC or Corporation for non-residents and can obtain an EIN, open your bank account and assist with tax filings. Wyoming and Delaware companies are the most popular, but we can start a company in any state.

There are, however, some special considerations and issues that you should be aware of when forming a business in the U.S. as a non-resident. This guide will provide an in-depth understanding of LLC foreign ownership, from its fundamental concepts to the most practical steps to set up an LLC both within and outside the United States.

A Limited Liability Company (LLC) is a popular business structure combining the liability protection of a corporation with the taxation benefits and operational flexibility of a partnership. Owners, known as members, aren't personally responsible for the company's debts and lawsuits.

This structure is particularly favorable for non-U.S. residents due to its ease of setup, flexible tax reporting options, and minimal regulatory obligations. The concept of LLC foreign ownership implies that non-U.S. citizens can establish an LLC in the U.S. and enjoy the benefits that this business structure offers.

Establishing a U.S. LLC as a Foreign Resident

Setting up a U.S. LLC as a non-resident may seem complex, but with careful planning, the process becomes manageable. Importantly, non-residents can own, invest in, and manage an LLC in the United States. This is beneficial as it allows the mixing of U.S. and international business opportunities.

The procedure involves several steps such as choosing a suitable state for registration, securing an ITIN, selecting a unique business name, appointing a registered agent, and filing the necessary paperwork. Remember, the rules might slightly vary from state to state, and professional advice can be immensely helpful in navigating this process.

Starting a business in the U.S. as a non-resident necessitates understanding the critical procedures that are particular to foreign ownership. With an LLC for non-U.S. residents, the business formation process remains the same, with a few differences.

Additionally, non-residents must appoint a registered agent with a physical address in the chosen state. Navigating through these essential procedures successfully ensures that the business is compliant with U.S. regulations and is set for successful operation.

Applying for an EIN

Applying for an EIN or Federal Employer Identification Number in the U.S. can be more challenging if you are not a citizen or resident of the U.S. This is because you probably won't have an ITIN (Individual Taxpayer Identification Number) or SSN (Social Security Number) to give to the IRS when you apply for an EIN.

This means the Employer ID (EIN) must be faxed in as an SS4. You cannot apply online, so the process takes longer. Generally, the EIN returns within 1–2 weeks but can take a month around popular times, e.g. popular holidays and tax season.

Nevertheless, the process for obtaining an EIN from outside the country is pretty simple once your business is registered and the appropriate steps are followed.

The Process of Obtaining an ITIN

An Individual Taxpayer Identification Number (ITIN) is essential for non-U.S. residents to handle tax-related matters. It's obtained through the IRS by filling out Form W-7 and submitting it along with necessary identification documents. You can apply by mail, at an IRS-authorized Acceptance Agent, or in person at an IRS Taxpayer Assistance Center. If you're not eligible for a Social Security Number (SSN), obtaining an ITIN is necessary for tax reporting purposes and is a critical step in managing an LLC foreign ownership.

Opening a U.S. Bank Account

Setting up a U.S. business bank account for your LLC foreign ownership can facilitate transactions with U.S. customers and vendors. Banks often require an EIN, business formation documents, and a U.S. address. Some banks may have additional requirements for non-U.S. residents. Online banking options are also available, specifically catering to international businesses.

We have partnered with several banks that specialize in non-resident accounts. You do not have to travel to the USA or have a SSN. With other formation services, this is often the most difficult aspect of starting a business in the U.S. as a non-resident, but we make it easy.

If you do not want to use our banking partners, you may be able to find a bank in the country where you live that has a branch in the U.S. or a U.S. bank that has a branch in the county where you live. If you have friends, family, or business partners in the U.S., then they can visit a U.S. bank branch as well if you prefer.

Having a dedicated business bank account also helps separate personal and business finances, crucial for maintaining your LLC's liability protection.

Acquiring a U.S. Mailing Address

To successfully form an LLC in the U.S. as a non-resident, acquiring a U.S. mailing address is crucial. This address is needed for official correspondences, including notifications from state and federal agencies. Services like virtual offices or mail forwarding companies provide U.S. mailing addresses to foreign entities. They receive your mail and forward it to your actual location, effectively managing your U.S. business communications while supporting LLC foreign ownership.

Do You Require a U.S. Phone Number, and How to Obtain One?

Having a U.S. phone number is not a requirement for an LLC for non-U.S. residents. However, it can simplify communication with American customers and businesses. You can obtain a U.S. phone number through several virtual telephony service providers. These services allow you to select a U.S. number and answer calls via the Internet. This can be especially beneficial in maintaining customer service or business correspondence for those involved in LLC foreign ownership.

Registering a United States-based LLC from Overseas

With modern technology and digital access to services, it's entirely possible for non-U.S. residents to register a U.S.-based LLC from overseas. The process generally involves choosing a state for your LLC, selecting a unique business name, appointing a registered agent, and filing the Articles of Organization. However, remember that LLC foreign ownership may require additional steps, like applying for an ITIN instead of an EIN for tax purposes. A thorough understanding of these steps can simplify the establishment of your business in the United States.

The LLC vs C Corp Dilemma: Which Should You Choose?

Choosing between forming an LLC and a C Corp involves evaluating your business needs and long-term goals. An LLC, which allows for LLC foreign ownership, provides flexibility in management, pass-through taxation, and limited liability for its members. On the other hand, a C Corp might be the better choice for those seeking to raise extensive capital, as it allows for unlimited shareholders and stock classes. However, C Corps face double taxation, which could be a considerable downside for some businesses.

The U.S. is a global economic powerhouse with a diverse and affluent consumer market, making it an ideal place for starting a business. For non-U.S. residents, establishing an LLC offers the advantages of a stable political climate, a robust legal system, and a thriving business environment. These factors, coupled with easy access to venture capital and the prestige associated with a U.S.-based business, make an LLC for non-U.S. residents an attractive option.

Why Form an LLC in Wyoming?

Wyoming, the least populated state in the country, has in recent years become one of the most popular states to form an LLC. But why do so many businesses choose to incorporate in Wyoming?

• Simplicity
  

  One of the principal reasons businesses choose to incorporate in Wyoming is simplicity. Both during the incorporation process and after you have formed your LLC, Wyoming requires you to fill out and file only a minimum amount of documents.

• Lower Fees
  

  Fewer documents to file also means lower fees. The cost of filing the Articles of Organization to form an LLC in Wyoming, along with the Annual Report Fee, is only $160. Compare this to the $410 for the same in Delaware and $775 in Nevada.

• Lower Taxes
  

  When it comes to taxes, Wyoming has no corporate or personal income tax. This means that you can keep more of your profits, which is a tremendous advantage over forming in other states.

• Better Asset Protection
  

  A Wyoming LLC provides a great deal of asset protection. Even if yours is a single-member LLC, you don't have to worry about creditors and would-be litigants piercing your corporation veil, which is the case in some states.

The Cost of Establishing a Wyoming LLC

The cost of establishing a Wyoming LLC is relatively low compared to other states. The initial filing fee is $100, and the annual report fee is $60 or $0.0002 per dollar of assets located in Wyoming, whichever is greater. However, remember to factor in the cost of a registered agent service if you don't have a physical address in the state. Also, if you need assistance with filing or additional services such as obtaining an EIN or ITIN, the costs will increase. It's crucial to budget for all possible expenses when establishing an LLC.

Why Form a Delaware Corporation?

Delaware is the world's leader in Corporations given the number of Fortune 500 and public companies there. Why do so many businesses incorporate in Delaware?

• Access to Funding
  

  Most Venture Capital, Private Equity, and other investors will insist on a Delaware Corporation given their familiarity with the law and the substantial precedence for resolving business disputes. This makes fundraising in DE easiest.

• Court of Chancery
  

  Business disputes are heard by judges well-versed in the matter, rather than having judges who may not be familiar with corporate case law.

Wyoming vs. Delaware Companies

Delaware Corporations are popular for those who are raising capital from VC or PE investors, and looking to eventually go public. Wyoming is preferred for smaller companies that are more cost-conscious.

For reference, Wyoming's annual report fee is $60 for LLCs and Corporations, but Delaware charges $300 for an LLC and a minimum of $450 for a Corporation. For that reason we recommend only those who need to be in DE open a company there, otherwise WY is less expensive.

We have more detailed guides here:

• Wyoming vs. Delaware Corporations
• Wyoming vs. Delaware LLCs
• Wyoming vs. Delaware, New Mexico and Nevada Companies
• How to Get an EIN
• How to Open a Business Bank Account

Establishing an LLC outside of the U.S. offers numerous benefits to foreign entrepreneurs, known as LLC foreign ownership. The process, while intricate, can provide opportunities for tax advantages, robust asset protection, and access to the lucrative U.S. market.

Firstly, decide on the state for your LLC registration. This decision influences your cost, tax, and reporting requirements. States such as Delaware, Wyoming, and Nevada are favorites due to their pro-business policies. Below we will discuss the steps for forming an LLC in Wyoming and Delaware.

There are two ways to form an LLC in Wyoming and Delaware:

1. Form one yourself or
2. Hire an attorney to form the LLC for you.

Either way, you will need to complete each of the following steps properly:

Step 1: Choose a Name for Your LLC

• Wyoming requires that an LLC use a name that is distinct from other business names in the state, and one that does not cause confusion.
• Wyoming law also states that an LLC's name must contain one of the following words: Limited Liability Company, Limited Company, Liability Company, or the abbreviations Ltd. Liability Co., Ltd. Limited Liability Co., LLC, L.L.C., LC, or L.C.
• The same rules apply to Delaware.
• The names of Low-Profit Limited Liability Companies in Wyoming must contain one of the following words: Low Profit Ltd., Liability Company, Low Profit Ltd., Liability Co., Low Profit Limited Liability Co., or the abbreviations L3C or l3c.
• Furthermore, the name of your Wyoming LLC must not contain any words, like IRS, FBI, Treasury, or State Department that might suggest that it is affiliated with the government.

You can start by doing a name search on the Wyoming Secretary of State's website or Delaware's Division of Corporations to make sure that the name isn't already taken. We provide a free name check as part of our service.

Step 2: Hire a Registered Agent

• Every business entity filed must have a registered agent i.e., an individual or a professional service registered to do business and who will accept correspondences on your LLC’s behalf.
• Your registered agent must have a physical street address in the state and must be available personally during normal business hours.

We have offices in Wyoming and Delaware, so we can be your agent in both and do not rely on a middleman. Learn more here about our Wyoming and Delaware registered agent services.

Step 3: File Articles of Organization

• The Articles of Organization for an LLC is the document that outlines key details about your LLC, including the business nature, registered agent's details, and LLC name.
• This document needs to be filed with the Secretary of State, which can be done online or by mail.

Step 4: Obtain an EIN from the IRS

• Secure an Employer Identification Number (EIN) from the IRS, which is required even if you don't employ any U.S. workers, it is important for taxes and banking and can be obtained online or through the mail. View our guide on how to get an EIN.

Step 5: Draft an Operating Agreement

• An operating agreement is an internal document that does not need to be filed with the state. It establishes ownership terms and membership rules for the LLC.
• Having an operating agreement in place helps to preserve limited personal liability for the LLC's members by further establishing your LLC as a separate legal entity from its owners.

Step 6: Obtain Business Permits and Licenses

• Compliance with all regulations, tax obligations, and any necessary business licenses or permits is vital, making the counsel of a tax advisor or accountant familiar with international taxation and LLC foreign ownership highly beneficial.

After successfully forming a Non-Resident LLC it is crucial to remain diligent and stay informed about the subsequent steps required.

Non-Resident U.S. Taxation: How Much Will You Pay?

U.S. taxation for non-residents with an LLC is a complex subject. Generally, foreign-owned LLCs are subject to U.S. tax only on their income effectively connected with a U.S. trade or business. However, an LLC might also be subject to a flat 30% withholding tax on its U.S.-source income. It's essential to understand that tax treaties between the U.S. and your home country may impact your tax liability. To ensure proper compliance and understand your exact obligations, it's advisable to consult with a tax professional familiar with international taxation.

Ensuring Tax Compliance and Regular Filings with the IRS

Tax compliance is essential for LLCs with non-U.S. residents. In general, you must report your income and pay taxes to the IRS. Form 5472 may be required if transactions occur between your LLC and its foreign members. Also, an ITIN is necessary for filing tax returns. Regularly consulting with a U.S.-based accountant familiar with international taxation can ensure your compliance and help you navigate the complexities of U.S. tax laws for foreign-owned LLCs.

Submitting Your LLC's Annual Report: Where and How?

Most states require LLCs to file an annual report or similar document. This report maintains your LLC's good standing and includes updates on basic company information. The method of submission varies by state—some accept online filing, while others require mail-in forms. Non-compliance can lead to fines or even dissolution of the LLC, so understanding the specific regulations of your LLC's registered state is crucial for maintaining your LLC’s foreign ownership.

John, a software developer from India, had been freelancing for American clients for several years. However, he was keen to formalize his business and expand his reach in the U.S. market. After researching, he decided to establish a Wyoming LLC, given its low cost, strong asset protection laws, and the state's privacy rules.

He began the process by choosing a unique name for his LLC, "Sapphire Software Solutions." After confirming its availability, he hired a registered agent service in Wyoming, ensuring the receipt of any legal documents. He filed the Articles of Organization and paid the initial filing fee of $100.

Next, he drafted an Operating Agreement, outlining the operating procedures of the LLC. He also obtained an EIN from the IRS and set up a business bank account. He ensured his understanding of his tax obligations as a non-resident, keeping in mind the flat 30% withholding tax on U.S.-source income.

Finally, he acquired a U.S. mailing address and phone number, officially setting up his business. The LLC provided him with an official platform to grow his business, and he soon saw an increase in his client base. Today, Sapphire Software Solutions is a thriving business, thanks to the advantages offered by the Wyoming LLC to non-U.S. residents like John.

LLC foreign ownership, if navigated carefully, can prove to be a rewarding venture for non-U.S. residents. With an understanding of the procedures, regulations, and potential advantages, foreign entrepreneurs can strategically position their businesses in the vast and dynamic U.S. market. While the journey of establishing an LLC as a non-U.S. resident might seem daunting, remember that there are plenty of resources and professional services available to support you. Your entrepreneurial dreams in the United States may just be an LLC away!

If you are ready to begin the process of creating your LLC, our services are available to assist you. For any additional questions, please reach out to us by filling out the contact form or calling +1 (307) 683-0983. Our knowledgeable paralegal team is ready to connect with you and guide you through the process.