Whether you’re residing abroad, an expatriate, or a non-citizen living in the United States, it’s still possible for you to establish a business in this country. Limited liability companies (LLCs) are an excellent option for this situation due to their simplicity and ease of formation.
Although the steps remain the same for non-citizens, additional challenges may be involved in ensuring that you possess all the required documentation and information. Once you have confirmed compliance with state and national regulations, you can operate your business within the United States.
If you’re a non-US resident looking to establish a business in America, Firstbase.io is an impressive software service that can assist with this endeavor regardless of location. With years of experience, Firstbase.io has successfully facilitated thousands of US company formations from individuals hailing from 120 countries worldwide.
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How to Form an LLC as a Non-us Citizen
Starting an LLC as a foreigner resembles that for a US citizen, with only minor variations. Below is a comprehensive outline of the entire procedure.
1. Choose a State
When starting a business in another country, it may be necessary to deviate from the usual practice of forming a company in your place of residence. If your business requires a physical location or office space, establish a non-US resident LLC in the state where that presence will be located. This will help avoid unnecessary complexity. However, you can choose any state if your business requires no physical presence.
Opting for a state without state taxes is advantageous as it simplifies tax filing by only requiring you to focus on federal taxes. Consequently, states like Wyoming, Nevada, Florida, and Delaware are popular choices for entrepreneurs. It’s important to note that each state has its unique tax rates and laws about businesses, including licensing requirements.
2. Name your LLC
Different states have varying regulations regarding the naming of businesses. However, it’s a universally accepted rule that you cannot choose a name already used. To ensure compliance, each state may have a registry where you can check if your desired name is available and still needs to be taken.
Searching for URL availability or nationwide trademarks is also beneficial to avoid conflicts. Regarding LLC for non-residents, the formal name must include either the phrase "limited liability company" or an appropriate abbreviation.
3. Find a Registered Agent
A registered agent refers to an individual or entity responsible for sending and receiving legal documents and paperwork on behalf of a business.
In most instances, the person starting an LLC assumes the role of the registered agent. However, this may not be possible if you’re located outside the country. If you need a local contact in your filing state, you can engage a registered agent service to procure one on your behalf.
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4. File Your LLC With the State
Submit all necessary paperwork to the state to establish a US LLC for non-residents. The commonly used forms for this purpose are the Article of Organization or Certificate of Formation. These documents will detail the structure of your organization and include all essential information as mandated by the state.
5. Create an LLC Operating Agreement
While many states don’t mandate an operating agreement as a prerequisite for filing an LLC, it’s highly advisable to create one.
An operating agreement serves as a legal document that outlines the ownership and operational procedures of the LLC, ensuring consensus among all parties involved and minimizing the likelihood of future disputes. This becomes particularly crucial in cases where some members of the LLC are absent physically while others are present.
6. Obtain an EIN
The IRS issues an Employer Identification Number (EIN) to businesses for federal tax identification purposes. Obtaining an EIN online is a straightforward process. Still, it necessitates providing a Social Security Number (SSN), an Individual Taxpayer Identification Number (ITIN), or a US address.
You can apply for an EIN via fax or mail if you’re a non-US resident business owner. This alternative allows you to identify as a foreigner and bypass the usual requirements.
7. Get a US Mailing Address
A physical mailing address is often necessary for various business tasks. If your business has a physical office in the state, you can use that address for all the required paperwork. However, obtaining an address is still essential if you still need an office. A P.O. box can be considered acceptable to meet this requirement in such cases.
There are online services like Earth Class Mail that offer real addresses and even provide mail scanning services so you can view your mail when it arrives.
8. Open a US bank account
Completing this step can be intricate and may involve traveling to the United States. Banks have strict protocols to prevent potential money laundering schemes, thus necessitating specific requirements. Once you obtain your EIN and establish your business, reach out to the bank of your preference to inquire about the necessary documentation for opening an account. You will likely need to visit the United States to finalize this procedure physically.
In case you already possess a personal bank account within the United States, there is a possibility that your bank will allow you to open a business account without requiring travel; however, this cannot be guaranteed. Your LLC and chosen bank's location don't need to be within the same state, which provides some flexibility regarding the options available.
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How to Open an LLC for Non-US Residents – Buyer’s Guide
Understand the Advantages of a Non-U.S. Resident LLC
Establishing a U.S. LLC presents numerous advantageous opportunities for non-U.S. individuals, making it an appealing choice.
By forming a US LLC for non-residents in the United States, foreigners can tap into the vast American market and gain access to American venture capitalists and investors. Having a presence in the U.S. can enhance the reputation and credibility of foreign companies.
The advantages that an LLC offers to American business owners are equally applicable to non-U.S. residents who own LLCs. These benefits include:
Personal liability protection: If you're thinking about launching a business in the United States, there are several routes you can take. One of the simplest options is to begin as a sole proprietor. This approach only requires registration in some states and allows all earnings to be deposited directly into your personal bank account. However, operating as a sole proprietor also comes with risks since creditors can sue the owner personally for any outstanding debts the company owes.
A limited liability company: An LLC is a type of business that protects the owner against personal liability. The LLC is an independent legal entity, which means that the owner cannot be held liable for any unpaid obligations of the LLC. The owner's personal assets and bank accounts are also protected and cannot be seized or used to pay off debts incurred by the LLC.
Pass-through taxation: A corporation is another business organization that protects against personal liability. In the United States, a corporation is recognized as a distinct entity, which prevents owners from being held accountable for business debts through legal action. Nevertheless, corporate profits are subject to taxation by the IRS at both the entity level (through corporate tax returns) and individual level (via individual tax returns) when distributed among shareholders.
Ownership flexibility: A single person doesn't need to own a limited liability company (LLC) known as a single-member LLC. An LLC has the flexibility to have multiple owners, referred to as "members." These members include individuals, corporations, trusts, IRAs, other LLCs, and pension plans. There is no limit on the number of owners an LLC can have.
Management flexibility: Managing an LLC offers owners multiple options for handling the organization. They can personally oversee operations, hire a non-member manager, or establish a management structure with a board of directors and corporate executives.
Easy formation: Forming an LLC isn’t as straightforward as setting up a sole proprietorship, but it’s still manageable. The process involves preparing and submitting several documents. Non-US residents might have to take additional steps depending on the state requirements.
