LLC for Non-US Residents

Yes, non-U.S. residents can create a limited liability company (LLC) in the United States. They do not need U.S. citizenship or a green card to start a U.S. LLC. Foreign business owners can register to open a U.S. company whether they are physically present or not. However, foreign business owners have a few different rules and use other forms than American LLC owners. 

The Advantages of a Non-US Resident LLC

Opening a U.S. limited liability company offers many commercial and practical advantages for a non-U.S. citizen. This is an attractive option for many business owners outside the USA. An LLC provides foreign access to the entire U.S. market and American venture capitalists and investors. Having a U.S. base can increase a foreign company's reputation and credibility.

Some of the most significant benefits include:

Personal Liability Protection

A limited liability company (LLC) offers the owner personal liability protection. The LLC is a separate legal entity whose owner can't get sued for unpaid LLC obligations. The owner's personal assets and bank accounts can't be attached or sold for LLC debts.

Pass-Through Taxation

Unlike other types of business entities, an LLC offers pass-through taxation. Consider corporations, for example. A U.S. corporation is a separate business entity that shields owners from lawsuits for business debts. Despite this, the Internal Revenue Service (IRS) taxes corporate profits at the entity level (think corporate tax return) and the individual level (individual tax return) for distributions.

While LLCs are like corporations in some ways, they do not have this type of double taxation. The entity does not file a business tax return, and the IRS essentially disregards it. Instead, the LLC distributes all profits to the owner or owners who pay taxes at the individual level. This is called pass-through taxation.

Ownership Flexibility

A limited liability company (LLC) with one member is a single-member LLC. An LLC can have any number of owners — called "members." The members can be people, corporations, trusts, IRAs, other LLCs, and pension plans.

Management Flexibility

The owner or owners of an LLC have many options for managing the company.

• Member managed

• Manager managed by one of the members

• Manager managed by hiring a third-party

Some LLCs install a management structure with a board of directors and corporate executives.

Easy Formation

Forming consists of creating and filing a few documents, which you can do online with the secretary of state. The ability to form an LLC virtually means a non-U.S. resident can do this anywhere.

Forming a Non-Resident LLC

Although LLC formation is a relatively easy process, as a non-resident business owner, you may have extra steps, like determining whether your LLC has non-resident alien status.

Determine if Your LLC has Non-Resident Alien Status

The Internal Revenue Service (IRS) considers a person a non-resident alien if they are not:

• A U.S. citizen

• A permanent U.S. resident with a green card or

• Someone who owns a business that passes the "substantial presence test."

A citizen of the United States can open a regular LLC or other U.S. business in any state. However, determining whether a person is a non-resident alien is slightly more complicated. This is particularly important if you are trying to avoid paying U.S. taxes to the IRS.

Extra Benefits for Non-Resident LLCs

One of the extra benefits available to non-resident LLCs is the possibility of avoiding paying any income taxes on their LLC business income. This only works if they are:

• Residents of a country that does not tax individual income and

• Not required to pay federal taxes in the United States.

All members of an LLC must be non-resident aliens to avoid tax filing requirements with the IRS.

Pick the State for Non-U.S. LLC Formation

To open a non-resident U.S. LLC, choose a state in which to open the U.S. business. Each state has unique laws about forming, maintaining, owning, and managing an LLC.

If your LLC will conduct business in one state, that is the state in which to form the company. If the LLC has no physical presence in any state, you'll want to determine which laws work best for your enterprise. Some opt for a Wyoming LLC because of its low maintenance fees. Others prefer Nevada or Delaware LLCs for more privacy about the names of LLC members.

Your LLC does not need a physical address. However, it will need a local registered agent whose address can serve as the company's mailing address to register the business and to get a U.S. bank account.

Select an LLC Business Name

Next, choose a business name for your LLC. Some LLCs operate under the owners' names, especially when the company only has one owner. However, most states also require "limited liability company" or "LLC" in the name. For example, you could call your LLC Jean Robin Limited Liability Company if your name is Jean Robin.

Try to pick a unique business name so you can trademark it.

Pick a Registered Agent for the Foreign Company

Most, if not all, states in this country require that every LLC organized in their jurisdiction appoint a registered agent to receive all the important notices and legal documents for the company. Many foreign companies — lacking physical contact with the state — prefer to hire a registered agent service. The registered agent's role is essential, so pick a reputable company.

Apply for an LLC Employer Identification Number

Every business entity in this country needs an official identification for tax purposes, termed a tax ID. A U.S. citizen will have an individual taxpayer identification number, such as a Social Security number (SSN). Still, a non-U.S. citizen starting a foreign LLC will not. So, the small business must get an employer identification number (EIN) from the IRS.

Anyone in the country can apply for an employer identification number on the IRS website. But if you are organizing an LLC from your home country, you can also call, email, or fax the required form, IRS Form SS-4.

The form asks for details of the new company, such as:

• The DBA or business name

• Mailing address of the registered agent

• Type of entity

If, for any reason, you can't apply for an EIN, a non-U.S. resident can get a U.S. Taxpayer Identification Number (ITIN) from the IRS.

Prepare Non-US Citizen LLC Formation Documents

After you have taken care of all these preliminary steps, you can turn to prepare the formation documents for opening your LLC in your chosen state. Most states require that you prepare and file articles of organization, setting out basic information about the company. All require that you pay a filing fee. Some states require a physical business address (a U.S. address) and some information about the members.

You should prepare an operating agreement if you have a multi-member LLC. This provides management and operating rules for the company and ensures all members are on the same page. Generally, you do not need to file these with your state's secretary of state.

Open a U.S. Bank Account for the LLC

Once the legal formation is complete, it's time to open a business bank account in your state. These are important for receiving wire transfers and paying bills and invoices. A local bank account in the United States will also help with merchant accounts and payment processors.

Get Legal Help

If you are a non-citizen needing help forming a non-U.S. resident LLC, you should speak to an experienced business attorney. They are experts in business law and will offer strong legal advice. Speak to a business attorney near you today.

Alternatively, you can use FindLaw’s business formation services. We make business formation EASY. Learn about our DIY business formation services here.