How to set up an LLC as a Non-US resident
By Bazal Razzaq
Updated: June 26, 2023
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- What is an LLC?
- How to change your LLC name in 2023?
- The Power of Partnership: Unleashing The Potential of A Multi Member LLC
- What Is A Foreign LLC?
- Mastering the Art of Maintenance: Things To Do After Setting Up An LLC
- Exploring the Basics: What is a Single Member LLC?
- C Corp vs LLC – Which Business Structure is Right for You?
- Which is the best state to form an LLC in?
- Unlocking the Benefits of an LLC (Limited Liability Company)
- A Guide to Business License: Everything you need to know
- Operating Agreement 101: A Key To A Successful LLC
- One LLC, Multiple Streams of Income: can you have multiple businesses under one LLC?
- Articles of Organization Made Easy: Everything You Need to Know
- What Is A LLC Annual Report: A Comprehensive Guide for Business Owners
- Exploring Eligibility: Who Can Be LLC Members?
- What Is A Domestic Limited Liability Company?
- What is An EIN, and Do You Need One?
- What Is a Registered Agent, and Why Does Your Business Need One?
- What is a Series LLC?
- How to start a business with no money in 6 steps
- Member Managed vs Manager Managed LLC – Which Structure Fits Your Business?
Since the very beginning, America has been termed as the land of the free and home of the brave. Anyone with an entrepreneurial spirit can run, not just start an LLC business in America. As a non-resident, have you ever wondered if it’s possible to set up an LLC in America? It doesn’t matter if you’re based here or are a non-US resident. America is the ultimate haven where one can create their fortune by being brave and having the drive to succeed.
Creating an LLC sounds all important and fancy, right? But what exactly is an LLC? Why should you even consider forming an LLC? Let alone creating one in the US. Let’s discuss it!
LLC or Limited Liability Company is a United States-specific business structure allowed by state law. It is a private limited company that can only be founded here in America. Also known as a hybrid entity, it features both organizations and partnerships. It could be ideal for company owners looking for more security and protection from debts or liabilities.
It’s easier to set up an LLC than other company structures, have a low running overhead cost, and have a simple tax structure. This factor makes them a popular choice amongst small business owners because they offer liability protection without the headache of complex formalities and regulations that usually come with forming a business.
Now that we have this out of the way let’s chew over the advantages of setting up a business in America.
Do You Get Any Benefits If You Set Up An LLC as a Non-Resident
First, why should you even think of setting up a Limited Liability Company in the United States? Well, there are at least a dozen answers to this question.
To start, the US is considered extremely business-friendly and ranks #1 in the world’s entrepreneurial list, which makes it all the more appealing to establish an LLC here. With its reasonable corporate tax rate and low startup costs, an LLC formed here will forever have the prestige of being based in the United States Of America. Additionally, having 336 million people, of which 200 million are credit and debit card owners, makes it one of the most appealing and profitable marketplaces.
Next, we arrive at the centerpiece of this article: Is it even possible for an Alien to set up an LLC in the US? Worry not. We’re not mocking you for being a noncitizen by calling you an Alien. The United States Government recognizes a foreigner as an “Alien,” as mentioned here.
The short answer is “Yes.” You can set up a Limited Liability Company even if you don’t have US citizenship, a “green card,” or a Social Security Number. Foreign business owners can start and run their venture even if they aren’t physically present. However, they’ll be subjected to different rules and regulations compared to US citizens and residents going into business, so we’re here to give you a rundown of every bit you need to know before going into business. Keep reading, and in less than minutes, you’ll know what to expect when starting a business in the US!
Figure out where to set it up:
This is the most crucial part of opening a business in America. There are over 50 states, and all of them have different rules and regulations for starting an LLC. It’s best to get in touch with an attorney or a consultant who is acquainted with the laws and requirements of all 50 states and the District of Columbia. It doesn’t end here. Figuring out the ideal state for your company also involves making correct decisions regarding finances, supply chain management, and demographics. Additionally, having an idea and assessment of your competition beforehand also helps.
In this case, Non-residents have an advantage over US citizens who will most likely set up their business in the same state and location they’re in. Aliens can pick and choose a state that offers maximum convenience and benefits.
You can decide on an area that is accessible to the market and have transportation and skilled labor readily available.
Incorporating your business in the same state, where it is physically present, is unnecessary. It would help if you had a registered agent for LLC whose address will be on the company’s mailing list.
While discussing states, it would be unfair not to mention the two prime LLC states, bringing us to:
Wyoming vs. Delaware: Wyoming LLCs offer more privacy and asset protection at a comparatively lower cost. Delaware LLCs are expensive to maintain but carry the honor of being home to Fortune 500 companies.
We recommend Delaware if you wish to set up an LLC and then convert it to C-Corp in the future or want that shiny tag that comes with being a part of it. If not, Wyoming is the next best option since it’s home to many non-residents running e-commerce and online businesses. They’re for business owners looking for an easy way to start and grow their businesses.
File your own LLC online:
Once you’ve finalized the state of interest for your LLC, you can start with the specifics.
You can do your LLC registration by:
- Recruit a registered agent: A quick Google search will get you reputed and experienced names. Hire an agent to receive legal documentation and important notices on behalf of your company.
- Select your LLC business name: Pick a catchy and engaging name before registering your LLC. While choosing a name, take care of the following:
- It can’t be the same as another registered business name.
- There are no restrictive terms such as “insurance,” “board,” or any obscene or forbidden words.
- It should not be used as a domain name to avoid trademark or legal issues.
- The name should reflect its LLC status, and it should end with abbreviations like “LLC,” “LLC,” or “Ltd.”
- File your LLC online: This depends on your interest and can be tracked online. Each state has a different filing fee ranging from $50 to $500.Once registered, the state will send you your operating agreement and formation instructions. Note that it may take several days or weeks before it arrives.
Apply for an LLC EIN:
EIN or Employer Identification Number is similar to the Social Security Number(SSN) allotted to US citizens for tax purposes. EIN does just that. It offers formal identification for taxation and is termed tax ID.
You will need it to file LLC tax returns, apply for merchant accounts like PayPal, and open a business bank account. Anyone from the country can apply for an EIN on the IRS website, but if you’re based out of the country, you can email or fax the required Form SS-4.
IRS has, very recently, enabled digital signatures. You can read more about it here.
Apply for business permits and licenses:
Going into business calls for a lot of paperwork. Depending on the location and the kind of LLC you are in, you must get the required licenses and permits. Business licenses show you comply with the industry’s standards, while permits allow you to sell particular products or services in your state.
Specific permits, licenses, and regulations vary depending on your state. For more information, you can always check with the Small Business Association(SBA), where you can get specific information based on your state of interest.
Different levels of business licenses are
- General License: All businesses are required to get a local business license to function within their dominion.
- Occupational License: Ventures like accounting companies, law firms, and food and drink businesses require occupational licenses to operate legally.
- State License: This government license verifies that your LLC is tax registered and legalized to run within the state.
- Federal License: LLCs functioning in specialized industries like agriculture and aviation are required to obtain this license.
Set up a US Business Bank Account:
When running a company and taking over the world, you must keep your personal and professional life separate. Register a bank account under your company’s name to keep track of your professional finances separately.
Once the bank account is set up, take care of all the transaction receipts and withdrawals, and keep assessing all the banking statements you’re entitled to. This way, you can stay informed about your financial activities.
As an LLC owner, you can open a bank account, but only after you’ve met the following conditions:
- You have an Employer Identification Number(EIN), and,
- A business address( you can use your registered agent’s)
- You’ll be required to open the account in person.
Open a merchant account:
Now that you have an official bank account, you can set up a merchant account to ease your financial transactions. Stripe and PayPal allow you to make and receive payments easily and within a few minutes.
You’ll need the following to set up a Stripe account:
- An LLC,
- Your EIN,
- A business address in the same state as your EIN
- Your business phone number and,
- an official ID
And the following for a PayPal:
- An LLC,
- Your EIN,
- Business address
- Business phone number and,
- Social Security Number or an ITIN.( Individual Taxpayer Identification Number)
Set an operating agreement:
An operating agreement is an internal document that contains information on the LLC’s operating terms and describes its members’ roles, rights, and responsibilities. While this may not be a requirement for all US states, you should consider creating one in case the co-owners ever get into a disagreement and need help arriving at a solution.
Some states, like California, don’t require a single-member LLC to have an operating agreement, but Multi-member LLC has to have an operating agreement. Likewise, it depends on your state of interest, but creating one is recommended to avoid future hassles.
Now that you have a mental picture of how your LLC will be founded from scratch, you can focus on running it. Anyone can start an LLC from anywhere in the world if they’re dedicated to the cause and prepared to pursue it regardless of any tests and trials they face. While opening and growing an LLC yourself is perfectly fine, you may fare better when teamed up with working partners or members. Ultimately, the choice is yours. At the end of the day, it’s your creation, your canvas, and you may paint it whichever way yields the perfect picture.
The “American Dream,” described by James Truslow Adams, is “That dream of a land in which life should be better, richer and fuller for everyone, with opportunity for each according to their ability or achievement.”
Luckily, anyone worldwide can live the “American Dream.”
You can, too, by following our simple, straightforward, and significant steps for setting up an LLC as a Non-American. We hope your LLC survives the market and moves nothing but up in the world!
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Frequently Asked Questions (FAQs)
Yes, a foreigner can set up an LLC in the United States of America.
No, you don’t need a physical presence in the US to create an LLC. However, you’ll need a registered agent in the state where your LLC is formed.
You can choose any state you desire to form your LLC, but most people decide where they conduct business or have a physical presence.
Yes, you will need an EIN to open an LLC. An Employer Identification Number is a unique nine-digit number the IRS assigns to identify your business for tax purposes.
You can apply for an EIN (Employer Identification Number) online through the IRS website.
No, you don’t need a US bank account to form an LLC, but it will be helpful for tax and accounting purposes.