Updated: Aug 23, 2022
Forming a company in the USA is an excellent way to Starting a business and expand into the United States market, whether you're a foreign citizen or if you operate a non-US based company.
The most popular business structure among new business owners to establish a US company is an LLC or limited liability company. Anyone can create an LLC in the United States; you do not need to be a US citizen, a US firm or a US resident to start a US business.
A Step-by-Step Guide to Creating a US LLC
One of the most important things you need to think about when forming your US LLC is staying compliant with all state and federal guidelines so that you're allowed to operate a business entity in America even if you live outside the country, also to avoid any penalties or negative status with the state that can lead to your LLC being inactive. Business Registration is a US business service that provide a comprehensive package of services from start to finish, including setting up your American bank account. You can also use our guides and do the work yourself.
The most important LLC formation tasks are choosing your state, forming the LLC, getting an Employer Identification Number (EIN) That will be used to file your Federal Tax returns, and having a physical US mailing address. We've provided easy-to-follow steps for each task below.
It is important to remember that forming an LLC in the United States does not provide visa sponsorship or green card eligibility no matter what type of business you have.
Anybody can start an LLC in the United States, regardless of nationality or incorporation status. You don't have to be a US citizen or a company to start a business in the United States. In the United States, foreign citizens and businesses may create Limited liability companies.
The steps to form your foreigner-owned LLC are:
Thousands of foreign-based entrepreneurs have used our services to legally establish their companies in the United States.
1. Choose a State in Which you will Form the LLC in the USA
It is usually recommended to create an LLC in a state without state taxes since you just have to deal with the US federal taxes. However, if you need to establish offices or have a physical presence in a specific state, you'll need to form an LLC there.
When determining which state to form your US LLC, you should primarily consider if you or your employees will have a physical presence, like an office or job site, in a specific state.
If this is the case, forming your LLC in that state is the best option. This eliminates the need to register your LLC in multiple states and use registered agents and will save on filing income tax return.
If your business does not require a physical presence, you should form your LLC in one of the three more tax-friendly states: Wyoming, Delaware, or Nevada. This way, you'll only need to handle US federal taxes.
We suggest Wyoming since it has foreigner-friendly laws, lower filing and annual costs, and no state, personal, corporate, or capital gains taxes.
2. Choose a Unique Name for Your LLC
Depending on the state, there are different rules about what an LLC's name can be. As a general guideline:
Your name must include the phrase "limited liability company," or one of its abbreviations (LLC or L.L.C.).
Your new business name cannot include words that could confuse your LLC with a government agency (e.g., FBI, Treasury, State Department, etc.).
Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
Checking if your desired website URL is available is crucial. Even if you don't want to make a business page right now, buying the domain name prevents others from taking it in the future. You may also consider registering a trade mark so that no one else can use your company's name.
Another thing to consider when selecting a name is the possibility of future change. It will be difficult to add more services like web design and SEO if you name your firm "Logo by Andy."
3. Hire a Registered Agent Service
What is a registered agent? A registered agent is a person or business that sends and receives legal papers on your behalf. This person or entity must be available during business hours M-F so that they can be hand-served with important documents on the company's behalf.
All LLCs must elect and register a registered agent in their state of operation. The chosen individual or corporation has to be authorized to do business where the LLC is located and usually needs to reside there as well.
A registered agent service is usually the best option for a non-resident owned business. The company you hire will have a physical office address in your state, and be open all required hours to accept legal notices in their office.
4. File Your LLC With the State
To officially file an LLC, you will need to file your documents with the state.
The official name for this document may be "Articles of Organization," but it is commonly referred to as a Certificate of Formation or Certificate of Organization. Your LLC formation document outlines how your business will run structurally.
Is your company a member-managed or manager-managed entity? This is a crucial distinction that depends on how your firm runs. Member-managed- one of the LLC's members (owners) will run the company day to day vs. The LLC will hire someone to be a manager as an employee, which is known as manager-managed.
At BusinessRegistration we offer Free LLC formation you will only pay the required fee by your state.
It is easy to file with BusinessRegistration and start a company. You will only need to complete an online form and provide basic information about your business, such as: desired name, address, type of business, etc. And we will take this out of your way so that you can focused on building your new business.
5. Create an LLC Operating Agreement
Although having an operating agreement is not typically required, it's still a good idea to have one.
An operating agreement is a legal document that sets forth the rules and regulations for an LLC.
Why are operating agreements so crucial? A thorough operating agreement protects all company owners from future conflict and maintains the consistency of their operations. It defines all of the responsibilities and authority of the members.
If you don't have one, you'll be bound by the State's operating agreement rules as interpreted by the court.
6. Get an EIN
You'll need an Employer Identification Number (EIN), which is a tax ID for your limited liability company.
According to the IRS, you don't need a US Social Security number (SSN), an Individual Tax Identification Number (ITIN), or a US mailing address to get an EIN.
While these identification numbers do allow for the IRS’s online application process to get an EIN; there are other options for non-resident entrepreneurs, an application can be submitted by fax or mail.
For Non-citizen applications, the IRS typically completes an EIN in 7 days to a few weeks.
You will need to register an EIN to do the following:
Open a business bank account
File Federal Tax return for your business
7. Get a Physical US Mailing Address
You must have a physical address in the state where you choose to open your LLC; this is required in order to open a bank account and for LLC formation.
If you need a mailing address in the US for your business, one way to get one is by establishing a physical office space in the state where you'll form and do business.
You can hire a 3rd party to scan and upload all of your documents to an online portal, where you will be able to access and download them.
8. Open a US Bank Account
After your business is successfully running in the US, you'll need to open a bank account in the States. You can not open a bank account without an EIN number.
The ability to trade in US dollars and access to low-cost international transfers from anywhere in the globe are just a few of the perks provided by a business bank account for foreign-owned LLCs. The following are some of the main advantages of establishing a US business account:
Increased access to business loans
Stronger business credit
There are several important practical and legal aspects to establishing a business checking account in the United States, which is one of the reasons why it is still so highly recommended by the Internal Revenue Service (IRS).
For example, establishing a business checking account might help to keep your LLC's corporate veil intact. This is an inaudible "cloak" that represents your legal rights as a corporation, including the right to limited personal liability under the law. Commingling founds and not keeping your business separated from your personal can pierce the corporate veil protection and expose you in case of a business failure. For that reason it is very important to keep your books clean are record every transaction in your business. QuickBooks is a great tool used by many new companies for accounting.
Keep in mind that you will be required to pay US taxes on revenue earned as a result of commercial or trade that has occurred within the United States.
In the United States, an LLC is considered to be "engaged in trade or business" if it satisfies the following requirements:
It has one or more "dependent agents" in the United States: This is an employee that works for your LLC almost exclusively.
The dependent agent participates in activities that will further your business' progress significantly within the United States, or
Your LLC is engaged in "significant, continuous, and regular" commercial activity inside the United States.
Courts have not provided a clear definition for what constitutes a “considerable, continuous, and regular” business activity, but — generally speaking — an LLC will be subject to US taxes for revenue that has been generated as a result of business activity within the US.
Depending on whether you're a single-member LLC or an LLC partnership, you'll need to submit various IRS paperwork:
Foreign-Owned Single Member LLC: File Form 5472 and Form 1120 each calendar year.
Foreign-Owned Multi-Member LLC: File an annual Form 1065. This includes Schedule K-1. Keep in mind that you may also have to file Form 8804 and Form 8805 if the company has revenue that has been generated from business or trade that has taken place within the US.
The process of opening a US bank account can be quite complicated, but this will ultimately depend on the bank in question.
Most conventional brick-and-mortar banks require in-person visits or proof of address in the form of a physical address or a utility bill. For obvious reasons, this can be quite inconvenient — or even practically impossible — for business owners outside the US.
Having said that, there are several “high-end” digital banking platforms that do not have the same qualification criteria.
The application requirements can vary with each online banking platform. Most require the following documents:
The Articles of Organization are a filing requirement in many states. This is also known as a Certificate of Organization or Formation, depending on your state's laws.
A United States Address: This can either be a virtual mailing address or the physical address of your Registered Agent.
Your Employer Identification Number (EIN).
Proof of Identification: As an international applicant, this will likely need to be your passport.
LLC Operating Agreement: It's possible that this will be required, but you'll have to evaluate this on a case-by-case basis. Even if it isn't necessary, it is usually advised that you create an LLC operating agreement from a practical standpoint.
Recommended Service: At BusinessRegistration we can help you as a foreigner to open your business bank account in the US.
9. Prepare for US Federal Income Tax Filing
The Internal Revenue Service (IRS) is in charge of LLC tax codes and rules. The number of members in a foreign-owned LLC affects its taxation.
Note: The penalty for failing to file Form 5472 is $25,000 per return and $25,000 per month until the form is submitted to the IRS successfully. This form may be challenging to complete. Before your business tax return is due, we recommend you get acquainted with it.
Summary of Forming a US LLC as a Non-Resident
The most significant issue you must consider when creating your US LLC is compliance, which entails ensuring that all state and federal requirements are satisfied in order to legally establish and operate a company in the United States from abroad.
To form your US LLC and start doing business in the US, you must:
Select a state in which your LLC will be formed
Choose a unique Name your LLC
Hire a registered agent service
File your LLC
Draft an LLC operating agreement
Get an EIN
Get a physical US mailing address
Visit the US and open a US bank account, or partner with BusinessRegistration agent to get help with opening a bank account.
Prepare for US tax filing (Form 5472) and find a local accountant to help you with accounting.
Frequently Asked Questions
Do i need an LLC to start a company in the US?
Though it's not required, we recommend that you form an LLC for your company. Doing so creates a barrier between your personal assets and any legal or financial troubles your business might experience.
Is it possible for me to work for my firm in the United States if I'm not a citizen?
A green card is required to work in the United States. If you don't have one, your only alternative is to work for your firm from abroad.
What business entity types can foreign nationals open in the US?
As a foreign national, you're able to open a limited liability company (LLC) or form a C corporation. Unlike LLCs, "pass-through" taxation does not apply to C corporations. Instead, they pay tax on profits as an entity while shareholders also pay taxes on for-profit dividends received as individuals also known as double taxation. Although C corporations have benefits as well, such as different sorts of stockholder interests which can create larger dividend payouts if the company is profitable.
Does the legal address of my company have to be located in the US?
Yes. Your legal address may be found in any country on Earth. You must, however, have a registered agent in the United States, in addition to your American mailing address. The majority of Registered Agent providers will need your address within the country you reside in.
Can my company’s name and address act as my registered agent?
Unless you have someone who can be physically present at your company's address during all standard business hours from Monday to Friday to accept and forward government documents, it is probably best that you hire a professional registered agent service.
I already own a company in my home country, can I name that company as the owner of my new American business?
Absolutely. All you need to do is nominate your existing company to be the managing member of your new LLC.
I already own a company in my home country, can I create an American branch of my existing company?
Yes, but unless you establish a connection between the two entities via internal resolutions or ownership as previously discussed, it would not be considered a branch location.