Many of my clients had NO IDEA how much they could save in taxes by starting a United States LLC or corporation for their business. It’s one of the best decisions you can make as a non-U.S. resident who has a successful business in your Country. If you live in Europe, the amount of taxes you end up paying back is nearly as much income as you’re already bringing home. Taxes in European Countries on private businesses can be as much as 50 to 60% of the income you’re making!
For this reason, the American market offers incredible opportunities to make and save money on your business. But you don’t want to jump in without fully understanding essential information to set up an LLC in the United States. If you don’t educate yourself on U.S. tax laws and all of the steps it takes to start a U.S. corporation or LLC for your business, the transition will be much more challenging and may even be futile.
This is why I’ve created a step-by-step guide on how to attain your LLC in the U.S. as a non-resident.
Once you’ve completed these steps, you can begin living the American Dream (even without having an actual residence in America).
Here are 6 Essential Steps You NEED to Know to Get an LLC in the USA as a Non-U.S. Resident:
- Choose the right state for your LLC
- Hire a registered agent
- Create your LLC name
- Apply for an EIN number
- Open a business bank account
- File your taxes correctly
Choose the Right State for Your LLC
The first and one of the most important steps is selecting the state in which you will register your LLC. Different states have different business regulations, taxes, and benefits. Some key factors to consider when choosing a state include:
- Tax laws: Does the state have state income tax or sales tax?
- LLC formation ease: How simple is it to open an LLC in the state?
- Business regulations: What are the rules around running a business in that state?
Some of the best states for foreign entrepreneurs looking to start an LLC include:
- Delaware: Known for its business-friendly laws and tax advantages.
- Wyoming: Offers privacy protection and no state income tax.
- Nevada: Similar to Wyoming, with no state income tax and business privacy.
- Florida: Low cost of living and tax benefits for business owners.
- Texas: A large, robust economy and favorable business environment.
It’s important to consult an expert to select the state that aligns best with your financial goals and business type.
Hire a Registered Agent
As a non-U.S. resident, you are required to have a registered agent in the state where you form your LLC. A registered agent is responsible for receiving official correspondence, such as legal documents, tax forms, and business-related mail.
Your registered agent will ensure that these documents are promptly forwarded to you, keeping your business operations smooth even if you’re located outside the U.S. This is crucial for maintaining compliance with state laws.
Create Your LLC Name
Naming your business is one of the most exciting steps in the process. However, you must ensure that the name you choose is unique and complies with state regulations. Most states require you to include “LLC” in your business name, and your name cannot be identical to other registered businesses in your state.
Be sure to check your desired name’s availability before proceeding.
Apply for an EIN (Employer Identification Number)
Your EIN is essentially your U.S. business’s “social security number.” It identifies your business for tax purposes, allows you to hire employees, open a business bank account, and file taxes.
It’s vital to apply for an EIN online through the IRS website. While the process is straightforward, it’s advisable to work with a business professional to ensure everything is handled correctly. Without an EIN, you cannot legally operate your LLC or fulfill tax obligations in the U.S.
Open a U.S. Business Bank Account
Opening a U.S. business bank account is crucial for any foreign entrepreneur.
Here’s why:
- Separation of finances: It helps separate your personal and business finances, simplifying tax filings and helping you avoid paying hefty taxes to your country of residence.
- Legality: A U.S. business bank account is required for processing payments and handling business transactions within the U.S.
- Savings: You avoid costly international transaction fees and currency conversion charges.
- Build U.S. business credit: A U.S. bank account is essential for establishing credit in the U.S., which can help you access financing for future business ventures.
To open a business bank account, you’ll need your EIN, proof of business formation (e.g., LLC operating agreement), a U.S. business address, and a valid form of identification such as your passport.
File Your Taxes Correctly
Once your LLC is up and running, the next step is ensuring that your tax filings are done correctly. As a foreign business owner, you’ll need to submit several forms to the IRS to remain compliant with U.S. tax laws.
Most of these forms are due by April 15th of the following year. It’s highly recommended that you work with a CPA or tax professional to ensure accurate filings and avoid potential penalties or fines.
The IRS forms you may need to file include:
- Form 1040NR (Non-Resident Alien Income Tax Return)
- Form 1120 (U.S. Corporation Income Tax Return), if applicable
- Other forms related to income and tax deductions for your LLC
Hiring a tax expert will give you peace of mind, allowing you to focus on growing your business while ensuring compliance with U.S. tax laws.
Ready to Start Your U.S. Business?
Starting a business in the U.S. as a foreigner is a rewarding and fulfilling journey, but it’s important to follow these key steps to ensure you’re set up for success. Whether you need assistance with forming your LLC, obtaining an EIN, or navigating the complex tax system, TonyDuranteLLC and team can do the entire process for you as seamless as possible.
If you’re ready to take the first step toward living the American Dream, click the link below to book a free 15-minute consultation call and discuss your business goals with us.
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