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Inside guide to Non US Resident USA Company Setup & Company Registration
Overview
A US Limited Liability Company LLC is a legal entity enable s individual (s) or Company (ies) conduct their business activity with a limited liability protection to their personal assets. An LLC has similar features of a corporation which is known as “company limited by shares” with tax advantage of a “pass through entity”.
The USA LLC can be formed with a sole owner (known as “Member”) who is a Non US Resident as well as a Non US Resident Company. There is no legal requirement to have a US Person as a member, partner or director.
Many Non USA Residents, setup a USA Company using a Delaware LLC due to many advantages both legal and taxes.
Globes America specializes in assisting Non US Residents with LLC formation, Delaware Company Setup, Bank Account Introduction & Submission for USA LLC and year round support of taxes, accounting and filling requirements.
History
The foundation of the Limited Liability Company (known as “LLC”) was laid out with the Limited Partnership Law in PA State. Limited Partnership allows having a general partner as well as limited partners who are protected by limited liability on their personal assets.
WY State was the first state to pass the Limited Liability Company Law and by that upgraded the formation of a limited partnership to a limited company. Few years later all 50 states offer the formation of a state limited liability company (llc).
An LLC is a business entity formed on the state level. The LLC, after the state registration is completed should obtain EIN (Tax ID Number) and register with the Federal Tax Authorities (known as the IRS – Internal Revenue Service).
As of today, you may setup the following LLCs:
Alabama LLC, Alaska LLC, Arizona LLC, Arkansas LLC, California LLC, Colorado LLC, Connecticut
LLC, Delaware LLC, Florida LLC, Georgia LLC, Hawaii LLC, Idaho LLC, Illinois LLC, Indiana LLC, Iowa
LLC, Kansas LLC, Kentucky LLC, Louisiana LLC, Maine LLC, Maryland LLC, Massachusetts LLC, Michigan LLC, Minnesota LLC, Mississippi LLC, Missouri LLC, Montana LLC, Nebraska LLC, Nevada LLC, New Hampshire LLC, New Jersey LLC, New Mexico LLC, New York LLC, North Carolina LLC, North Dakota LLC, Ohio LLC, Oklahoma LLC, Oregon LLC, Pennsylvania LLC, Rhode Island LLC, South Carolina LLC, South Dakota LLC, Tennessee LLC, Texas LLC, Utah LLC, Vermont LLC, Virginia LLC, Washington LLC, West Virginia LLC, Wisconsin LLC, Wyoming LLC and District of Columbia LLC.
All States Limited Liability Company offers the same features:
1. A limited Liability Company owned by members
2. A “Pass Through” Entity for Tax Purpose
The differences between the states in the LLC’s formation process are in the state fees, owners & directors details and formation period.
LLC & the IRS – How LLC became a “Pass Through” Entity
The US IRS has a tax code related to limited partnership which categorizes it as a “pass through” entity tax wise. It means that the partnership is not liable for the income tax resulting from its profit but the partners are. The advantages of the “pass through” entity are:
1. There is no “Double Taxation” like in the case of a corporation. A corporation must pay income tax on its profit. If the shareholders withdraw dividends out of the net profit they must pay additional dividend tax. In a pass through entity, the profit goes to the owners and there is no dividend tax.
2. If the partners are individuals they will pay according to the individual tax rates v.s. corpora rate tax rate (in a corporation).
Following the Wyoming LLC law in 1977 and other state thereafter, the USA Federal Tax Authority - IRS ruled In 1988 that a Limited Liability Company (LLC) formed under Wyoming State was eligible for pass-through tax code. The new regulation treated the LLC as a partnership in the eyes of the tax man!
LLC & Non US Resident
A USA Limited Liability Company is one of the most popular legal entities used by Non US Residents from all over the world both as a business platform for their US business activity and as an offshore company.
A Non US Residents can be the sole owner (member) of a USA / Delaware LLC. The sole member can be a Non US Resident Company. A Non USA Resident can also be the LLC’s director. There is no legal requirement to have a US person as a director or member on board.
The formation of the US LLC does not require a NON US Resident to be present in the US. You may manage your LLC from anywhere in the world.
In states like Delaware, Nevada, Wyoming, Florida and others the LLC may keep its records outside of the state and even outside of the USA. Therefore the LLC management & control can be done from the Non US Resident’s Country.
In some situation, if the LLC’s member(s) are Non US Residents and the LLC does not conduct any business in the USA, the profit will not be subject to US tax. This is the result of the LLC “pass through” code. If the members are Non USA Residents and they have no business activity in the US, their federal tax status does not require them to file or be subject to US tax. This feature of the LLC makes it similar to an offshore company.
Limited Liability Company (LLC) Setup & Registration Process
The foundations of the LLC formation application with the state are:
1. Local Registered Agent – must be an individual or company with a legal address in the state of incorporation. Globes America will provide this address as part of the incorporation process.
2. Articles of Formation, Articles of Incorporation, Articles of Association – These are the legal foundation of the LLC which state the LLC’s legal name, legal address, type of business activity and members / directors information
3. Bylaws – Setup the relationship between the members and the LLC
4. Member Certificate – State each member and the percentages of ownership (interests)
Some states such as Delaware do not require information about the members or directors of the LLC.
The registration process is made by electronic documents & filling. Globes America will provide all required documentation & paper work via email. All you need to do is: print, sign, scan and forward back to us for processing.
Summary - LIMITED LIABILITY COMPANY (LLC)
A USA Limited Liability Company known as LLC is a separate legal entity similar to a corporation
The owners of the LLC are not shareholders but members. The members are protected with Limited Liability. Their personal liability is limited to the amount invested in the LLC.
The LLC is a pass through entity for tax purpose. The LLC will not be subject to tax but the members will.
The members can be individuals or companies (US or NON USA Residents), including corporations, partnerships, trusts etc.
Non-residents can be a sole member of the LLC, known as Offshore LLC. There is no limit or restriction on the number of owners (members).
A US organized Limited Liability Company is a great financial tool for individuals and companies who conduct international business and wish to minimize their tax liability.
The USA Limited Liability Company offer Non-US resident complete ownership, management & control with no USA Person required. Non US Resident members are not required to file tax returns if the income of their LLC is not generated from the United States and it is not effectively connected with trade or business within the United States nor do they employ US residents or rely on a dedicated place of business within the United States.
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