How to Form an LLC in the USA if You’re Not a Resident

Key Takeaways

• As a non-resident, you can legally form and own a U.S. LLC, opening the door to the lucrative American market without requiring U.S. citizenship.
• Incorporating an LLC based in the U.S. protects your personal assets from business liability. Its flexibility in terms of management structures and operations further adds to its attractiveness for international entrepreneurs.
• To get started, choose your state and choose a name for your LLC. From there, name a registered agent, file your formation documents, obtain your EIN, draft your operating agreement, open a U.S.-based bank account, and receive a U.S. mailing address!
• It’s vital that state choice is not overlooked. States such as Wyoming, Delaware, and Nevada provide great advantages, including avoiding or minimizing taxes, privacy, and a straightforward business-friendly regulatory landscape.
• Avoiding U.S. tax rules and navigating confusing compliance requirements can be overwhelming. Collaborating with a tax professional familiar with non-resident obligations will help make sure you don’t find yourself unprepared for these complex requirements.
• These all pose challenges that range from opening a U.S. bank account, to meeting compliance standards from half a world away, to acclimating to American business culture. You can avoid these challenges with proper advance planning and targeted support.

Step 1 – Choose a state for your non-resident LLC. Generally, this will be the state where you intend to conduct business.

Then, hire a registered agent in that state and file formation paperwork in that state. This is why a lot of non-residents choose Delaware, Wyoming, or Nevada for their easy rules and low cost.

You don’t have to be a U.S. Citizen or even reside in the United States in order to open one. What you do need is a U.S. Mailing address for the registered agent’s office.

Now that you’ve gotten your LLC set up, you’ll need to get an EIN with the IRS. This EIN will be needed for tax purposes, as well as for opening a US bank account.

This is where rules for non-residents state by state come into play. It is always a good idea to check your state laws to be fully informed!

The rest of this guide takes you through each step in simple, easy-to-understand English.

What’s a US LLC really?

It is sort of a hybrid creature between a partnership and a corporation. Like other limited liability entities, an LLC provides its owners—called members—personal liability protection. This protects the members, as they are not personally liable for the debts or lawsuits against the company.

This will shield your personal house, checking account, or car in the event that your business is ever sued. An LLC may be a single member or many members, making it a great choice for both the solo founder and the founding team.

Further, it is a highly flexible structure and gives members a lot of leeway in determining how they wish to conduct themselves. You don’t need to worry about a formal board of directors or annual required meetings like you would with a corporation. Instead, members usually have the authority to direct manage the company themselves, or to engage third-party managers.

Correct, non-US residents are allowed to set up an LLC! In reality, they have to select a registered agent. This agent must have a physical address in the state in which they’re forming the LLC.

This means that LLCs are treated as pass-through entities. No requirement to file a corporate tax return. All profits and losses flow right through to the members’ individual income tax returns. The business itself does not file or pay federal income tax.

This is a really effective way of avoiding double taxation, one of the perennial bugaboos about corporations. All non-residents should be very careful. Some types of income are taxable in the US at source, via US withholding tax rules.

An LLC gives you more credibility in the US market. Second, it gives foreign owners a very real foothold in the world’s largest economy. More significantly, it does so while keeping an obvious separation between personal and business money, thus creating an even stronger shield for owners’ assets.

The out-of-pocket cost and regulatory requirement of forming an LLC varies widely from state to state. That’s why choosing where to register is incredibly important for your long-term convenience and cost of operation.

Why it appeals globally

US LLCs are pretty much catnip to foreigners. For those of you, yes an LLC is a more abbreviated, less complex path to enter the US market. Indeed, the US legal system is famous for being very business friendly.

What’s more, the process of registering an LLC is simple and clear-cut. The big elephant in the room is that the dollar is strong, and the US has a super attractive big market. By using an LLC in the US, you’re creating a bright new world of global sales and global investment!

In practice, US LLCs offer an extremely flexible and open-ended organizing structure. The members of an LLC can be any nationality or residency, meaning they do not need to live in the United States. Combined, the simple rules and transparent ownership make for a friendly environment.

Venture investor-friendly features and strong legal protections make it an excellent choice for anyone outside the US who wants to do business or raise capital here.

LLC vs. other US entities

Unlike sole proprietorships, an LLC keeps your personal assets (like your house or car) safe from any liabilities your business may incur. Corporations provide the exact same protection.

LLCs are a lot easier to run—no formal annual meetings and you’re not going to be drowning in legalese and bureaucratic red tape. Tax-wise, LLCs avoid the double taxation penalty that C Corporations face.

Unlike the other US entities, members of an LLC report profits directly on their personal tax returns. Conversely, C Corporations face entity-level tax initially, and then again on dividends. The nature of management in LLCs is more relaxed than corporate formalities.

There is no need to maintain a board of directors or formal bylaws. Bear in mind that every state has its own initial filing and yearly fees. In reality, LLCs are far simpler and cheaper to maintain than corporations.

Your liability shield explained

The most attractive thing about an LLC is its liability shield. If you own a business US LLC, your personal assets are not at risk. As a general matter, they are insulated from every business liability or obligation.

This shield only works to protect your personal assets if you never co-mingle personal and business finances. As long as you don’t commingle them or violate statutory requirements, courts cannot pierce your veil and hold you personally liable.

Legal protection is indeed bulletproof for LLCs. What you do is more important than what you miss. The proper steps—like properly signing contracts as the LLC, not in your personal capacity—are crucial.

It’s actually following the rules that keeps the liability shield from cracking.

Can foreigners own US LLCs?

The short answer is yes, foreigners can own a U.S. LLC and are not required to become citizens or legal residents. Foreign ownership of U.S. LLCs is permitted under U.S. Business regulations, allowing everyone from private citizens to governments around the world to create and manage LLCs. This open policy makes the country one of the best places for international entrepreneurs looking to form a presence in the U.S.

What is the application process for non-residents vs residents? Non-residents are subject to the same process as residents. All that aside, here are a few important tax implications to be aware of. Foreigners typically form LLCs in business-friendly states such as Delaware, Wyoming, and Nevada. Their statutes and filing requirements are extremely simple, further streamlining the experience.

Citizenship not a barrier

In fact, you don’t even need U.S. Citizenship—or even a SSN—to have an LLC created. Foreign owners are protected under the law no less than domestic owners. This open-door policy has brought business to the country from both sides of the Atlantic.

As an example, we’ve helped German tech founders who have formed their U.S. LLCs in states like Delaware. Emerging at the same time are fashion companies from South Korea. The most important bureaucratic difference comes around tax time. Note that for U.S. Tax filing purposes, non-resident owners would file IRS Form 1040NR, as opposed to the normal 1040. U.S. Business law always intended to leave the door open to foreigners, not slam them shut.

Live abroad, own in US

Good news for foreigners — you can run your LLC from anywhere! Just as they interact with personal digital assistants and business partners by email, video chat, and other digital platforms. To keep an LLC legally active, you need a registered agent based in the United States. This individual will be the one to get all legal and official correspondence directed at the LLC.

This is a tried and true maneuver employed by billions of dollars of global companies. They manage daily business remotely and keep their U.S. Company completely legally compliant. This setup allows foreign owners to serve U.S. Customers. They can conduct research, develop products, and serve customers in a variety of new markets, all without moving to the U.S.

Defining “non-resident” status

A non-resident for tax purposes is defined as including anyone who does not pass the green card test. Additionally, they fail the substantial presence test. Non-residents must file various tax forms and usually only owe U.S. Tax on U.S.-sourced income. This includes income that is considered to be from a U.S. Source.

Resident owners, by contrast, are taxed as if they were U.S. Residents. While being a non-resident LLC member means filing additional paperwork like Form 5472, the benefits of non-residency include pass-through tax advantages. The main rule: know your status and file the right forms.

Start your US LLC: key steps

Creating an LLC in the United States from abroad requires a proactive, informed approach. I know it can seem like a daunting process at first, but it really is a simple step by step procedure.

Which state you choose to start your LLC in is an important decision. Completing all the required forms and setting up your business banking is all part of the process too!

State laws governing LLCs, initial filing fee and annual compliance requirements vary widely. Knowing what to expect at each stage of the process is the most important piece of the puzzle!

Looking to start your US LLC as a non-resident of the US? Don’t miss out on the little details that make the difference between success and failure!

Essential steps to start a US LLC:

• Choose the state for LLC formation
• Pick a unique LLC name
• Appoint a registered agent
• File official LLC formation documents
• Obtain an IRS Employer Identification Number (EIN)
• Draft an operating agreement
• Open a US business bank account
• Set up a US mailing address

Every step is a new opportunity for you to make state-specific moves. Maintaining tidy recordkeeping and timely filing of forms is key, because any delay or mistake can significantly derail your business’s momentum.

Based on your decisions and pre-work done, you can have the whole process completed in as little as 2 weeks. In reality it can drag on for up to 2 months.

1. Choose your state

The initial and most important step is deciding which state to form your US LLC in. Not only are the fees, requirements and regulations different in each state, but so is the overall business climate.

If your business is fully online or you don’t plan to have a US office, you can choose any state. Wyoming and Delaware are popular choices.

Our pick for the best overall state to form an LLC, for its low setup cost (about $150), privacy, and lack of an annual report. Delaware is the de facto capital of business-friendly courts and laws.

The annual franchise tax and required filing fees are higher. Nevada is a close second and will be very popular! It provides for no state income taxes and excellent privacy. The costs can add up fast.

Each state has different requirements exactly. For example, starting in 2024 certain states will mandate the filing of a Beneficial Ownership Information Report (BOIR).

A few of them do require the filing of an annual report, and a few states impose a franchise tax. State tax regulations, in addition to federal rules, dictate what you owe and how you have to file.

Think about your goals for the future, your desire for privacy, and your finances when deciding.

2. Name your new US LLC

Your US LLC name must be unique from all other companies under the jurisdiction of the state you are forming the company in. Further, most, if not all, states will insist that the name end with “LLC” or “Limited Liability Company.

Second, the name cannot be too similar to another business that is already registered. So avoid terms such as “bank” or “insurance,” unless you’re feeling up for the extra challenge.

All but a handful of states provide an online business name search tool. Take advantage of it and use it to see if a name is already in use!

Or you could go the route of reserving a name for $50 or so and then finish your filing. Picking an original name means you’re more likely to avoid brand confusion and a whole lot of hassle later on.

3. Get a registered agent

Every US LLC is required to have a registered agent. This person or company receives service of process and other important legal documents for the company.

The agent must be available at that physical address during normal business hours in whatever state you decide to form your LLC in. You can do this through a professional registered agent service, which is what most non-residents do.

These services make sure you’re never blindsided by a missed legal notice. They’ll assist you with keeping your personal address out of public records.

Additionally, using a registered agent you trust keeps your business’s compliance in check and prevents you from forgetting a key date.

4. File official LLC papers

You’ll have to file your Articles of Organization officially with the state’s business division. In some states, this is referred to as the Certificate of Formation.

Here’s what you’ll need:

• Articles of Organization form
• Registered agent info
• LLC name and address
• Member or manager details
• Filing fee payment

You can typically file online, by mail, or in-person depending on your chosen state. This can cause rejections or delays to be unavoidable, so make sure to triple check every detail before you file.

After you submit your documents, your state will review them, which may take from just a few days to several weeks.

File those details on time and file them correctly the first time! Taking these steps will spare you from avoidable operational headaches down the line.

5. Obtain your IRS EIN

Your Employer Identification Number (EIN) is like your LLC’s Social Security Number. It’s a requirement to be able to pay US taxes, hire US workers and open a US bank account.

The good news is, yes, non-residents can apply for an EIN without a US Social Security Number (SSN). You can apply for your EIN with IRS Form SS-4.

Be aware that you can submit your request directly by mail, or even by fax. You will usually have your EIN within a week or two.

The EIN will make it easier for your new LLC to follow federal tax regulations and makes getting a business bank account and hiring employees easier.

6. Create an operating agreement

Your operating agreement outlines how your LLC will function. Even if it’s not required by your state, you should still have one in place.

The agreement can outline expectations for management structures, voting rights, and distribution of profits. It further describes the process of what occurs when a member leaves the company.

Key provisions outline member duties, how to handle important decisions, and how profits get split up. This document doesn’t just protect all members from personal liability, but it keeps thousands of disputes from occurring to begin with.

Don’t worry—you can create one on your own! The other option is to use a template. Just ensure the information complies with your LLC’s specific needs.

7. Open a US bank account

Having a US business bank account not only builds credibility, but it makes managing your US-based finances more convenient. Banks will usually ask for your LLC formation documents, EIN, operating agreement, and proof of address.

Others will only take on new clients that they can meet with in person. Some only accept non-residents if you work outside of their jurisdiction.

Having a separate bank account makes it easy to show the difference between your business and personal money. Creating this separation is crucial during tax season and allows you to begin start building business credit!

Most importantly, it makes it easier to receive payments from US clients and pay US bills.

8. Sort your US mailing address

Receiving important business correspondence and meeting most state obligations will need a US mailing address. This could be a US-based virtual mailbox service, the address of your registered agent, or a mail forwarding company.

This not only makes your business look more professional, but it helps with vendor filings and state registrations. The best mail forwarding service ensures you receive all critical mail without fail.

It accomplishes this by scanning, emailing, or forwarding your mail directly to your digital mailbox. This will ensure that you can still maintain operation even if you are not physically present in the US.

Top states for your US LLC

Your US LLC’s home state makes a big difference on how much you pay to maintain your business. It can affect your privacy and legal presence. Each state has its own unique mix of tax rates, regulatory burdens, and costs to form.

At the very bottom, you’ll find a sortable table. Incredibly helpful and super speedy, this comparison is amazing! It highlights three of the top states for your non-resident LLC, including Wyoming, Delaware and Nevada.

Wyoming: low tax, high privacy

Wyoming wins the top spot once more for non-residents seeking low fees, and low red tape. It means more money in your pocket with no state income tax.

The state pulls owners’ names from public records, granting an extra layer of anonymity. Opening an LLC has never been easier!

In most cases, you can set up your business within just a few days and pay some of the lowest annual fees anywhere in the country. That’s one of the biggest reasons online business owners flock to Wyoming.

Its business-friendly laws and low state fees lure e-commerce merchants!

Delaware: the corporate haven

Delaware is famous worldwide for its business-friendly laws. Its courts handle business disputes with speed and fairness, which brings confidence to many international investors.

Delaware LLCs provide significant formal and legal benefits. Delaware LLCs can operate in nearly any format as you’d like.

The state’s franchise taxes and all other required filing fees are, without a doubt, much higher than other states. Consider the legal benefits against the future cost.

Considering Nevada for your LLC

This means Nevada ties with Wyoming for second place with no state income tax. Privacy just doesn’t cut it—ownership information is never added to public state databases.

Nevada’s rules are fairly black and white, though the state does require annual business licenses and annual reports.

Nevada’s upfront costs are a little bit more than Wyoming’s. Many people feel its laid-back business vibe makes the hit a worthwhile one.

What truly matters in choice

Look at the potential tax liability you would face, the level of privacy you want, and how much regulation you are ready to deal with.

Other states, like California, have excessive franchise fees that within no time erase any profit. Others, like New Mexico, have low costs but are much more restrictive and limiting in their flexibility.

What truly matters in choice of state. For instance, a technology startup generally wants to pick Delaware. An independent online retailer would generally be better served by Wyoming.

US tax rules for non-residents

So we understand that it can seem like a daunting task to figure out US tax rules as a non-resident LLC owner. The IRS rules for non-residents are much different than that of US citizens. For one thing, get smart on what constitutes taxable income!

Determine which forms you are required to file. Learn how federal and state rules can overlap or work against each other. Below is a quick run-down of essentials for non-resident LLC owners:

• Otherwise, see exceptions below unless the income is US sourced or is effectively connected with a US trade or business.
• Non-resident aliens report income earned in the U.S. by filing IRS Form 1040-NR.
• Dividends that are paid to non-resident shareholders are subject to a blanket 30% withholding tax.
• US filing status must be single, married filing separately, or qualifying surviving spouse.
• On top of that, both federal and state taxes come into play, as each state is allowed to determine its own legal framework and guidelines.

Federal and state tax basics

Federal taxes Federal tax rules for non-residents are complicated.

State taxes LLCs are subject to state taxes, which is determined by the states in which one forms or operates an LLC.

LLCs can be particularly confusing. For example, California continues to tax LLC income that is California-sourced, regardless of the residency of its owners. Education and the ability to file simple and accurate returns easily and for free are the cornerstones of a strong tax system.

Uncle Sam can be a fickle fellow AND tax laws are always changing! Keep an eye out for IRS and state updates before tax season.

Do you need an ITIN?

If you’re ineligible for a Social Security Number then apply for an Individual Taxpayer Identification Number (ITIN). It’s really important for tax purposes! Without it, you cannot file your taxes.

In short, if you’re a non-resident with US income that must be reported, you’ll need to get an ITIN. You can apply using IRS Form W-7 where you must submit documentation that verifies both your identity and foreign status.

You don’t have to have an ITIN before filing.

Filing US taxes correctly

• Gather all US income records and paperwork.
• File IRS Form 1040-NR.
• List deductions and credits you qualify for.
• Meet all IRS and state deadlines.

Good record-keeping is key to being able to claim any deduction—business expenses, for example. Know filing deadlines and extensions. There will be penalties for late and non-filing.

Why tax pros are vital

The bottom line is that US tax rules for non-residents are complex, confusing, and daunting. They help non-residents maximize their deductions, avoid costly mistakes, and stay up-to-date on any changes to the law.

A qualified tax professional can help you figure out the best way to reduce your withholding. They can help you file your tax return to claim a refund if excess US tax was withheld.

When it does, it can be a substantial amount of money. Beyond keeping you out of trouble, their advice can actually help you save money.

Why a US LLC helps you

Forming a US LLC gives non-residents specific, unique business advantages. US LLCs are known around the world for their speed and ease of formation. In addition, they require minimal upkeep in the majority of states and they offer excellent liability protection.

Attractive opportunity

A US LLC gets you a seat at the table. That market is over a ¼ of all household consumption on the planet! You have a target-rich audience of potential customers! They are pre-qualified and anxious to purchase from you as they want to deal with American-based companies.

Further below, you’ll find more on each key benefit.

Protect your personal wealth

Using a US LLC protects your personal wealth. This is especially important if your business runs up debts or is sued. If your business goes into debt, creditors can’t pursue your private residence, car, or other assets.

In the eyes of the law, the LLC is its own PERSON! To keep this shield strong, you need to treat your LLC as its own thing: use a separate bank account and follow all the right steps.

You receive additional peace of mind with states like Wyoming offering simple regulations and low annual costs. For the majority of us, this personal LLC protection wall will be a huge relief. You don’t want to be afraid of losing every single thing you own personally.

Enjoy flexible LLC management

LLCs don’t limit your options. You can form a US LLC with a single member. This gives you the flexibility to operate the business independently, without a US-based partner.

As the manager, you have a lot of flexibility in terms of who’s in charge and how things are run. That flexibility certainly creates a lot of possibilities. It works well for both solo founders and teams with customized management structures.

No board and no formal meetings means decisions can be made vastly more quickly and easily.

Gain US market credibility

Having a business presence as a US LLC shows that you’re serious about being in the market. Additionally, most US customers are more comfortable working with companies that have a local presence.

They are much more likely to support these businesses than those located outside of the US. So having a real US address and a real US registration sounds better and might even land you some bigger deals.

A US LLC gives you a presence that makes you look much more formed and serious about doing business here. This is a big deal to US buyers or partners.

Unlock the vast US market

The US economy is large, dynamic, and teeming with opportunities for expansion. Incorporating your foreign business with a US LLC will help you open your doors to buyers across the country.

You can conduct business through local partnerships. This not only opens up US payment systems to you, but makes you eligible for funding from many of the top VC firms.

If you’re a company on the move, this is one of the best places in the country to be – and to grow.

Common hurdles for foreigners

Although creating a US LLC as a foreign national is an excellent option with plenty of perks, it’s important to understand the hurdles. Many of these problems are simply aggravated for foreigners. If these hurdles are not dealt with on the front end, they can end up postponing or even killing their business investment plans.

Some of the most common challenges include:

• Understanding different state regulations for LLCs
• The difficulty of acquiring a U.S. business bank account with no U.S. physical presence
• Filing a Beneficial Ownership Information Report (BOIR)
• Dealing with language and cultural barriers
• Getting an Employer Identification Number (EIN)
• Finding a registered agent or U.S. address
• Navigating U.S. tax paperwork, such as Form 5472
• Ongoing compliance, including filing annual reports and maintenance of records

US banking challenges

It’s extremely challenging for non-residents to get a U.S. Business bank account. Some banks still ask for a U.S. Residential address or a Social Security Number. Some even require the account holder to appear in a local branch in person, an almost certainly impossible request.

Commonly required documentation would be your LLC formation documents, EIN, passport, and proof of address—not uncommon for any business. Having a well formed banking relationship in the U.S. Makes any transaction go smoothly.

It goes a long way to build goodwill and trust. Particularly as making progress on even small things often takes a lot of time and multiple rounds of follow-up – patience and persistence will get you far. The rest depend on fintech banks, which more frequently fail to offer a comprehensive, full-service answer.

Remote compliance tips

Enforcing compliance with foreign partners requires diligent oversight of U.S. Regulations. Digital tracking online tools have significantly simplified the process of remaining on top of deadlines and ensuring their paperwork is filed in a timely manner.

Setting calendar reminders for when annual reports or tax returns are due can help prevent requirements from being missed. Working closely with a U.S.-based accountant or lawyer experienced in foreign compliance can help ensure you stay on the right path.

Regular catch up meetings with US-based colleagues or representatives keep everybody aligned and focused.

Sidestep formation errors

In many cases, non-residents will skip out on local requirements or just fail to fill out all the required forms. Understand your state’s rules before you apply.

Make sure to double check template forms to ensure they are valid LLCs. Failing to provide an item such as a registered agent or required documentation can delay approval.

Thorough examination before public release prevents expensive errors.

Mind US business culture

Mind U.S. Business culture etiquette. This is a critical area to be aware of. Some basic pleasantries, some no-nonsense emails and an adamant schedule goes a long way.

To overcome cultural differences that can cause confusion, be adaptable in your communication approach and ask for clarification if needed. Regular, transparent communication will help build trust with your US partners.

Conclusion

We know that starting an LLC in the USA as a non-resident can be a daunting prospect. It certainly doesn’t feel as overwhelming once you see the process in real life and write it down on paper. You choose your state, file your formation paperwork, get your EIN, and open a business bank account. States like Delaware or Wyoming provide a simplified process with fewer hurdles to overcome. US LLCs offer extraordinary benefits, such as limited liability and a legitimate chance at scaling. What’s more, you’ll find more regulatory relief in your daily practice of business! What are the obstacles you would face, such as tax laws, form-filing requirements and getting qualified help. With smart, strategic planning, most of that guesswork is taken out of the equation. Wanting to have a US presence for your company. Learn the differences, weigh your choices against each other, and launch your new LLC before you know it.

Frequently Asked Questions

Can a non-resident open an LLC in the USA?

Can a foreigner have an LLC in the United States? That’s thanks to the fact that a majority of states don’t have any citizenship or residency requirements for LLC ownership.

Do I need a US address to start an LLC?

I want to open an LLC in the US, do I need a US address. This is the case in all states, but you do not need to be physically present in the US as a non-resident.

Can I open a US bank account as a non-resident LLC owner?

Sort of, but you’ll have to make a trip to the US in physical person — usually at all of the big banks. The good news is that a few fintech companies have opened their doors to allow remote banking for non-residents.

Which state is best for non-residents to register an LLC?

These states are the most common choices among non-residents Delaware, Wyoming and Nevada. These states are desirable for their business-friendly laws, low cost to set up an LLC, and privacy.

Will I need an EIN for my US LLC?

Will I need an EIN for my US LLC? The IRS has recently made applying online an option.

Are there extra taxes for non-residents running a US LLC?

Non-residents are taxed by the US government for US-sourced income only. While the US doesn’t tax income earned abroad, you should always check this with your tax advisor.

Do I need a US partner to form an LLC?

Do I need a US partner or manager to form an LLC? So yes, a non-resident can be the single-member and manager of a US LLC.