Unveiling the Magic of US LLCs for International Entrepreneurs
The Non-Resident’s Guide to US LLCs, Banking and Stripe and more!
Everything you need to know to form an LLC, get business banking, and start accepting payments from abroad.
Harnessing the American corporate power can be an international businessperson’s dream. The strategic benefits include quality banking, efficient payment processing, reputable standing, along with the blessings of a comfortable tax rate and achievable compliance needs.
Let’s uncover how setting up a Limited Liability Company (LLC) in the United States could be your golden ticket to global success.
- Choose an optimal U.S. state for forming your anonymous or non-anonymous LLC
- Obtain a virtual U.S. business address to meet legal residency requirements
- Handle LLC formation, EIN application, and filing completely online
- Open online business bank accounts remotely as a non-U.S. resident
- Integrate payment processing via Stripe, PayPal or similar services
- Gain all the key legal and financial tools needed to operate your U.S. LLC from abroad
Your Ultimate Tour Guide: Mat the Navigator
Our international business savant, Mat, has channeled his expertise into the Globalization Guide. His mission is to assist ambitious entrepreneurs like himself to navigate the intricate world of international business and cross-border living.
He has already paved the way for dozens of busniness entities to structure their international operations.
The Benefits of Sailing with the USA: An Overview
Why is a US-Based Business a Good Idea?
- Reputable Recognition: US companies enjoy universal trust and respect.
- Affordable Entry and Maintenance: The costs are competitive on an international scale.
- Easy Access: The barriers to entry are minimal.
- Robust Financial Infrastructure: You get stable access to banking and payment processing services.
- Friendly Tax System: US taxation is comparatively favorable for businesses.
💡 Highlighting the Perks
In the backdrop of a business-friendly ecosystem, the USA offers some notable pros:
- An unblemished reputation that propels trust
- Economically viable set-up and maintenance charges
- Easy market penetration
- A reliable conduit to exceptional banking and payment processing facilities
- A favorable tax system
Organizing an LLC in the US is an uncomplicated procedure that doesn’t necessitate legal aid. This makes the overall cost palatable for entrepreneurs worldwide. For a comparison, you’d require roughly $2000 to launch a similar enterprise in Canada, whereas you can have an LLC up and running in the US in less than a week for less than $1500.
- In Italy, the average cost of starting a business is $14,150, which includes expenses such as creating a business bank account, hiring a business secretary, establishing a real registered office, and so on.
- The cost of opening a company in Thailand can vary, but typically ranges from $1,500 to $1,900 (The total cost can fluctuate based on specific business requirements and circumstances). The official government registration fee is around $225. However, there are other costs like professional service fees ($900-$3,000), visa and work permit fees, consultancy charges, and corporate bank account opening expenses, VAT and other potential fees.
- In Singapore, the average business set up engagement fees of opening a company with a professional firm can be approximating US$13,223, including company incorporation, multi-currency corporate bank account opening, resident director services, and government fees. It’s important to consider additional costs such as company name application fees and ongoing annual costs.
I could go on and on…
The Global Trust Builder – The American Brand
The United States continues to dominate the world economic stage, lending your registered business a high level of global trust. Your clientele will face zero hiccups in tax-deducting invoices stemming from your company.
Economical Initiation and Management
With thousands of LLCs sprouting across the US daily, the competition is fierce, keeping the rates of most services related to LLCs affordable.
Tax Implications for Non-Resident LLC Owners
Taxation plays a pivotal role in your LLC ownership journey. This facet often becomes a source of confusion, especially in the context of US international tax.
In a twist, the US can transform into a tax haven for your business. An LLC opened by a non-US citizen or resident might allow for entirely tax-free earnings.
Your business model can be one of the following and still fit into this setup:
- Consultation or other personal services
- Digital products selling
- Amazon FBA
The Power of One – The Single-Member LLC
An LLC operates as a tax-transparent or pass-through entity, meaning the tax obligations don’t rest on the LLC but ‘pass through’ to its owners. They then document these on their individual tax returns.
There won’t be any tax to pay at all if there are no tax obligations on the US side and the owner is either a tax resident of nowhere or resides in a country with a territorial taxation system.
The US side taxation appropriateness hinges on the IRS Taxation of Nonresident Aliens. To exempt a US LLC from US federal income tax, it must meet these three criteria:
- Be 100% owned by non-US tax residents (either individuals or legal entities)
- Have no US presence or economic substance
- The income must not be “effectively connected”
Who Qualifies as a Non-Resident Alien (NRA)?
If you’re not a US citizen, a US permanent resident (aka a “green card holder”), or have not resided in the US long enough to pass the “substantial presence test,” you’re classified as a non-resident alien.
What Determines US Presence or Economic Substance (Nexus)?
It’s quite simple. As an NRA
You’ll be subject to US tax on business income if you are “engaged in a trade or business in the United States” (ETBUS).
However, you are ETBUS only if:
- You have at least one “dependent agent” in the US, essentially employees or companies that work almost exclusively for you, and
- That dependent agent substantially furthers your business in the US (purely administrative jobs don’t count).
Further, suppose an applicable tax treaty benefits you. In that case, you’re only subject to US tax if you operate in the US through a “permanent establishment” (like an office or other fixed place of business), in addition to being ETBUS.
Even if the LLC generates income in the US through service provision or product selling, that income isn’t taxed in the US if you don’t meet the aforementioned conditions.
Real-Life Examples – Clarifying the Nexus
Let’s illustrate the above with two real-life examples.
Case 1: Offshore Consulting Agency Serving US Clients
Picture a social media marketing agency servicing US clients from a Panama-based office with additional employees in the Philippines.
- They have no US office or sales agents and conduct all sales over the phone or through automated sales systems.
- They use a US LLC to bill their clients and receive payments in USD via a US bank account.
- The US clients can claim the services as business expenses seamlessly.
The work is performed overseas, and the owners are non-US citizens/residents, so the income isn’t taxed in the US.
Case 2: Non-Residential Fulfillment by Amazon (FBA) Seller
Consider a non-residential entrepreneur selling products in the US via Amazon’s marketplace.
- They use Amazon’s “Fulfillment by Amazon” service to fulfill their orders.
- The non-US citizen manages all marketing and procurement online and splits his time during the year between Vietnam, Philippines and Indonesia.
- His supplier delivers the products to Amazon’s warehouses, where Amazon staff repackage and dispatch them to clients across the United States.
- Amazon, acting as an independent agent with millions of other clients, is not primarily working for this entrepreneur, therefore he is not “engaged in a trade or business in the US”.
- Consequently, he isn’t subject to income tax from selling products in the US.
Meeting Filing & Reporting Requirements for Foreign-Owned LLCs
Foreign-owned, single-member LLCs have to fulfill three main filing requirements: Form 5472 + 1120, FBAR, and 1040-NR. The 2017 US tax reform broadened the filing requirements and magnified penalties for non-filing or incorrect filing. You can explore the details and instructions to fill Form 5472 here and here.
The accounting requisites for US LLCs are minimal, requiring only a simple profit and loss account showcasing incoming and outgoing payments. Tax inspectors or audits won’t bother you as long as your LLC operates as a disregarded entity with no tax obligation.
Plotting Your Corporate Voyage: Unearthing the Optimal U.S State for Your LLC
Planning to set up your Limited Liability Company (LLC) in the land of opportunities, but can’t figure out which state to select? Say no more! Our esteemed international organization guru, Mat, is here to guide you through the maze. He’ll help you decipher the puzzle, giving you a comprehensive picture of the ideal state to file your LLC.
A Kaleidoscope of Choices: The U.S States and Your LLC
As an entrepreneur gazing at the prospect of registering your LLC, you have the liberty to pick from any of the 50 diverse states. If you’re a non-resident, and your LLC qualifies as a disregarded entity, the differences between these states could be less impactful. For instance, the disparity in state tax rates won’t affect you, as you’ll strive to keep your tax liability at bay.
Nonetheless, there are still several crucial criteria that need your attention:
- LLC Formation Cost: A one-time payment to the state for setting up your LLC.
- Annual Franchise Tax: A recurring fee paid to the state for maintaining your LLC’s good standing and compliance. Ignoring this payment may lead to your LLC’s dissolution by the state.
- Anonymity: A handful of states offer the choice of anonymous LLCs, where the LLC owners’ identities are not disclosed publicly.
- Other Laws and Regulations: Certain states harbor more business-friendly laws. Take Wyoming, for instance, which shields companies from lawsuits, making it a magnetic choice for non-resident LLCs.
The Enigma of Anonymity: Which State to Choose for an Anonymous LLC?
If you’re in pursuit of anonymity, your choices are limited to only four states. However, these states also happen to offer some of the most streamlined and cost-effective incorporation processes.
Wyoming, Delaware, and New Mexico allow you to form LLCs while safeguarding your identity from public records. But remember, complete anonymity is a myth. The registered agent must always be aware of the LLC’s stakeholders and disclose this information to the state when necessary.
Here’s a sneak peek into the three states:
- Delaware: While this state doesn’t require the names of members and managers of LLCs, it mandates listing a Registered Agent and the incorporator/organizer. To maintain absolute privacy, it’s necessary to enlist third-party services for these roles.
- New Mexico: This state refrains from collecting any details about the LLC’s members or managers. It also eliminates annual reports, fees, or taxes. Like Delaware, achieving full privacy would need third-party providers.
- Nevada & Wyoming: These states allow “nominee services”, allowing nominees to feature in public records, instead of the actual owners.
Note: Regardless of the state or setup you choose for your LLC, you must disclose your information to the IRS when registering for an EIN (Employer Identification Number). You’ll need this EIN to get banking and payment processing. Don’t worry, though—this information won’t be public.
Embarking on an entrepreneurial journey by registering your LLC in the U.S can seem like a daunting quest. But with our expert navigator, Mat, at your side, it becomes a thrilling adventure. Plotting your corporate voyage has never been easier!
Do you need more insights?
Want to discover more about the U.S’s business landscape?
Don’t hesitate to contact us at email@example.com. Our experienced team is always ready to provide you with comprehensive guidance on your global venture. Remember, it’s your journey—we’re just here to make it smoother. Happy sailing!
Embarking on a Business Voyage: Your Ultimate Guide to Establishing Your Own LLC
Thinking about chartering your own Limited Liability Company (LLC)? Well, you’ve landed on the right page! With Mat, our seasoned tour planner and international organization expert, you’ll navigate through the process smoothly, from initiating your LLC to setting up the gears for your financial operations. Let’s walk you through it, one step at a time.
Stage 1: Mapping Out Your Business Expedition
Before you dive headfirst into the sea of business, let’s get your bearings straight:
- Select your LLC’s Home Port: Decide on the state where you want to anchor your LLC.
- Name Your Vessel: Choose a unique name for your LLC and cross-check it with your selected state’s database.
- Find a Reliable Crew: Use a service provider to establish your LLC and to serve as your Registered Agent.
- Get Your Identification: Apply for an Employer Identification Number (EIN).
- Set Up Your Treasury: Open bank accounts and engage with payment processors.
Stage 2: What You Need to Sail – Forming and Operating an LLC
Your Company’s Passport: EIN (Employer Identification Number)
In the business world, an EIN serves as your company’s unique identifier. Just as a Social Security Number is to an individual, this 9-digit number, assigned by the Internal Revenue Service (IRS), helps identify your business for tax purposes.
Not only is the EIN crucial for filing your LLC’s taxes, but it’s also indispensable for setting up a bank account and engaging with payment processors like Stripe or Paypal.
How to Secure an EIN as a Non-Resident without an SSN or ITIN
You’ll need to fill out Form SS-4, aptly titled “Application for Employer Identification Number”, to apply for an EIN. This process requires three essential ingredients:
- A business name
- A US business address
- A brief outline of your primary business activities and principal product/service.
You can order your EIN through Globalization Guide for an effortless experience.
LLC Banking: Traditional Banks vs. Neobanks
An LLC without a bank account is like a ship without a sail! Besides executing wire transfers and settling bills, you’ll also need a bank account to facilitate your merchant accounts and payment processors.
The big question here is – where and how to set up robust bank accounts. The contenders are:
- Traditional Banks: The old stalwarts like Bank of America, Chase, etc.
- Neobanks: Modern, tech-driven financial institutions like LEVRO or WISE (formerly TransferWise).
While traditional banks usually have more stringent compliance guidelines and necessitate a personal visit, Neobanks tend to offer a smoother ride, often allowing remote setup with lower KYC requirements.
Anchoring Accounts Remotely
Conforming to their KYC (Know-Your-Customer) guidelines, traditional banks usually insist on a personal appearance by a company representative at a branch. However, the good news is that certain fintechs and neobanks permit you to complete the verification without stepping outside your home or office.
As of mid-2022, there are five neobanks/fintechs offering remote account opening for non-resident LLC owners:
- WISE (formerly TransferWise)
However, it’s important to do your homework and consider what ongoing tools and features your business will require. This can save you from a later redundant verification process if you need a different bank.
Setting Foot on U.S Soil: Opening Accounts in Person
When you’re physically present in the U.S, the process of opening accounts for your LLC is straightforward. You have a myriad of options, including the big players like Chase, Wells Fargo, Bank of America, TD Bank, and many others.
Remote Account Opening via Service Providers
There’s an option to open accounts without physically travelling to the U.S. Through intermediaries equipped with power of attorney, you can initiate the process. However, bear in mind that these banks may eventually require a personal visit.
Plotting your entrepreneurial voyage doesn’t have to be daunting. With Mat at the helm and the right tools, your journey towards establishing your own LLC can be smooth sailing. For more insights or queries, feel free to reach us at firstname.lastname@example.org. We’re here to make your journey as seamless as possible. All aboard!
PS: When you decide you need my assistance Forming an LLC, know that I can provide remote support for any of your process and documentation needs:
- LLC formation is available in all states, including Wyoming, Delaware, New Mexico, and Florida.
- Fast EIN application
- Banking processing
- Filing and subsequent bookkeeping
Forming a US LLC and getting business banking set up can be a headache when you don’t live in the US. This guide will walk you through every step of the process, from choosing your LLC state to opening your bank accounts.
AKA: Everything You Need to Know to Form an LLC and Get Your Business Banking Sorted Remotely is Here!
How to Open an LLC as a Non-Resident + Bank Account & Stripe
- Choose the optimal state for forming your LLC
- Set up a virtual business address to meet legal requirements
- Form your LLC and obtain your EIN tax ID remotely
- Open online business bank accounts that allow non-resident owners
- Integrate payment processing through Stripe or similar services
- Obtain everything you need to operate your US LLC abroad
Hey guys, this is Mat from Tourvado. If you’re reading this then you’re probably interested in opening a U.S. LLC for your business, maybe to get US banking, to write invoices to your clients, for all sorts of reasons.
I have written this guide to make it as easy as possible for you guys to get this process started and to have success opening your LLC, then also getting your tax ID, and then most importantly getting banking and payment processing because really this is for most of you what it’s all about.
There are many ways to do this, I think if you follow this guide you’ll be quite satisfied with the results that you’re getting and I have also made sure that you’re not spending more money than you have to. So go ahead, follow this guide and let me know how your results are.
To successfully set up your U.S. LLC remotely as an international entrepreneur, there are 6 key steps:
- Decide on the Optimal LLC State and carefully determine which U.S. state best fits your specific LLC needs regarding formation costs, annual taxes, degree of anonymity, reporting requirements, business laws, and other factors.
- Establish a U.S. Virtual Business Address to have a valid U.S. business address to meet legal compliance standards.
- Handle LLC Formation & Documentation
- Form and register your LLC by filing articles of organization, appointing an organizer, and obtaining necessary documentation like operating agreements.
- Obtain an Employer Identification Number (EIN) for your new business to open bank accounts and apply for Stripe.
- Set Up U.S. Business Bank Accounts and online business checking accounts that allow foreign owners and provide banking support for your LLC financial flows.
- Integrate Payment Processing
- Connect payment processing through Stripe or alternatives so your LLC can seamlessly accept credit card payments from customers.
What You Will Have at the End
You will have pretty much everything you could desire from a business if you follow all of the guidelines in this article.
- Business address to receive and forward company mail and documents
- Company documents
- Tax ID
- Business Checking Account
- Payment Processing (Stripe)
- Physical or Virtual Debit Card (depending on your Country of Residence)
- Articles of Organization
- Statement of the Organizer [A document signed by the Organizer that names the Limited Liability Company’s initial members, with the Secretary of State (or other appropriate state office)]
- IRS EIN Verification Letter
- A Business Checking Account
Choose the Right State for Your LLC
Picking the perfect state for registering your new limited liability company may seem like an administrative headache, but it’s actually a key decision that can have major downstream effects on everything from taxes and fees to privacy rules.
Get this important choice right from the start, and your LLC will be set up for success.
Easier said than done, I know! But have no fear – this handy guide breaks down the need-to-know details in simple terms to make the process of choosing less painful and more productive.
The Land of Enchantment: Why New Mexico Might be the Magic Pick
If you want the best bang for your buck, New Mexico’s the number one pick for lots of good reasons.
For starters, it only cost few bucks to file there initially. And get this – that’s the only fee you’ll pay annually since they don’t require any yearly reports or extra taxes down the road. Pretty sweet deal!
Plus, you get complete anonymity as the organizer, meaning no one except you needs to know who’s really behind your operation. For anyone looking to keep things on the down low, this level of privacy is clutch.
Wrap it all up with the convenience of setting things up remotely since you don’t have to be a resident, and New Mexico has all the right ingredients for LLC success.
The Sunshine State Shines Bright Too
Alright, no doubt New Mexico brings some major perks. But what if you’re planning to open up European bank accounts under your business’s name later on?
Anonymity goes out the window in cases like this, so Florida slides into first place. Even without the secrecy factor, Florida still brings a lot to the table in terms of advantages. You’ll shell out around $100 more than New Mexico initially, but you can look forward to zero personal income tax and no annual franchise tax or business license fees.
That’s some extra chunk change to pad your pockets! If you think Florida might be a fit for your future plans, don’t hesitate to choose this sunny state.
Weighing Your Options
New Mexico and Florida are great choices for most LLC setups, but your unique business needs might benefit from establishing roots elsewhere. If you want a second opinion before selecting a state, I’m always happy to consult and provide advice tailored to your situation.
Every LLC origin story looks a little different, but the right home base can seriously set you up for success down the road. With a little expert input, picking the perfect place to plant your flag can be a total breeze! Just say the word if you need a hand.
I’m here to help light the way.
Creating a Business Address
A registered business address is necessary by law for every LLC.
To meet this criterion, we will use a virtual office provider.
Set Up Your Business & Mailing Address
The virtual address is included in our service and we recommend anytimemailbox.com.
Anytime Mailbox: Step-by-Step Instructions
Form Your LLC
I recommend having a consultation before beginning the application process for any of the services.
- A functioning website
- A professional email address from your domain
- Optional: Linkedin profile
If you do not yet have a website, jump over to our contact page and let us find and build your best available web solution in the shortes time possible!
Picking the Perfect Bank for Your Budding Biz
You’ve got your sparkling new LLC up and running, your website’s open for business, and you’re rearing to rake in the revenue. But before you start counting your chickens, there’s one more must-do task—set up that all-important business bank account. I know, I know, it probably sounds about as exciting as watching paint dry. But finding the right financial nest to house your company cash flow is key.
Buckle up, buttercup! This ain’t your grandad’s bank. Lots has changed when it comes to banking for biz in 2024. Brick-and-mortar branches with their winding queues and reams of paperwork have largely flown the coop. Now, slick ‘n swift digital banks rule the roost. But with flashy newcomers popping up quicker than jackrabbits, how’s an entrepreneur to choose? Follow me down this winding path, and I’ll walk you through what to look for.
Niftiest Nests for Fledgling Companies
🔸️Levro: The hottest hangout for LLC lucre and stripe-ready as can be. Plus, they speak money in nearly any language—we’re talking 34+ currencies here, folks. Room for all!*
🔸️Mercury: This slick silver bullet aims to please. Modern money for the digital age.
🔸️TransferWise: Nothing wisecracks about euro banking better. Comes complete with those IBAN code thingies too.
🔸️Payoneer/Paysera: Real VIPs if dealing in euros or US dollars makes you happy.
*Access is exclusive for now—give a holler to email@example.com for the secret handshake.
Let me know if you have any other questions!
Mat from Tourvado