Create an LLC for Non-US Residents (Foreigners Guide)

Are you a non-US resident looking to create an LLC?

You’ve come to the right place!

I formed my LLC as a foreigner in 2020 (with the help of Northwest), and I know and CAN relate to the struggles involved.

Trust me, it’s not as painful as it seems from a distance.

With the right guidance and information, you can establish your LLC and start a business in the United States without traveling, making endless calls, or doing hundreds of hours of research online.

In this comprehensive guide, I’ll cover and show you everything you need to know about forming an LLC as a foreigner…

From the requirements to the benefits and costs.

LLC For Non-US Residents Requirements

A few requirements must be met to create an LLC for non-US residents.

Here are some of the key factors to keep in mind:

LLC Filing and Formation Fees

First and foremost, let’s talk about costs. Forming an LLC isn’t free, and the fees can vary depending on your chosen state.

Some states might be more expensive than others, so doing homework is important. Research the fees for filing and forming an LLC in your chosen state to get a clear picture of what you’ll need to budget. This step will ensure you’re financially prepared from the get-go.

Registered Agent/LLC Service

Next, you’ll need a registered agent or LLC service. Think of this person or service as your business’s go-to contact for legal documents and important notices. Your registered agent must be reliable and trustworthy because they are crucial in keeping your LLC in good standing with the state. Choosing the right agent ensures your business will always be represented properly.

Articles of Organization

The Articles of Organization are a formal document that lays out the basics of your LLC—like its name, address, and purpose. It’s essentially the blueprint for your LLC and is required by the state. Completing and filing this document accurately is key to officially recognizing your LLC. It’s the first major step in bringing your business to life!

Operating Agreement

While not every state demands an operating agreement, having one is smart.

This document outlines how your LLC will be run and details each member’s roles and responsibilities. It’s like a rulebook for your business, helping to avoid misunderstandings and ensuring everyone is on the same page. Even if it’s not legally required, drafting one is a good idea to keep things running smoothly.

Read more: Operating Agreement Guide for LLC

Employer Identification Number (EIN)

An EIN, or Employer Identification Number, is a business’s Social Security number. It was issued and is essential for tax purposes.

You’ll need it to file tax returns, open a business bank account, and more. Applying for an EIN is straightforward, and it’s a crucial step to ensure your LLC is properly registered with the IRS.

Steps on How to Form Your LLC as a US Non-resident

Forming an LLC as a non-US resident may seem daunting, but it is straightforward. Here are the steps you need to take to create your LLC:

Step 1: Selecting Your Business Name (new or existing)

The first step in forming your LLC is choosing a unique business name. Your name should not be similar to any other registered business entity in the state where you plan to form your LLC.

You can check the availability of your desired business name through the Secretary of State’s business database of your chosen state to confirm your desired name is still available.

Step 2: Choose a State Suitable for Non-Resident LLC Formation

The next step is to choose the state where you will form your LLC.

Selecting a state that is friendly to non-resident LLC formation is essential. Some states, like Delaware, Wyoming, and New Mexico, are popular options because of their low fees, minimal reporting requirements, and favorable business laws.

For example, Delaware is renowned for its business-friendly legal system and straightforward regulatory environment, making it my favorite choice for LLC formation overall.

Step 3: Appointing a Non-US Friendly Registered Agent (I use Northwest)

A registered agent is a person or company that accepts legal documents on behalf of your LLC. A registered agent is a requirement in all states. A non-US friendly registered agent, such as Northwest Registered Agent, can assist you with the formation process and ensure you stay compliant with state laws.

Step 4: Get a US Mailing Address

As a non-US resident, you need a US mailing address to receive important documents and correspondence. A virtual mailbox service like VirtualPost Mail can provide you with a US address that you can use for your business. Alternatively, you can use the US mailing address of your registered agent.

Step 5: File Articles of Organization (your registered agent can help with this)

Filing the Articles of Organization with the state officially registers your LLC, allowing it to conduct business legally.

The Articles of Organization establish your LLC as a legal entity. Your registered agent can help you file this document with the state. It includes your LLC’s name, address, and members’ names.

Step 6: Create an Operating Agreement

An Operating Agreement is a legal document that outlines your LLC’s ownership and operating procedures. Although it is not required by law in all states, it is highly recommended that you have one. Your registered agent can also help you create this document.

Step 7: Obtain an EIN (Employer Identification Number)

You can apply for an EIN online through the IRS website, and you will receive the number immediately upon approval.

An EIN is a unique nine-digit number that identifies your LLC for tax purposes. You can obtain an EIN from the IRS for free. This number is necessary to open a bank account, hire employees, and file taxes.

Step 8: Get a US Phone Number (optional)

A US phone number can help you establish credibility with US-based customers and vendors. It is also necessary if you plan to open a bank, Stripe, or PayPal account. You can use a service like OpenPhone to get a US phone number.

OpenPhone provides a US phone number you can manage from anywhere in the world, making it easier to communicate with US clients and partners.

Step 9: Open a US Bank Account (optional)

Opening a US bank account can make managing your finances and conducting business transactions easier. You can choose from various banks, but some, like Mercury USA Bank, are more friendly to non-US residents.

Step 10: Set Up a US Stripe Account (optional)

Stripe is a popular payment processing platform that allows you to easily receive online payments from customers in the US and worldwide.

Setting up a non-US Stripe account can help you accept payments from US-based customers. To set up a Stripe account, you must provide your LLC formation documents, EIN, address, phone number, and government ID.

Step 11: Stay Compliant

Staying compliant with state and federal laws is essential for an LLC owner. Make sure you file your annual reports and pay your taxes on time. Your registered agent can help you stay compliant and avoid any legal issues. Compliance requirements vary by state but typically include filing annual or biennial reports, maintaining a registered agent, and paying state fees.

LLC Non-resident Benefits

Forming an LLC can offer many benefits for a non-resident looking to start a business in the United States.

Here are some key benefits you can expect to receive by creating an LLC:

Access to the U.S. Market

One of the most significant benefits of forming an LLC is access to the U.S. market. Creating an LLC allows you to gain worldwide recognition, access to U.S. payment processors, and open a U.S. bank account. This can help you expand your business and establish a presence in the United States.

Limited Liability Protection

Another essential benefit of forming an LLC is limited liability protection. This means that your assets, such as your home or car, are not at risk if your LLC faces legal action or debt. Your liability is limited to the amount of money you have invested in the LLC.

Credibility and Professional Image

Forming an LLC can also help establish credibility and a professional image for your business. This can help you gain the trust of potential customers, partners, and investors.

Tax Benefits

LLCs offer several tax benefits, including simplified taxation and pass-through taxation. With pass-through taxation, the LLC’s profits are taxed at individual rates, not corporate rates, which can lead to significant tax savings. Also, forming an LLC in the United States can help you avoid double taxation.

Access to U.S. Funding

By forming an LLC in the United States, you can also access U.S. funding options, such as loans and grants. This can help you grow your business and take advantage of new opportunities.

Legal Protections

Creating an LLC can also provide legal protections for your business. This includes protection against fraud, breach of contract, and other legal issues that may arise.

Anonymity and Privacy

Finally, forming an LLC can provide anonymity and privacy for the business owners. This can be particularly important for non-residents who may wish to keep their personal information private.

How Much Does it Cost to Form an LLC in The United States as a Foreigner?

As a foreigner, the cost of forming an LLC in the United States varies by state. Each state has its own rules and fees for forming an LLC. Some states have lower fees and taxes, while others have higher ones.

It is important to note that forming an LLC in the United States as a foreigner requires a registered agent.

A registered agent is a person or company authorized to receive legal documents and other official correspondence on behalf of the LLC. This is state-dependent, and registered agent fees vary by state.

One of the best and cheapest LLC service providers is Northwest Registered Agent. They charge $39+ State Fees to form an LLC in any state and provide registered agent services for $125 per year, the cheapest I’ve seen.

Read my Northwest Registered Agent Review to know how they operate.

To help you understand the costs of forming an LLC in different states, here is a table with the Registered Agent Fee, LLC Formation Fees, Annual Report Fees, and Total LLC cost:

State	Registered Agent Fee	State Formation Fees	Annual Report Fees	Total LLC Cost
Alabama	$39	$200	$10	$249
Alaska	$39	$250	$100	$389
Arizona	$39	$50	$45	$134
Arkansas	$39	$50	$150	$250
California	$39	$70	$20	$129
Colorado	$39	$50	$25	$114
Connecticut	$39	$120	$80	$239
Delaware	$39	$90	$300	$329
Florida	$39	$125	$138.75	$302.75
Georgia	$39	$100	$50	$189
Hawaii	$39	$50	$12.50	$101.5
Idaho	$39	$100	$0	$139
Illinois	$39	$150	$75	$264
Indiana	$39	$95	$32	$166
Iowa	$39	$50	$30	$119
Kansas	$39	$165	$100	$304
Kentucky	$39	$40	$15	$94
Louisiana	$39	$100	$30	$169
Maine	$39	$175	$150	$364
Maryland	$39	$100	$300	$439
Massachusetts	$39	$500	$500	$1039
Michigan	$39	$50	$25	$114
Minnesota	$39	$155	$0	$194
Mississippi	$39	$50	$250	$339
Missouri	$39	$50	$0	$89
Montana	$39	$70	$0	$109
Nebraska	$39	$105	$25	$169
Nevada	$39	$75	$150	$264
New Hampshire	$39	$100	$100	$239
New Jersey	$39	$125	$75	$239
New Mexico	$39	$50	$0	$89
New York	$39	$200	$9	$248
North Carolina	$39	$125	$200	$364
North Dakota	$39	$135	$50	$224
Ohio	$39	$99	$0	$138
Oklahoma	$39	$100	$25	$164
Oregon	$39	$100	$275	$414
Pennsylvania	$39	$125	$0	$164
Rhode Island	$39	$150	$50	$239
South Carolina	$39	$110	$0	$149
South Dakota	$39	$150	$50	$239
Tennessee	$39	$300	$50	$389
Texas	$39	$300	$0	$339
Utah	$39	$70	$18	$127
Vermont	$39	$125	$140	$304
Virginia	$39	$100	$50	$189
Washington	$39	$200	$70	$309
West Virginia	$39	$100	$25	$164
Wisconsin	$39	$130	$65	$234
Wyoming	$39	$100	$60	$170

As you can see, the cost of forming an LLC in the United States as a foreigner can vary greatly depending on the state.

Choosing a state with lower fees and taxes and a FAVORABLE state to non-US entities is essential. With the help of a reliable LLC service provider like Northwest Registered Agent, you can form an LLC in any state for a reasonable cost because Northwest offers a free registered agent fee for the first year and a free operating agreement.

LLC Taxation for Non-US Residents – Do Foreign LLC Companies Pay Taxes?

If you are a non-US resident and have formed an LLC in the United States, you may wonder whether you need to pay taxes. The answer is yes; foreign LLC companies must pay taxes in the US.

However, foreign LLC companies’ tax laws and regulations differ from those for US residents. As a non-US resident, you must meet certain requirements and file certain forms to comply with US tax laws.

The tax requirements for foreign LLC companies depend on factors such as the type of business and the amount of income generated.

Foreign LLC companies are generally subject to federal income tax on their US-sourced income. Non-resident LLC owners only pay taxes on income sourced in the US. If income is non-US sourced, there is no requirement to pay income tax.

It is important to note that foreign LLC companies may also be subject to state and local taxes, depending on the state in which the LLC is registered and operates. Each state has its tax laws and regulations, so it is important to consult with a tax professional to ensure compliance.

To comply with US tax laws, foreign LLC companies must obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This unique identification number is used to identify the LLC for tax purposes.

Additionally, non-resident aliens engaged or considered engaged in a trade or business in the United States during the tax year must file a return even if they have no US-sourced income.

Foreign LLC companies must also file an annual tax return with the IRS using Form 1120-F. This form reports the LLC’s income, deductions, and credits and calculates the amount of tax owed.

Which is The Right State For Foreign LLCs?

When creating an LLC as a non-US resident, choosing the right state is crucial to maximize benefits and minimize costs. Each state has its own set of regulations and tax laws that can affect the success of your business.

Here are some states to consider when forming an LLC as a foreigner:

Delaware

Delaware is popular for LLCs due to its flexible business laws, business-friendly environment, and established legal system. It also has a reputation as a tax haven, making it an attractive option for non-US residents. Delaware LLCs do not have to pay taxes on income earned outside the state; there is no sales tax.

Wyoming

Wyoming is another popular state for LLCs due to its low taxes and business-friendly environment. It does not impose an income tax on LLCs, making it an attractive option for non-residents. Wyoming also has a low annual fee of $50, regardless of the size of your company. Additionally, Wyoming has strong privacy laws, allowing LLC owners to remain anonymous.

Nevada

Nevada is known for its low taxes and business-friendly environment. It does not impose an income tax on LLCs, making it an attractive option for non-residents. Nevada also has strong privacy laws, allowing LLC owners to remain anonymous. However, forming an LLC in Nevada can be expensive, with an initial filing fee of $425 and an annual fee of $350.

New Mexico

New Mexico is a less commonly considered state for LLCs, but it offers some unique benefits. Its tax rate is 4.9%, and it does not impose an income tax on LLCs. Additionally, New Mexico has a low filing fee of $50 and an annual fee of $0 for LLCs with less than $1 million in revenue.

Frequently Asked Questions

Can I use a registered agent for LLC registration as a non-resident?

Yes, non-US residents can use registered agents to form their LLCs. A registered agent is a person or entity authorized to receive legal documents for your LLC. The registered agent must have a physical address in the state where the LLC is formed. You can hire a registered agent service provider to act as your registered agent.

How can a non-US resident establish an LLC in the United States?

To establish an LLC in the United States as a non-US resident, you must follow the same steps as a US resident. You need to choose a state where you want to form your LLC, choose a name, appoint a registered agent, file the Articles of Organization with the state, and obtain an EIN from the IRS.

Is a physical presence required in the US to form an LLC as a non-resident?

No, a physical presence is not required to form an LLC in the US as a non-resident. You can form an LLC from anywhere in the world. You can use a registered agent to act on behalf of your LLC in the state where your LLC is formed.

What are the best states for non-US residents to form an LLC?

The best state for a non-US resident to form an LLC depends on your specific needs. Some popular states for non-US residents to form LLCs include Delaware, Wyoming, and Nevada. These states have favorable tax laws and offer strong asset protection.

What are the costs associated with forming an LLC for non-US residents?

The costs associated with forming an LLC for non-US residents vary depending on the state where you form your LLC. Depending on the state, you will need to pay the state filing fee, which ranges from $50 to $500. You may also need to pay for a registered agent service, which can cost between $50 and $300 per year.

What are the tax responsibilities for non-US residents who own a US-based LLC?

Non-US residents who own a US-based LLC are subject to US federal income tax on their share of the LLC’s profits. They may also be subject to state income tax in the state where the LLC is formed. Non-US residents may be eligible for certain tax deductions and credits, depending on their circumstances.

How does a non-US resident set up a US company for e-commerce platforms like Amazon?

To set up a US company for e-commerce platforms like Amazon, you must follow the same steps as setting up an LLC in the US. You need to choose a state where you want to form your company, choose a name, appoint a registered agent, file the Articles of Organization with the state, and obtain an EIN from the IRS. You must also apply for a seller account with Amazon and comply with their seller policies.