Want to start your own business in the United States, even if you don't live there? You can make your dream a reality by setting up a Limited Liability Company (LLC). An LLC is a flexible and popular way to launch your U.S. business venture, and the good news is that you don't have to be a U.S. resident to do it.
In this guide, we’ll discuss:
- LLCs for Non-US Residents
- LLC vs C-Corp
- Choosing Your State
- EIN
- Bank Account
- US Phone Number
- Taxes
Can Non-US Residents Start a US LLC?
Starting a U.S. LLC as a non-U.S. resident might seem like a complex process, but it's entirely possible, and you don't need to be a U.S. citizen, resident, or have a U.S. Social Security Number (SSN).
Starting a U.S. LLC as a non-U.S. resident is a straightforward process with numerous benefits such as; owner privacy, personal liability and asset protection, simplified taxation making your American dream a reality.
LLC vs. C-Corp: Which One Fits Your Business Better?
When it comes to picking the right type of company for your business, you've got two main options: an LLC or a C-Corp. Let's break it down in simple terms:
LLC (Limited Liability Company): - Liability Protection: An LLC helps protect your personal assets if your business has financial difficulties. - Easy to Start: Starting and running an LLC is less complicated. - Tax Flexibility: With an LLC, you have more choices about how to pay taxes.
C-Corp (C Corporation): - Venture Capital/Investors: If you're planning to get investments in the U.S. or you want to go public, C-Corp is a great fit for you.
Remember, it's your business, so you get to decide. If you want more details, you can learn more about the differences between LLCs and C-Corps here.
Choosing the Right State for Your LLC
When it comes to picking the best state to set up your Limited Liability Company (LLC), the general rule is to go with your home state. That's because your business is usually based there. Nevertheless, non-residents or specific types of LLCs may find more suitable options:
- Non-US Residents: If you're not from the United States, you can pretty much choose any state you like. But two states stand out: Wyoming and Delaware.
If you want to learn more about the differences between these two states, check out our blog post: Wyoming vs Delaware.
Getting Your Tax Number (EIN)
Getting your tax number, also known as an EIN (Employer Identification Number), is essential for your US company. Here's what you need to know:
- Application: You can apply online, but you'll need a valid Taxpayer Identification Number (either an SSN or ITIN). Otherwise, you'll have to mail or fax your application to get an EIN for your US company.
- Overall Process:
If you have a Social Security Number, you can apply online and get your EIN in minutes if all your information is correct.
If you don't have a Social Security Number, you'll need to fill out a form called SS-4 and fax it to the IRS. It can take 8-11 weeks to get your EIN (you can use digital signatures for Form SS-4).
In most cases, you can get your EIN shortly after filing for your LLC.
Bank Account Setup Process
Setting up a bank account for your business can be a bit tricky, especially if you're not a US resident and don't have a US Social Security Number (SSN). But don't worry, we've got some straightforward options for you:
Recommended Banks for Non-US Residents without a US SSN:
- Relay
- Brex
- Wise
These banks are your go-to choices if you don't have a US SSN or if you're not a US resident.
Choosing Between Stripe and PayPal Now, once you have your bank account set up, you might wonder whether to use Stripe or PayPal for your business transactions. Here's what you need to know:
- Stripe: It's more flexible and doesn't need a US SSN. You'll only need an EIN (Employer Identification Number) and some formation documents. - PayPal: PayPal is a bit pickier. It requires a US SSN or ITIN (Individual Taxpayer Identification Number), along with an EIN and formation documents. If you don't have a US SSN or ITIN, PayPal won't work for you.
Getting a US Phone Number
Getting a US phone number might sound like a small detail, but it's crucial for various business needs, including setting up your bank account and Stripe account. Here's why having a US phone number is important:
1. Proof of Location: Some services require a utility bill as proof of your business location. 2. Confirmation of Business Authentication: To apply for services like a bank account, Stripe, PayPal, or an Amazon Seller account, you'll need a U.S. phone number. It's part of proving that you're a legitimate business. 3. Customer Support: Having a US phone number can improve your customer support.
Now, when it comes to getting a US phone number, we recommend using OpenPhone but there are plenty of other options online.
Understanding Taxes for Your LLC
Taxes and IRS filings can feel like a maze, but we're here to make it clearer. Here's an overview of what you need to know to stay on top of taxes and IRS requirements for your LLC:
Stay Updated: To ensure you're meeting all tax requirements, stay updated on most up-to-date information on US tax filings.
Foreign Single Owner/Sole Proprietor (Foreign Single Member LLC):
Key Filings:
- Preparation of Pro-forma (Form 1120)
- Preparation of a foreign owner report (Form 5472)
Multi Owner (Multiple Member LLC): Key Filings:
- Preparation of partnership return (Form 1065)
Do You Need a Professional CPA? No, you're not required to hire a professional, but taxes can be confusing, so many people find it helpful to work with a CPA to ease the process.
Conclusion
Launching and maintaining a US LLC is definitely achievable without being a US citizen. While it's possible to handle the whole process independently, managing it can be complex. Having a supportive partner to guide you through the business formation process smoothly can be very beneficial.
Let us be that partner and we will make it easy for you.
Get started with Incunit here, and let us help you out through every step of the way!
