Benefits of Starting Your Business in the US
The US is renowned globally for its business-friendly environment, even for non-US citizens. It boasts a competitive corporate tax system and offers a straightforward process to establish an LLC. Some of the major advantages include lower startup costs compared to many countries and the prestige of having a US-based company.
Can Non-US Residents Establish a US LLC?
A widespread myth is that one needs to be a US citizen with a Social Security Number (SSN) to create a US company.
This is not the case. You don’t need to be a US citizen, possess a green card, or have an SSN to start an LLC.
This implies that as a foreigner, you can conveniently establish a US LLC online and obtain:
– A US LLC
– A US bank account
– Access to US payment systems
– And more!
One significant advantage for non-US residents forming a US LLC is its “pass-through” tax nature. This ensures that your business remains exempt from US taxes provided your LLC:
– Is entirely owned by non-US tax residents (either individuals or entities)
– Lacks a US presence or substantial economic activity
– Generates income that isn’t “effectively connected”
What is an LLC?
An LLC allows businesses to open bank accounts, receive payments, and, as the term “limited liability company” suggests, it safeguards you from liability.
“With an LLC, only the assets held in the name of the LLC are exposed to business creditors, including business-related lawsuits. The personal assets of LLC members remain protected from claims related to business debts. This protection is a prime motivator for many to establish an LLC.”
— Investopedia
Should I Opt for an LLC or a C Corp?
If you prioritize liability protection along with administrative and tax flexibility, an LLC is ideal for startups. They’re generally simpler to initiate and sustain. However, if you’re seeking US venture capital or planning to go public, a C Corporation is preferable. Notably, US investors typically prefer C Corporations for venture capital investments. Ultimately, the choice is yours!
Which State is Best for Forming My LLC?
Typically, the most advantageous state to establish your LLC is your home state, given that your business predominantly operates there, whether it’s a brick-and-mortar or online enterprise.
There are two notable exceptions:
– If you’re a non-US resident (in such cases, Wyoming or Delaware is recommended)
– Or if you’re establishing a real estate LLC, in which the “home state rule” doesn’t apply
Other states offering distinct advantages:
– Delaware – Provides anonymity for business owners. Uniquely, Delaware doesn’t mandate owners to be named in the entity formation documents.
– Wyoming – Allows the listing of a “nominee” as the LLC’s owner, instead of the actual owner’s name.
