A US LLC (limited liability company) is an entity that provides the limited liability of the corporations with the tax benefits of partnerships. You can enjoy limited liability because it’s easier to comply with corporate formalities like record-keeping and meetings. A US LLC can have one member or many members.
If you are a non-US resident, setting up a US LLC is an excellent way to invest in the US market, mainly because it is not taxed in the US. It is not taxed in the US because it is considered a foreign company and benefits from treaty, reciprocity, or international taxation. Therefore, you can also use a us llc for non-us residents to invest in the US market while enjoying the benefits of a foreign company.
Advantages & Disadvantages of LLCs
The main advantage of an LLC is that it offers limited liability to its owners. Limited liability means that the business itself cannot be held liable for the debts or obligations of any one of its members.
As a result, you can be sure that your business is protected from personal and business obligations. An LLC can reduce or eliminate personal liability exposure.
Limited liability is almost always available to LLCs. For corporations, it’s optional. The limited liability protection available to corporations is often restricted by the type of shareholder the corporation has or operates in specific industries. These restrictions make LLCs more desirable for many businesses.
Another advantage of an LLC is that it provides “pass-through” taxation. This means that the partnership or LLC itself does not pay taxes; instead, it passes the tax obligation to its owners (members). This means that the members are taxed based on their proportionate share of the profits generated by the business.
The main disadvantage is that it doesn’t offer as much flexibility as corporations, but this can be a positive. LLCs frequently have fewer corporate formalities than corporations. Many corporate shareholders and directors find that this lack of corporate formalities is one of the most significant advantages of an LLC. It’s easy to go from a start-up to a going concern with the incorporation of a business.
Setting up an LLC in the US
Setting up an LLC is easy if you are a non-US resident (or the majority owner if you are a US resident). It is easy to set up an LLC in the US because LLCs already exist and are an established business structure. It is also easy because you do not need to register or obtain approval from any government agency.
You can set up an LLC by filing Articles of Organization with the Secretary of State in the state where you want to set up an LLC. All you need for this is the name of the LLC and/or registration agent or serve as an agent yourself for us company formation.
For instance, if you want to set up an LLC in Texas as a Non-US corporation, you just need to register with the secretary of state before transacting business in Texas. Texas law does not restrict who wants to have ownership of a business entity as non us residents. However, an entity can impose residency or citizenship requirements in its certificate of formation or other governing documents, if desired. You can even take the help of a Texas registered agent if you are finding it difficult in forming LLC in Texas as a Non-US resident. They offer the best LLC services at a very affordable price and will help you in every walk of your LLC journey.
In some states, you must file a Statement of Information with the Secretary of State’s office. The Statement of Information provides federal tax information about the new LLC. This is usually not necessary for a limited liability company (LLC). However, if you want foreign tax information (including information about the IRS and your home country), you must file this form.