Setup a U.S. LLC - Limited Liability Company
Setup a U.S. LLC - Limited Liability Company - LLCs can be a good choice for medium or higher-risk businesses, an LLC provides protection of personal assets and a clear distinction between personal and corporate liability. An LLC does not have any residency or citizenship restrictions, which allows foreign nationals to have either partial or total ownership of an LLC. An LLC is the perfect entity type for non-resident business owners who wish to form a U.S. company.
The Advantages of Setting up an LLC in the U.S.
Limited Liability Protection By forming an LLC - Only the LLC is liable for the debts and liabilities incurred by the business — not the members. The members liability is limited to the personal interest they have invested in the company thus protecting the personal assets of the individual member that are separate from the LLC.
Pass Through Taxation - The LLC typically does not pay taxes for itself. Instead, the net income/loss is "passed through" to the personal income of the owner(s)/member(s), and is simply taxed as personal income. Federally, LLC taxation is handled very much the same as a partnership or sole proprietorship, in the case of a single member LLC.
No Ownership Restrictions - The LLC does not have any residency or citizenship restrictions, which allows foreign nationals to have ownership in an LLC, if desired. In addition, other corporate entities may be LLC members which means that other corporations or LLCs (or other entities) may be a member of the LLC, or may be the sole member (although an LLC with a sole member that is a corporation or LLC is treated for tax purposes as a partnership or multi-member LLC).
Versatile Tax Status - One of the most advantageous aspects of the LLC is that it has the ability to choose how it is treated as a taxable entity. According to the IRS an LLC is, by default, federally taxed as a partnership (in the case of a multi-member LLC) or as a sole proprietor (in the case of a single member LLC). The LLC, however, may elect to be taxed as a C- or S-corporation at any time the members so choose.
Flexible Profit Distribution For an LLC - If the members choose, the net income/profits of the LLC may be allocated to the members in different proportions to their ownership percentage in the LLC. This is different from a corporation, as corporations are required to distribute profits exactly accordance with the proportion/percentage of ownership of each shareholder.
Minimal Compliance Requirements - LLCs are subject to limited state mandated annual filing requirements and ongoing formalities. While corporations are typically required to have at least an annual meeting of directors and shareholders (and initial meeting of the same), adopt bylaws, and keep minutes of all meetings and all formal corporate resolutions, an LLC is not required to do any of those things (see the explanation of an operating agreement, above). The LLC members may have whatever meetings they wish and may document any such things as they wish, however they are not required to do so.
We provide fixed business address services in any of the 50 states, often with multiple options to choose from. Our virtual address service offers a permanent business street address for registering your company.
Setup an LLC
Setup an LLC (Limited Liability Company) - An LLC lets you take advantage of the benefits of both the corporation and partnership business structures. LLCs protect you from personal liability.
Once we have your company formation complete and have your articles back from the state, alongside your EIN tax ID IRS letter, we can put you in touch with our banking partners to get your account setup.
Typically LLCs are taxed like partnerships, with pass-through taxation. While multi-member LLCs must file an informational tax return, single member LLCs do not. In both cases, the profits or losses are “passed-through” the business and reported on the owners’ tax returns. Any tax due is then paid by the owners at the individual tax level.
LLCs can also elect to be taxed like corporations, where the profits of the LLC are taxed at the business level. The state income tax treatment of LLC profits and losses may or may not mirror the IRS tax treatment depending on the state.
An LLC may be managed by its members (owners) or by selected managers. If the LLC is to be managed by its members, it operates much like a partnership. Each member has an equal say in the company decision-making process. If the members choose, they may elect a manager or managers to act in a capacity similar to a corporation’s board of directors. These managers are in charge of the affairs of the LLC.
Member-management is the normal default rule of state law. This means that if managers are not selected in the Articles of Organization LLC forms, the members will direct the affairs of the LLC.
There is no requirement specifying the maximum number of members (owners) an LLC can have. The IRS does allow one-member LLCs to qualify for pass-through tax treatment. Taxation of the one-member LLCs at the state level may be different.
Some of the benefits of an LLC include personal liability protection, tax flexibility, their easy startup process, less compliance paperwork, management flexibility, distribution flexibility, few ownership restrictions, charging orders, and the credibility they can give a business.
An LLC is owned by its members. They are analogous to partners in a partnership or shareholders in a corporation, depending on how the LLC is managed. A member will more closely resemble shareholders if the LLC utilizes managers, because then the members will not participate in management. If the LLC does not utilize managers, then the members will closely resemble partners because they will have a direct say in company decision-making. A member’s ownership of an LLC is represented by membership interest, just as partners have interest in a partnership and shareholders have stock in a corporation.
There are two main types of corporations – the S-Corporation and the C-Corporation. Every corporation is considered a C corp when it is formed with the Secretary of State. The distinction is made on a federal level and processed by the IRS.
A corporation that wants to be taxed as a small business corporation will file a form with the IRS called Form 2553 and file their taxes using 1120s tax return. Corporations that do not file this form are taxed as traditional corporations and file the 1120 tax return.
A C-corporation files a corporate tax return and pays taxes on the profits. The post tax income may then be distributed to the corporation shareholders in the the form of dividends. The shareholders are then taxed on dividends, which effectively forces the ownership of a corporation to pay taxes on the same earnings twice- once at the corporate level, and then at an individual level. This is known as “double taxation.”
An S-Corporation is similar to a Limited Liability Company in the sense that the profits of the company flow directly to the shareholders. This is known as pass through taxation. The profits of the S – Corporation are distributed proportionally to share percentages.
Tax Advantages of a C-Corporation:
The corporate tax rates are typically lower than personal income tax rates. Because corporate tax rates are lower, companies that have retained earnings can take advantage of the lower rates.
Limited Liability Companies (LLC)
An LLC like the S – Corporation provides for pass through taxation. An LLC is considered a disregarded entity and its tax treatment depends on the number of members. A single member LLC is taxed as sole proprietorship while an LLC with more than one member is taxed as a partnership. A very unique advantage of the LLC is that it can elect to be taxed as S-Corporations or even a C – Corporation if it chooses.
Tax Advantages of the LLC:
Multiple options in terms of taxation. Extremely flexible in how it chooses to distribute profits which allows the owners to distribute profits or losses in ways that are advantageous to their tax situation.
Typically, there are no residency or legal restrictions as to who can start an LLC. Non-residents can form a U.S. LLC and run their LLC from anywhere in the world.
- What Services Do We Provide Our Clients? -
Identity Notarization - US Business Address - Filing Documents with the State - Obtaining an EIN Tax ID - Bylaws and Resolutions - Registered Agent Services - Mail Handling - Business Bank Account - Shipping of All Final Documents -
In certain instances where required, we will use an online notarization service to validate your identity as the company founder or representative in association with your registered business address. To complete this simple process we use a online notarization platform provided by our partner, Notarize, the online notary public.
U.S. Business Address
To open a company in the United States, you are required to have a U.S. business address in the state of incorporation. Once step 1 has been completed, we will obtain a registered business address for you in the state of your company formation. This address serves as a business address and registered mail forwarding address.
Obtaining an EIN Tax ID
An EIN Tax ID is required by the IRS and U.S Banks to track your business associated income and operate your business legally. As part of our U.S business formation services we will obtain an EIN on your behalf. This is part of our incorporation service.
U.S Business Bank Account
Foreigners (non-U.S. residents) can open a U.S. business bank account for their company. You don’t have to be an American or a U.S. resident to open a business bank account in the U.S. We offer U.S. business account opening via our banking partners who cater to non-resident business owners..
Filing Documents with State
To process your company formation, the filling of incorporation documents with the state or federal government is required. As part of our U.S company formation services we will file these documents on your behalf. This is part of our incorporation service and when processed your articles of formation will be made available.
Registered Agent Services
If you’re forming a corporation or a limited liability company, you’ll need to select a registered agent for your business and provide the agent’s name and address on the formation documents you file with the state. We can provide this service on your behalf. We offer registered agent services in 50 states.
Bylaws and Resolutions
Bylaws and resolutions are the initial decisions of your corporation’s board of directors and basic "operating rules" of your corporation. As part of our U.S company formation services we will provide initial drafts of these on your behalf. This is part of our incorporation service.
International Docs Delivery
As part of our service for international clients, where you select the option for a corporate kit, we will deliver your business incorporation documents, EIN tax ID forms and any additional selected supplements to you anywhere in the world as part of our service offering.
- Download our Platform Services Brochure -
Access our 25 page brochure on setting up a company in the United States – A step by step overview of our legaltech formation platform and services for non-residents