How do I form a US-based LLC online as a foreigner?
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| How do I form a US-based LLC online as a foreigner? |
Are you an entrepreneur living outside the United States who wants to set up a business entity in the US? Forming a US-based LLC (Limited Liability Company) online can be a great way to establish your business presence in the US market from abroad. With the right preparation and knowledge, the entire LLC formation process can be done digitally and remotely.
In this comprehensive guide, we'll walk you through the step-by-step process of forming a US LLC online as a foreigner or non-US resident. We'll cover the legal requirements, fees, best state options, and tips to successfully set up your US LLC entirely online. Whether you're just starting to explore this idea or are ready to get your LLC application submitted, this guide will outline everything you need to know to form your US LLC without having to fly to the US.
Step 1: Ensure You Meet the Legal Requirements
Before diving into the actual application process, it's important to ensure you meet the legal requirements to form a US LLC as a foreigner. Here are the key criteria:
- You must be aged 18 or older. The "owners" or "members" of the LLC must be legally recognized adults.
- While US citizenship is not required, you must have valid visa status to legally operate a US business. The appropriate visas are the E-2 Treaty Investor Visa or the L-1 Visa.
- You'll need an eligible US "Registered Agent" to accept official documents on behalf of your LLC. More on choosing the right registered agent in Step 2.
- You'll need to provide valid official IDs and documents to verify your identity and eligibility.
- Your business activities through the LLC must comply with US laws and regulations.
As long as you meet these requirements, you can proceed to the next steps of forming your US LLC as a non-US resident. Double check that you have the right visa status and required documents before getting started.
Step 2: Choose a Registered Agent
A Registered Agent is a required role for every US LLC. This agent accepts official mail and legal documents on behalf of your business. All US states require your LLC to have a Registered Agent with an in-state physical address.
As a foreign LLC founder, your best option is to partner with a commercial Registered Agent service. These companies provide scanning and forwarding of your mail to you digitally. They act as your business's official physical address.
When selecting your Registered Agent, look for:
- In-state address: They must have a physical address in the state where you form your LLC.
- Digital mail forwarding: Choose a service that scans mail and forwards it to you online.
- Reasonable fees: Compare pricing starting around $100 per year.
- Good reviews: Check third-party review sites to verify quality service.
Some top Registered Agent services include Northwest Registered Agent, ZenBusiness, and Incfile. Take your time to research and choose the right one for your new LLC.
Step 3: Select the Best State for Your LLC Formation
One key decision in forming your US LLC is choosing which US state you want to register and form the business entity in. You'll need to file your Articles of Organization to legally form the LLC in your selected state.
As an overseas founder without US residency, you have the flexibility to pick any state that best supports your business goals. Consider factors like:
- Business climate: Tax policies, economic health, access to your industry.
- Costs: State filing fees, franchise taxes, and ongoing compliance costs.
- Privacy: Some states disclose less LLC ownership information publicly.
- Convenience: Time zone alignment if you'll be communicating with the US.
- Registered Agent options: Ensure your state has available and affordable Registered Agents.
Popular state choices for foreign LLC founders include Delaware, Wyoming, Nevada, and Florida. Do your research to select the best state for you.
Step 4: File Your Articles of Organization
Filing your Articles of Organization is the official process to register and establish your LLC with your selected state. This crucial business formation document includes:
- Your LLC's name
- Registered business address (your Registered Agent's address)
- LLC members/owners (you and any co-founders)
- Nature of your LLC's business
- Effective date of formation
Each state has slightly different requirements for your Articles of Organization. Most states provide pre-filled templates that cover all required fields. You'll submit this document along with your state's required filing fees.
This filing process can be completed entirely online through your state's official website (e.g. Delaware Division of Corporations). Most states should allow digital filing rather than paper mail.
Step 5: Draft Your Operating Agreement
Your Operating Agreement acts as the official governing document that outlines ownership, operations, and structure of your LLC. It's an important internal legal document for you and any co-owners of the LLC.
While not required in most states, it's highly recommended to create an Operating Agreement. Include:
- Ownership percentages - Dividing LLC shares between owners
- Profit/loss distribution - How you'll share profits & losses
- Member responsibilities - Define roles and duties
- New member entry - Process for adding/removing members
- Rules and regulations - How the LLC will operate and make decisions
You can find templates, but drafting a custom Operating Agreement is wise for thoroughness. Get your Registered Agent's guidance. This keeps your LLC running smoothly.
Step 6: Get an EIN from the IRS
An EIN or Employer Identification Number functions like a Social Security Number for your business. The IRS (Internal Revenue Service) issues EINs for free.
As a foreign LLC, getting your EIN should be one of your first steps after registering your LLC. This ID number is required for:
- Opening a US business bank account
- Hiring employees and paying taxes
- Interacting with vendors/suppliers
- Filing business tax returns
The IRS offers an easy online EIN application form. As a foreign applicant, you must submit by fax or mail instead of online but the process is still straightforward.
Step 7: Open a US Business Bank Account
To operate your US LLC, you'll need a US business bank account to accept payments, pay expenses, and manage finances.
Choosing the right bank is an important decision:
- Look for banks familiar with foreign-owned LLC accounts. Atlantic Bank, Bank of America, and Wells Fargo are good options.
- Make sure they accept EIN-only accounts, since you likely don't have an SSN.
- Consider a branch near your Registered Agent for convenience.
- Compare monthly fees, minimum balances, digital tools, and more.
- Ask about account opening requirements as a foreign founder.
Opening your account may require flying to the US to apply and provide identity verification in person. Discuss requirements with bankers.
Step 8: Understand Continued Compliance Needs
Forming your US LLC establishes your business...but there are ongoing legal and tax compliance duties required to maintain your LLC:
- Annual report filing - Most states require an annual report with fees to renew your LLC.
- Taxes - As a US business entity, you must file business tax returns. Income, payroll, and sales taxes may apply.
- Changes - If you change LLC details like owners or address, you must file changes with the state.
- Good standing - Ensure you meet requirements to avoid LLC termination or suspension.
Consider partnering with a small business accountant or legal counsel to guide your compliance. Stay on top of requirements so your LLC remains active.
Conclusion
Forming a US LLC online as an overseas founder is very achievable with the right preparation. By following this step-by-step guide, you can set up your US business entity entirely digitally without needing to be a US citizen or resident.
Be sure to research your state options, legal requirements, registered agents, taxes and accounting support. With care taken at each step, your foreign-owned US LLC can be a thriving base for your American business operations and success. The investment is well worth it to access the US market!
