Website design By BotEap.comThousands of foreign nationals decide to set up a business in the US each year, but it can be an overwhelming process. After all, most of the information you’ll find about US businesses and incorporation is designed for residents and doesn’t consider the unique needs of a non-resident.

Website design By BotEap.comAs a non-resident, you can follow these basic guidelines to choose a business entity:

Website design By BotEap.comIf your company is going to do business in the United States, a corporation is the best option.

Website design By BotEap.comIf you will be operating entirely outside of the United States and there will be no US-resident owners, a limited liability company (LLC) is the best option.

Website design By BotEap.comWhy an LLC?

Website design By BotEap.comIf your business will be conducted entirely outside of the United States and has no US resident owners, your LLC will likely not be subject to US income tax or reporting. a single-member LLC, your business is a disregarded entity, meaning it doesn’t even exist for tax purposes. The global income of a corporation, on the other hand, is subject to tax and requires the filing of a corporate income tax return annually.

Website design By BotEap.comWhy a Corporation?

Website design By BotEap.comIf you’re going to be doing business in the US in any way, including leasing space or hiring employees, a corporation makes more sense. A corporation pays a regular tax rate regardless of whether it is owned by a resident or a nonresident. With an LLC, the tax situation becomes more complicated. Continuous taxation means that nonresidents will need to obtain a US taxpayer identification number and file a nonresident US income tax return.

Website design By BotEap.comAll money the LLC earns that is sent to the owners is reduced by 30% for withholding taxes. The IRS can then issue a refund for the excess over the amount due. If you do business in the US and form an LLC, you will also need to appoint a withholding agent and prepare and submit IRS information each year.

Website design By BotEap.comA foreign-owned LLC is also subject to branch income tax, which is designed to prevent foreign-owned companies from avoiding capital gains tax.

Website design By BotEap.comIncorporation in the US

Website design By BotEap.comWhile the process of incorporating or forming an LLC as a nonresident can be a bit complex, it is often worth it. When you form an LLC, you will go through the same basic process as a US resident. No citizenship or residency is required, and there will be few hurdles to go through.

Website design By BotEap.comIncorporation, on the other hand, is done at the state level, not the federal level. The process varies by state.

Website design By BotEap.comYou will need to obtain an individual taxpayer identification number from the IRS if you have to pay taxes. In order to get the profit transfer distribution, you will need to form an LLC. If you form a corporation, you will be subject to double taxation. This is why many foreign residents opt for an LLC.

Website design By BotEap.comYou can be a corporate director or officer, but you cannot work in the US or receive compensation for services rendered in the country unless you have a work permit. If you open a bank account in your home country or a local government office requires proof of formation, you may need to certify your business documents with an Apostille, which is an agreement between countries to accept documents.

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