Key Takeaways:

  • LLC registration in the USA involves selecting a state, choosing a name, appointing a registered agent, and filing articles of organization.
  • LLCs offer liability protection and pass-through taxation, avoiding corporate double taxation.
  • Foreign nationals can register an LLC in the U.S., but they must comply with IRS tax reporting and potentially appoint a U.S.-based representative.
  • Specific state regulations, tax classifications, and business licenses vary; some states are more business-friendly for nonresidents.
  • Hiring an attorney or professional service can simplify the process and ensure compliance with legal requirements.

Completing LLC registration in the USA is a fairly straightforward process. However, with so many business structures to choose from, how do you determine which one is right for you? If you are wondering what to do next in terms of registering your business in the United States, here is what you should know. 

Business Entity Options

When forming a business, there are several options available. The structure you choose will depend on numerous factors. 

These possible entities include:

  • Nonprofit organizations
  • Sole proprietorships
  • Partnerships (general or limited)
  • Corporations (C-corps or S-corps)
  • Limited liability companies (LLCs)

It is important to note that when selecting your business structure, your choice is not permanent. For example, you may first register as a sole proprietorship and as your company expands, you can form an LLC. If you are a foreign national, you can choose from either C-corporation or an LLC. 

Choosing the Best State for LLC Formation

When registering an LLC, choosing the right state can impact taxes, legal protections, and filing requirements. Popular states for LLC formation include:

  • Delaware – Known for strong business laws and privacy protections, with no state corporate income tax for nonresident owners.
  • Wyoming – Offers asset protection, low fees, and no state income tax.
  • Nevada – No corporate or personal income tax, plus business-friendly regulations.
  • Your Home State – If operating locally, forming an LLC in your home state may be the simplest and most cost-effective choice.

If you plan to operate in multiple states, consider whether you need to register as a foreign LLC in additional states.

What Is a Sole Proprietorship?

Commonly selected by startups, this structure is simply an entity that a person opens on their own with any agreement with others. In this case, there are no additional forms and in terms of taxation, the owner is personally responsible. This means all profits and losses will be filed under the owner's individual tax return. 

In most states, if you are using a name other than your own name, i.e. John Smith, you will need to register your business name. This is what's known as your "doing business as" name or your trade name. With no requirement to register at the state level, any debt or liability is the responsibility of the sole owner. 

What Is a Limited Liability Company (LLC)?

Combining components of a corporation and partnership, an LLC protects owners against lawsuits and bankruptcy — similar to a corporation. All profits and losses are divided among owners, which is like a partnership.

  • Each owner is known as a member and in most states, you can operate a single-member LLC. When there are multiple members, nonresidents can be included — known as offshore LLCs.
  • In terms of taxation, LLCs do not pay taxes. Instead, LLC members are tax liable and must report their portion of profits on individual tax returns.
  • To register your company, you need to submit articles of organization with the secretary of state. 

Overall, the main benefits associated with LLC formation include:

  • Pass-through taxation, helping companies avoid what's known as double taxation.
  • Reduced formalities and regulations in comparison to a corporation.
  • Availability of corporate income splitting. 

Once an LLC is making a significant amount of money, the company can be treated as a corporation for tax purposes. The LLC must file form 8832 with the IRS.

Tax Classification Options for an LLC

LLCs are flexible in how they are taxed by the IRS. The default tax status depends on the number of owners:

  • Single-Member LLCs – Treated as a disregarded entity by default, meaning profits/losses pass through to the owner’s personal tax return.
  • Multi-Member LLCs – Classified as a partnership by default, requiring an annual partnership tax return (Form 1065).
  • LLCs as Corporations – LLCs can elect to be taxed as a C-corporation (Form 1120) or S-corporation (Form 1120S), which may offer tax benefits depending on the business’s structure and income level.

To change the default classification, LLCs must file IRS Form 8832 (for C-corp status) or Form 2553 (for S-corp status).

How to Form a Limited Liability Company in the USA

If you are considering LLC registration in the USA, please be mindful of the following steps:

  • First, determine which state your LLC will operate out of. If you live outside of the United States, then you can form an LLC in one of the following international-friendly states — Delaware, Nevada, or Wyoming.
  • Select a unique and memorable name. Choose a name your customers will remember. Your desired name will need to end in LLC or limited liability company. Conduct a name search and also search all filed trademarks.
  • Next, decide on a management structure. Will your company be manager-managed or member-managed? You must also select a registered agent.
  • File your articles of organization before drafting your operating agreement.
  • Obtain your employer identification number (EIN) — this is imperative when you plan to hire employees and is generally required when opening a business bank account.
  • Depending on where your business is located, you may also require additional permits and licenses. Contact your nearest Small Business Development Center to inquire.
  • Open a business bank account, keeping your personal and business banking separate. Mixing funds could lead to significant complications in terms of a potential lawsuit.
  • If you do hire an employee, you must report them to the state's new hiring office within 20 days.
  • Consider hiring a professional business lawyer, accountant, and bookkeeper. 

LLC Registration for Nonresidents

Foreign entrepreneurs can register an LLC in the U.S. even if they are not U.S. citizens or residents. The key steps include:

  1. Choose a State – Delaware, Wyoming, and Nevada are popular for nonresident business owners.
  2. Appoint a Registered Agent – A U.S.-based representative is required to receive legal notices.
  3. Obtain an Employer Identification Number (EIN) – Required for tax purposes and opening a business bank account. Nonresidents can apply via Form SS-4 with the IRS.
  4. Open a U.S. Bank Account – Most banks require an EIN and proof of LLC formation; some may require a U.S.-based representative.
  5. Comply with U.S. Tax Laws – Nonresident LLC owners may be subject to withholding taxes and must file Form 5472 with the IRS if they conduct business in the U.S.

Hiring a business attorney or service specializing in nonresident LLC formation can help ensure compliance with U.S. regulations.

FAQs

  1. Can a nonresident open an LLC in the USA?
    Yes, non-U.S. residents can form an LLC in the U.S., but they must appoint a registered agent and obtain an EIN.
  2. What is the cost of LLC registration in the USA?
    Costs vary by state, typically ranging from $50 to $500 for filing fees, plus potential annual fees and registered agent costs.
  3. How long does it take to register an LLC?
    Processing times depend on the state but generally take 1 to 4 weeks. Some states offer expedited filing for an additional fee.
  4. Do LLCs pay taxes in the U.S.?
    LLCs do not pay federal income tax directly; instead, profits pass through to owners, who report earnings on their personal tax returns. However, some states impose LLC franchise taxes or fees.
  5. Can an LLC be taxed as an S-corporation?
    Yes, an LLC can elect to be taxed as an S-corp by filing IRS Form 2553, potentially reducing self-employment taxes for business owners.

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