The company itself · A term for founders abroad
What is an LLC?
limited liability company. A US company whose owners aren't personally liable for its debts, and whose profit is taxed once, to the owners, unless it elects otherwise.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 62 of 105 in the glossary, filed under L.IRS: limited liability company
LLC, for a founder abroad.
A limited liability company is created by filing articles with a state. Its owners are called members, its rules are set out in an operating agreement, and for federal tax it's transparent by default: a single-member LLC is a disregarded entity, and a multi-member LLC is a partnership. Neither pays income tax itself; the owners do. Either can elect to be taxed as a corporation on Form 8832.
For a founder outside the US, it's the simplest company to own: no board, no minutes, no annual meeting, and in Wyoming no owners on the public record. It's the structure we recommend for most founders who aren't raising money from US investors.
What a founder abroad takes on
- A state's yearly charge: $60 in Wyoming, or $400 in Delaware.
- An agent in the state: a registered agent with a street address there, for as long as the company exists.
- A yearly IRS filing: Form 5472 with a pro forma Form 1120, for a single-member LLC with a foreign owner, even with no income.
- Separate money: its own bank account, so the liability protection holds.
Forming one needs no visit to the US, and Wyoming approves the articles the same day it is filed. How to start a US LLC as a non-resident walks through it step by step.
Sources: IRS: limited liability company.
Read next · guide · 8 minWyoming or Delaware LLC for a founder abroad: the choice that sets your yearly costWhat founders ask next.
- Can a non-US resident own a US LLC?
- Yes. The IRS notes that most states don't restrict who owns an LLC, so members can be foreign individuals and foreign companies. You don't need a US visa, a Social Security Number or a US address to form one; you need a registered agent in the state.
- Does a foreign-owned LLC pay US income tax?
- A single-member LLC doesn't pay income tax itself; its income is treated as the owner's. A foreign owner is taxed by the US mainly on income connected with a US trade or business, so a company run entirely from abroad often owes none. It still files Form 5472 every year. The tax guide works through when tax is owed.
- Should a founder abroad choose an LLC or a C-Corporation?
- An LLC, unless you plan to raise from US investors, who expect a Delaware C-Corporation. The LLC or C-Corp guide compares them line by line.
03 · See also
- The company itselfC-CorporationA US corporation taxed on its own profit, which issues stock and is what US investors' paperwork assumes; usually formed in Delaware.Read the term
- US tax for an owner abroadDisregarded entityA single-member LLC the IRS ignores for income tax, treating its income as the owner's; it still files Form 5472 if the owner is foreign.Read the term
- The company itselfOperating AgreementThe private contract among an LLC's members that sets ownership, management and what happens when someone leaves; it isn't filed with the state.Read the term
- The company itselfMemberAn owner of an LLC, the LLC's equivalent of a shareholder; members may run the company themselves or appoint managers.Read the term
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