Are there any benefits to foreign non-residents filing corporations or LLCs in the United States? Or, should you avoid this process because it’s too complicated? It’s a question that’s much more commonly asked than you think. The answer is that the process is really similar to what U.S. residents experience when filing. And yes, there are great benefits that come in doing so.
Foreign non-residents filing Limited Liability Companies (“LLCs”)
LLCs are popular business structures for partnerships and individuals, due to the attractive tax and legal benefits, and personal liability protection that they afford. The process for U.S. residents is pretty similar for foreign non-residents filing llcs in the U.S. Because U.S. citizenship and residency are not necessary, non-U.S. citizens are welcome to start or expand on American soil.
Incorporation
Company incorporation in the United States is administered at the state level —not the federal level — for both foreign nationals and U.S. citizens. The process will differ from state to state.
Here are the steps:
- Apply to register in that specific state
- Establish a registered agent with a valid, physical address in the selected state.
Individual Tax Payer Identification Number (ITIN)
Foreign non-residents filing corporations or llcs must have an Individual Taxpayer Identification Number (ITIN). The Internal Revenue Service (IRS) issues these tax processing numbers to individuals who have to pay U.S. taxes but are not eligible for a Social Security number. Residents and non-resident aliens as well as foreign nationals fall into this category.
Receive pass-through profit distributions
Foreign non-residents filing llcs can proceed, but all profit distributions (called dividends) made by a C corporation are subject to double taxation. (Under US tax law, a nonresident alien may own shares in a C corporation, but may not own any shares in an S corporation.) For this reason, many foreign citizens form a limited liability company (LLC) instead of a C corporation.
Work and Salary
A foreign citizen may be a corporate officer and/or director, but may not work in the United States or receive a salary or compensation for services provided in the United States unless the foreign citizen has a work permit (either a green card or a special visa) issued by the United States.
Bank Accounts
If you intend to open a bank account in your home country, then a local company or government office will require proof of business formation. You may need to have the company formation documents certified with an “Apostille” or “Certificate of Authentication”. An Apostille is an agreement between countries to accept each other’s documents. And, an apostille is only available if your country is a member of the Hague Convention.