One of the perks of the LLC business structure over the S Corp — at least for entrepreneurs who aren’t US citizens — is that you don’t have to be a citizen to form one. If you want to start a business in the United States — or even open an office here — the LLC is the ideal business structure for you. Another perk of the LLC is that you don’t have to reside in the US to operate it. So if you decide to open a branch of your Middle Eastern market (whose headquarters are in Lebanon), you can hire a manager to run it while you work out of the home office.
Things to Keep in Mind
Certainly, if you plan to open a business in America, you’re doing your homework on how the small business environment differs from the one in your country. And while this post won’t go too far into that subject, you should be aware that you’ll be required to follow the same laws and protocols as American entrepreneurs. You’ll also have to pay taxes here (as well as possibly in your own country). Do your due diligence to make sure you’re prepared to be compliant with your business before you launch.
What You’ll Need to Form an LLC
The process for forming an LLC for non-residents is similar to the process for residents. You can file the paperwork yourself, though it can be helpful to work with a registered agent who can help you navigate the process.
The first thing you need is a business name. Because you’re planning to file an LLC, you want to ensure that no one else is using the name you’re considering. To that end, use a free name search tool to make sure it’s not already registered.
Federal Employer Identification Number
In order to form an LLC, you will need a Federal Employer Identification Number (FEIN), which you will use to identify your business, open a business bank account, and other processes. Here’s where the process differs slightly for you. In order to get a FEIN from the Internal Revenue Service, you typically need a social security number. But because you are not a US citizen, you likely don’t have one. Instead, you can apply for an Individual Tax Identification Number (ITIN) as a non-resident. Once you have that, you can then continue filing for your FEIN.
This is an essential document for your LLC, as it outlines the rights and obligations of all members of your LLC. It also lists the distribution of income to each member. Keep this document, signed by all members, in your office.
Now That You’re Ready…
Armed with all of the above, you’re ready to complete your application for LLC status. It may take several weeks for the IRS to review your application, so build that into the scheduling of your business’s launch. Once you’ve got your approved paperwork in hand, you’re ready to start doing business in the US, as long as you’ve got the necessary business licenses and permits.
One Final Caveat
If there is one drawback to forming an LLC as a non-US resident, it is that you can’t elect for your LLC to be treated as an S corporation to reduce your tax burden. This is a feature that US citizens can take advantage of, but as a non-resident, you do not qualify for.