What is an LLC?
A Limited Liability Company (LLC) is a US business entity formed at the state level. It combines limited liability for its members with very flexible operating rules, set out in its Operating Agreement.
Limited liability
The LLC's debts are generally the company's, not its members'. This protection assumes you keep the company's finances separate from your own.
Default taxation
A single-member LLC is a disregarded entity by default: it is not taxed at the federal level and its results are allocated to its owner. A multi-member LLC is taxed as a partnership by default. An LLC can also elect to be taxed as a corporation.
Can you form one without living in the US?
Yes. Non-residents can form and own an LLC, with no visa or Social Security number. You need a registered agent in the state of formation.
Obligations to plan for
Depending on the state: an annual report and/or annual tax. At the federal level: Form 5472 for a single-member LLC owned by a foreigner. In your country of residence: local obligations, to check with an advisor.
- A registered agent maintained without interruption
- Annual report or franchise tax depending on the state
- Federal filings with the IRS
- Separate bookkeeping
This article is for information only and is not legal or tax advice. The rules mentioned may have changed since the update date.
