What does this acronym refer to, which you must have come across dozens of times when talking about setting up a company in the USA?
Is it the best legal structure to consider, what are the advantages?
Let’s discover together the contours of this legal structure very appreciated by foreign entrepreneurs.
What is an LLC in the United States?
The acronym LLC stands for Limited Liability Company and is used for limited liability companies in the United States. Since the liability is limited, this means that the members of an LLC are by definition protected. They will not be held personally liable for the debts of the company.
Choosing an LLC is the easiest way to start your business in the United States. Indeed, the LLC is the lightest legal form to create a company there.
But not only that, the LLC offers many advantages for its owners in terms of taxes, profits and losses.
An LLC is a hybrid model between the corporation – for its limited liability, and the partnership – for its flexible organization.
A little history
Originally, there were 3 types of legal structures to start a business in the United States: the sole proprietorship, the partnership and the corporation. It was not until 1977 that the LLC was invented in the state of Wyoming to meet a new economic and business need.
It was only after the Internal Revenue Service (IRS) gave its approval that all other states legalized the creation of LLCs in their states.
But for what purpose? There was a need to create a structure that could be managed and taxed as a partnership while protecting the members from potential liabilities and losses as if it were a corporation.
Also, the law initially stated that an LLC had to have at least two members. It is now possible for an LLC to be composed of only one member.
What are the advantages of an LLC?
If you choose the LLC to start your business, you must keep in mind the advantages of this type of legal structure.
Possibility of not being resident in the USA
- Any foreigner can open an LLC in the USA without being a resident of the USA. You can open your LLC and live abroad.
Legal protection against debts
- Personal: with an LLC, your business debtors cannot affect you personally. Your assets are therefore protected;
- Professional: this is the only type of corporation that prevents personal lawsuits and debtors from liquidating your business in response to a judgment.
- Unlike other structures, the LLC is much more flexible and less expensive. This is a boon for Entrepreneurs.
- The income and expenses of an LLC are distributed to its members (the term “member” is used in an LLC, not a partner or shareholder) and thus the members avoid double taxation at the corporate and member level.
Taxation can be zero in the US if the company is considered as non-ETBUS (“Engaged in a Trade or Business in the US“). Don’t forget that it is not the company but its members who are taxed in their country of residence. This only concerns the so-called active income.
No limit on the number of partners
- It is possible to have as many partners as you want with an LLC in Florida, USA
More advantages to discover HERE.
How many partners for the LLC?
It is quite possible to create an LLC by being the only owner, just as it is possible to create a company with several members.
It should be noted that in order to benefit from zero taxation in the USA, it is strongly advised to have only one member (this simplifies the procedures for tax exemption in the USA). Thus, for federal tax purposes, you are considered a disregarded entity.
Members of an LLC can be individuals or corporations.
Is it possible for a foreigner to form an LLC in the US?
A foreigner can legitimately form an LLC in the United States. There are no restrictions on foreigners forming LLCs in the US.
A non-US resident is therefore free to form an LLC under the laws of the state in which he or she will form the business.
Create your company in the USA today
For your project, we strongly recommend you to choose the LLC in Florida. We do not propose the creation of company in Delaware, Nevada, New Mexico, Wyoming because it is usually impossible to open a bank account in the USA for companies registered in this state (more information on this article).
We therefore recommend Florida, which offers the same advantages while having a better image, and which especially allows to open a bank account on the spot.
For several years, we have been helping many entrepreneurs to create their LLC in the USA.
We invite you to contact us if you need more information about creating an LLC in the State of Florida in Orlando.
Our team can prepare a free, no-obligation quote that best suits your needs.
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