LLC formation in the USA with bank account

LLC formation in the USA, with bank account: Short and to the point

LLC formation in the US is easy to do online and an excellent option for EU citizens to expand their business internationally and benefit from the tax advantages. This guide will show you the most important aspects of LLC formation in the US, including choosing the best state, tax considerations and setting up a bank account.

The best states for LLC formation

When choosing the state for your LLC formation, some states stand out in particular:

1. Wyoming and NevadaThese countries are considered the best options as they allow anonymous incorporation and the best data protection.
2. NevadaParticularly suitable for owners of large capital, as the annual franchise fees and contributions are fixed costs and do not depend on the company capital.
3. WyomingThe annual license tax is $50 or 0.2 millionths of the Wyoming property value, whichever is greater. There is a minimum of $50, but no upper limit.
4. New MexicoA good option if the LLC does not need to be so strictly private. The terms are very favorable, with low fixed annual contributions to the authorities and a fast company registration process.
5. Delaware: Ideal for those, who work with investors and holding and corporation structures would like to. Delaware offers a high degree of reliability and security for companies and investors, while the structuring remains flexible.

Details of the franchise fees can be found in the separate article: Franchise Tax

Normal vs. anonymous LLC formation

There are two main types of LLC formation:

1. Normal foundation:
   • Cheaper and simpler process
   • The foundation application is created and sent in with your name
   • Your personal data is visible in the public documents
2. Anonymous foundation:
   • Slightly more expensive, but offers more privacy
   • The name of your Registered Agent is stated in the incorporation application
   • The authorities do not know your name
   • Offers a higher degree of anonymity

In both cases, your real name and residential address must be provided when registering a company account. This is a Banks' requirement to comply with Know-Your-Customer (KYC) and anti-money laundering regulations. As long as the company does not violate any laws, this information remains a banking secret and is only reported to the IRS (Internal Revenue Service).

More on the topic: Normal LLC Reasons
More on the topic: Anonymous LLC Reasons

Most favorable form of company for European citizens

For European citizens, a LLC with several members and a well-drafted partnership agreement often the cheapest option. The reasons for this are:

• In Europe this form of LLC is recognized as a partnership
• It is taxed as self-employment in the EU
• No trade tax or corporation tax is payable
• Nevertheless, you enjoy limited liability and worldwide recognition
• The LLC can act like a large company
• The LLC account in the USA is not covered by the FATCA agreement. or CRS affected

See: US companies (LLC) for EU citizens Differences to EU companies

Eligible customers for US LLCs

In order for the US LLC, which was founded by a non-US citizen, to be recognized in the USA tax-free (Exempt LLC), the following requirements must be met:

1. No physical presenceThe LLC is allowed in the USA have no warehouses, offices with US staff, local sales outlets, etc.
2. No focus on the US marketThe business should not aim to attract US customers or be optimized for the American market.
3. Avoidance of US source incomeIn the best case, the LLC should not receive any payments from US sources in order to avoid withholding taxes.
4. Tax exemption in the USAIf these conditions are met, the company remains tax-free in the USA.
5. Taxation in the home country: Only income tax is paid in the home country.

It is important to note that "Doing Business in US (ETBUS)" can lead to tax obligations in the USA.

Establishment procedure and duration

The formation of an LLC in the USA can be done entirely online. without you having to travel in person. The process is typically as follows:

1. Appointment of a registered agent
2. Submission of the incorporation application (optionally with articles of association)
3. Receipt of the certificate of incorporation (1-4 weeks)
4. Applying for an EIN (Employer Identification Number) with the IRS
5. Receipt of the EIN (2-8 weeks)
6. Register a bank account with EIN, company details and personal details

The total duration of the process can vary depending on Federal state The duration of the treatment may vary depending on the individual circumstances, but typically ranges from a few weeks to two months.

Tax aspects

The Tax aspects of an LLC in the USA are particularly advantageous for European citizens:

1. No taxation at company level: LLCs pay in the USA no trade or corporation tax on their income.
2. Pass-through taxationThe owner of the company only pays his personal income tax.
3. Taxation in the country of residenceIncome tax must be paid in the holder's country of residence, where he is liable to pay tax.
4. Avoidance of double taxation: In many cases, double taxation agreements can be used to avoid Double taxation avoided become.
5. No CorporationIt is important not to set up a corporation, as this would immediately be taxed as a corporation in the EU.

Tax treatment in the EU

In the EU, a US LLC with several members is generally treated as a Partnership treated. This means:

• The income is taxed at shareholder level
• No trade tax or corporation tax is payable
• The partners pay income tax on their share of the LLC's profits

This treatment may vary depending on the EU country, so it is important to consider the specific tax laws of each country and draft the articles of association accordingly.

Bank account for LLC companies

Setting up a bank account for your LLC is an important step:

1. Quick setupA bank account can usually be created in one day.
2. Required documents:
   • Passport
   • Proof of address (e.g. invoice or bank statement with customer address)
   • EIN (Employer Identification Number)
3. Proof of addressIt is best to use a bank statement from the home bank with the customer's address, preferably in English. Alternatively, any invoice (e.g. electricity bill) can be translated into English with notarization.
4. EIN instead of SSN: When registering, use the EIN number instead of an American Social Security number.

Data protection of the US bank account

US bank accounts for US companies enjoy a high degree of protection. Data protection:

1. Banking secrecyThe banking secrecy of US banks applies to accounts of US companies.
2. No data exchangeThere is no data exchange with external tax authorities.
3. No CRS or FATCA reportsUS company accounts are not covered by CRS (Common Reporting Standard) or the FATCA agreement (Foreign Account Tax Compliance Act).
4. ConfidentialityInformation about US company accounts does not flow to the outside world unless there is reasonable suspicion of illegal activities (court order).

Conclusion

The formation of an LLC in the USA offers numerous advantages for European citizens, including tax benefits, increased data protection, limited liability, access to the global market and payment systems.