5 Best States to Form an LLC for Non-Residents

As a non-resident, you can form your LLC in any state within America without much stress. While numerous states support LLC formation for non-residents, it is important that you’re familiar with what each state has to offer before selecting a suitable one. 

Forming an LLC in America as a non-resident comes with a lot of benefits. It opens the business to a lot of opportunities, including global networking and connection, gives the business more credibility and more so provides you with access to international investors. Not only that, you also have privacy protection options depending on the state chosen.

However, it is vital to choose the right state in order to smooth and straightforward formation process and also to enjoy these benefits. This guide therefore explains the 5 best states to form an LLC as a non-resident. 

What is an LLC?

An LLC meaning a limited liability company is a business structure that offers members or shareholders legal, asset and financial protection. As such, a member of an LLC assets and properties are usually protected whenever the business runs into debt. Unlike a sole proprietorship, this kind of business entity is identified as a separate entity and thus can enter into a legal contract in its own name, sue and be sued. 

They are also considered as a hybrid business structure that shares the features of both a corporation and a partnership or sole proprietorship. While an LLC comes with a limited liability, they are treated as pass-through entities for taxation purposes.

5 Best States to Form an LLC as a Non-Resident.

As a Non-resident, there are several states where you could form an LLC in the US. While each state has their own unique features and benefits to be derived, here are our 5 best states.

1. Delaware

A state filing fee of $90 is required to form an LLC in Delaware. Although you aren’t required to pay annual fees, there is a franchise tax of $300. If you are looking for a state where you could easily source for investors, then you should consider Delaware. The state also has a privacy policy and as such members' information cannot be easily assessed by anyone. If you are looking forward to forming an LLC but also considering changing to a corporation in the future, then Delaware could be a great option.

2. Wyoming

Wyoming remains one of the first states to allow the formation of LLCs in the US. It is considered as one of the business-friendly regions for the non-US residents. To register your LLC in Wyoming, you’ll require $100, with an annual filing fee of $60. Unlike some other states, there are no state income taxes to be paid. 

Many non-US residents prefer to register with the state because of the privacy policy involved. This means members or shareholders of the company do not have to be listed on public records and as such, they could keep a low profile. On the other hand, registered agents are expected to know who the members of the LLC are. Wyoming isn’t only great for physical businesses, but is one of the best for those looking to set up an online business. With its low filing and compliance fees, Wyoming has remained one of the most attractive states for Non-residents. 

3. Nevada

Nevada has been considered as one of the amazing states for business owners and entrepreneurs. Just like Wyoming, you do not have to pay an income tax or franchise tax. Notably, the state is one place you would want to consider because of its strong LLC protection. Like other states mentioned here, Nevada also has privacy protection and, as such, members' names aren’t made public. On the other hand, Nevada filing and formation fees are quite expensive compared to most other states.

4. New Mexico

Another state that doesn’t require members to have their name on the when filing for a certificate of formation is New Mexico. To form your company here, a filing fee of $50 is required, although there are no annual report fees. Beyond the limited liability protection associated with LLCs, it is generally easy to file for your annual reports. Many non-residents consider this state mostly because of the privacy protection, minimal fees and few reporting requirements compared to many other states.

5. South Dakota

In recent years, South Dakota has now been considered as one of the business-friendly states to form an LLC as a non-resident. This isn’t only due to its affordability but also the fact that it remains one of the areas with fair business regulations. With LLC formation in this state, you don’t have to pay personal or corporate income tax. 

You will, however, need a filing or formation fee of $150. The annual filing fee is also quite low, making it easy to meet up with the state's regulations. Unlike Delaware and Wyoming, privacy protection isn’t really straightforward in South Dakota, as it requires more paperwork and payment for you to protect the identity of LLC members.

Factors to Consider when Choosing a State to Form an LLC as a Non-Resident

As earlier mentioned, different states have their unique regulations, features and benefits that make them attractive to non-residents. However, there are some general factors you would want to check out when choosing a state to form your LLC. Here they are.

1. Fees

One of the important factors you would want to consider is the fees associated with forming an LLC in the state and other associated fees. Apart from the initial formation fees, which are mostly required for almost every state, there are also annual reporting fees, franchise tax, etc. that might be required for some specific states. Taking note of all the fees and the amount is important, as you would want to avoid compliance issues in the future.

2. Privacy Protection Option

While some states offer a privacy protection option, others do not. With the privacy option, you could protect the identity of the members of the company. So if this is what you wish to consider, then checking out states that offer privacy protection before company formation will be great.

3. Business regulations

Taking note of the business regulations of each state is also essential as every one of them has its unique regulations that differentiate it from the other. Some states have specifically worked to provide business-friendly rules and regulations, which makes them attractive to non-residents. You would also want to check all the LLC laws associated with a state before forming a company.

4. Legal and asset protection

LLC in itself offers property protection for members or shareholders, that is, they have a limited liability in case the company runs into debt or loss. Beyond this, different states offer several levels and standards of protection to LLC owners. This is to say, although most states provide legal protection; however, there are levels to this. So you should consider a state with a strong one.

5. Compliance requirements

Beyond the annual filing, tax payment and others, are there specific compliance requirements you would need to put into consideration? You would also want to know the amount of paperwork that needs to be done during company formation and beyond. Doing this doesn’t just help you understand the compliance requirement of each state, but prepares you for the future.

6. Tax policies and benefits

Another important factor you would want to put in check is the tax policies and benefits associated with each state. While some states offer no income or corporate tax, some do not. Beyond that, you would want to check what the tax rates are and if there are other specific tax policies associated with a state.

Advantages of Forming an LLC as a Non-Resident

Here are some of the benefits to be derived from forming your LLC as a non-resident.

1. Offer many tax benefits

With the formation of an LLC as a non-resident, there are some tax benefits you would enjoy. Firstly, taxes would be treated as pass-through entities and as such you would only be required to pay individual tax returns. With this, you would be experiencing a fair, straightforward and efficient tax process. Beyond that, you can always avoid the issue of double taxation. This would be made possible through the tax treaties available within the US and your home country. And as such, you would only be required to pay tax within just one jurisdiction rather than multiple.

2. Flexible management options

Forming an LLC in the US doesn’t necessarily require you to be physically present. Beyond that, you can carry your business operations out online. So whether your business will be operated remotely or physically in the US, you will always find a state that suits you best. 

3. Enhances Company Credibility

Having a business formed and located within the US improves the business's credibility and professional image. This alone brings more trust and loyalty between the company and several stakeholders. Many suppliers, investors, customers and partners will be willing to deal with your US LLC and this could potentially bring a lot of growth and development to the company.

4. Privacy protection

With the formation of an LLC within the US, you can protect the identity of the company's members. However, this would involve selecting a state that offers the privacy protection option. Beyond that, forming an LLC in the US helps you ensure that your personal assets and properties are protected from the company's debts.

5. Access to a global market

The US itself provides a medium for your business to access a global market. With it, you won’t only be serving your home country, but you will also be rendering your product or service to the residents and non-residents of the US. And as such, your business would experience enormous growth as time passes by. Beyond all of these, you could gain more connections, partnerships and strategies by forming a US LLC. Overall, you won’t gain only being locally recognized, but there are opportunities for you as a global company owner.

6. Access to Investors

Investors, creditors and partners are a great part of every business. By forming an LLC within the US, you stand a higher chance of accessing US investors than when you form your company in a different country.

7. Easy Filing Process 

When it comes to filing for an LLC formation as a non-US resident, the process is quite straightforward. Although the state chosen could also have an influence, however, you would be able to scale through when you put a factor like this into consideration before selecting a state. The LLC formation process for non-residents could take up to a few days or a week.

Form Your LLC with Foundeck Today

Foundeck offers a range of fast and efficient online company formation services, allowing you to register a business structure of your choice quickly from anywhere and keep it compliant. To get started, kindly contact us here.

Conclusion

Forming an LLC in the US as a non-resident could be an exciting journey. Not only will you have so many opportunities to explore, but your business will gain the global recognition and credibility that it deserves. That being said, it is important you familiarize yourself with each state, including their LLC regulations, compliance requirements, their unique features and benefits before selecting a suitable state.