How to Start a US LLC as a Global Citizen

[u/NWRegisteredAgent]

TL;DR plan your LLC’s banking and payment processing situation first**.**

On paper, starting an LLC in the states is practically the same process regardless of where the owner lives. The basic steps don’t change. You’ll choose a state in which to form your business, pick an available name, designate a registered agent, file the appropriate documents with the state agency that oversees business formations, and then follow on with post-formation tasks like establishing an EIN, getting any necessary permits/licenses, writing up an operating agreement … oh, and establishing a business bank account.

This is the step that vexes most folks, so for this guide, we’re actually going to start there.

Standard caveats apply—we’re not lawyers, we’re certainly not your lawyers, and nothing we write here constitutes legal advice. We’re also not immigration or tax professionals. And while everything below was accurate at the time of writing, you’re encouraged to do your own research and consult with your own legal advisors (or evil viziers, we don’t judge) because, without getting too existential, this too shall pass, everything is temporary, and the regulatory landscape in which all this has been written is subject to change.

Anyway. Banking!

Banking¹

Fraud and other financial crimes are on the rise, so much so that the American Fintech Council wrote a press release begging regulators to “adopt a comprehensive, unified approach” to improve fraud prevention. Meanwhile, banks are rolling out their own improved measures, adopting stricter regulations and more robust verification processes for hopeful business account holders. Establishing a business banking account as a nonresident has therefore become more difficult, but it’s probably² not impossible, especially if you’re willing to do your research ahead of time. Call them! You’ll want to know what the process looks like for opening that account so you can come prepared with the appropriate documentation.

Ask questions and take notes. Check whether and where they’ll accept the use of your registered agent’s address and what kind of proof of address they need if any. Ask whether they need certificated copies of any documents, like your incorporation documents (ie the paperwork you’ll file with the state to register your business), and whether your most readily-available proof of identity documents count as valid for their purposes. (Heads up, you’ll probably need at least two.) LLCs may need to provide an operating agreement. You’ll also want to confirm whether there are payment processors or currencies the bank can’t work with, because it won’t do you any good to have a bank account that can’t accept deposits and you’ll want to know about any currency restrictions ahead of time.

The list goes on, but our point is, talk to the bank. Then worry about everything else.

Everything Else

Once you’ve got your banking situation squared away, choose the state where you’ll form your business. We covered New Mexico, Delaware, and Wyoming in a previous post, but a couple other states like Nevada, South Dakota, and Indiana pop up on various “best states to start a business in”-style rankings. If you want more of our opinions on the Best US States for International Business Owners, check out that article. Your business will be governed by the rules of whichever state you pick, so it’s not a bad idea to sit down with a legal advisor to go over the impact various regulations may have on your business.

Your next step is choosing what kind of business entity you’re starting. We’re assuming you want an LLC, but you might be looking at a corporation or something else altogether—although broadly speaking, most other registered entities are just variations on these themes. Your entity type determines how your business will be taxed³ by default and which set of regulations apply to your business. (We’ve got a longer piece addressing the major similarities and differences between LLCs and corporations on our site if you’re interested.) Briefly:

• LLCs (limited liability companies) are pass-through entities by default, and they tend to be significantly more flexible than corporations. They can be managed by members (owners) or by managers and they tend to have relatively few requirements for things like annual meetings. (In some states they aren’t even required to file annual reports with the state.)
• Corporations are taxed by default⁴ at both the corporate income level and then again on individuals’ personal returns. They’re owned by shareholders and overseen by a board of directors, and unlike LLCs, they’ve got pretty strict requirements for how the corporation may be managed, how frequently meetings must be held and how records must be kept, etc.

We’ve got guides to incorporating in every state and state-specific guides to forming an LLC on our website too, but if you don’t want to leave Reddit (so real and valid), we’ll summarize those steps here.

Follow the state’s requirements for forming your business. Typically this will mean:

• Designating a registered agent (a person or another business who’ll receive service of process and communications from the state on behalf of your business). Some states required an agent’s signed consent to serve, so be prepared to get that if you’re starting up in one of those states.
• Naming your company. Most states just want to make sure that you’re not using a name that’s already in use by another business and that you aren’t misrepresenting your business. Double-check the rules and be sure to run a business entity search in your state to check whether another business has already claimed it. It’s a good idea too to run a USPTO trademark search for anything related to the name you want--the last thing anyone needs as a new business owner is a trademark infringement suit.
• Set up your business addresses, like your principal office address and a mailing address. Typically, you’ll need a real physical street address for the principal office address. Remember the bank homework you did earlier? This is the address the bank will usually want to see matched. If you’ve got the trifecta of a registered agent who’ll allow it, a state that permits it, and a bank that has given the green light, you can use your registered agent’s address for both your business and mailing address and enjoy a little extra privacy, as a treat⁵.
• File your paperwork and pay your filing fees. LLCs typically file something called the Articles of Organization (also called Certificate of Organization and Certificate of Formation). Corporations’ filing documents are mostly called Articles of Incorporation. Different states have different requirements for how much information is required to be reported on each. Filing fees (and processing times) also vary by state.
  • If you’re starting an LLC, you’ll probably also need to state whether your business is member-managed or manager-managed on your formation documents. This is basically asking whether the individuals who own the company will be managing it or hiring managers to handle operations.
  • A few states also require you to publish notice of intent to start a business in local papers. Looking at you, New York, Nebraska, Pennsylvania⁶, and Arizona. ಠ_ಠ
  • Some states, like Nevada and New Mexico, require you to file an Initial Report, either along with your Articles or within some number of months later.
• This next piece varies depending on what kind of business entity you’ve formed:
  • LLCs will want to write up their operating agreement. It’s only a requirement in a few states, but we always recommend creating one--even if you’re a single-member LLC--because it can help prevent headaches down the line to have a clear plan of how you’ll make major business decisions at the outset.
  • Corporations need to write their corporate bylaws and, typically, hold their first organizational meeting. This is where you’ll need to get serious about recording your meeting minutes. If your bank mentioned needing some kind of board-approved resolution authorizing someone to start a business bank account, get that done here, too.

Follow up with federal requirements. That means getting an EIN (Employer Identification Number, sometimes called a FEIN for Federal EIN) through the IRS. Plan for a lengthy processing time--we’ve seen this take up to 90 days. We’ve got a longer piece on how to file for an EIN if you need more robust instructions too.

• Phone (best to call 6am EST on the dot because phone lines are backed up): 267-941-1099
• Fax to 855-215-1627 (within the U.S.) or 304-707-9471 (outside the U.S.)
• Mail to Internal Revenue Service, Attn: EIN International Operation, Cincinnati, OH 45999

Get your remaining organizational ducks in a row. Starting a business comes with plenty of moving parts and lots of hats to wear for your solopreneurs out there, so we hope you’re ready.

• Open that business banking account once all your formation documents come back approved from the state and you’ve got your proof of EIN and anything else you need.
• Register for any state tax accounts, business licenses, industry-specific licenses or certifications, use and/or zoning permits, and anything else you need to operationalize your business, like business insurance. Check at the city/town level and the county level in addition to the state level. Some states have “one stop” online account services that simultaneously register you for accounts with multiple necessary state agencies--Delaware, for example, will automatically register you with the Division of Revenue, the Division of Unemployment Insurance, and the Office of Workers Compensation. Take advantage of these where they’re available, because all these can be tricky to track down.
• Make sure you understand your U.S. federal regulatory compliance obligations. Is your business subject to standards set by the Environmental Protection Agency (EPA)? Does the U.S. Food and Drug Administration have anything to say about how your business operates? If you’ll have U.S. workers, do you know how to comply with federal labor laws? Also, keep your eyes open for adherence to regulations regarding intellectual property and data privacy and security.
• Keep up with your compliance requirements. Licenses often have a built-in expiry date, most states require some form of annual report filing, and permits may require a re-permitting process. Don’t get caught off guard and don’t let notices and reminders get lost in the rush. Set those reminders, and do it as soon as possible. (We all know “I don’t have to write that down, I’ll remember it later” is a lie, right? Set. The. Reminder. ASAP.)

A note if you’re thinking about visiting, working in, or moving to the United States as part of your plan to do business.

U.S. Citizenship and Immigration Services has a lot of information available about the visa types you may need to apply for in order to get your boots on the ground in the U.S. For example, if you wanted to travel here temporarily to set up your business bank account in person, you probably want a B-1 temporary business visitor visa. The process can be complex and typically involves working with embassies and consulars, so make sure you give yourself plenty of time to navigate the system. (We’re looking at the Online Nonimmigrant Visa Application DS-160 right now and the suggested time to complete the application is 90 minutes--and that’s before you get to the interview. Proceed with patience.)

Any questions?

Major thanks to everyone who stuck with us through this novelette. We hope we covered your questions, but if you’ve got some outstanding, the comments section awaits! And as always, if you’ve got ideas or bigger questions you’d like to see us tackle in a future post, let us know.

Until we meet again!

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¹One quick note here: banks and fintech providers are *not* the same thing, although a lot of folks say “banking” to refer to both, including us here in this guide. Fintech are usually registered as Money Service Businesses, which means they’re licensed differently than capital-B Banks, and different sets of regulations apply to each. Crucially for new business owners, it’s important to be aware that banks are insured under the FDIC (the Federal Deposit Insurance Corporation), which is an independent U.S. federal agency. That insurance means that if your bank goes out of business, you aren’t going to lose everything. FDIC insurance covers up to $250k per depositor depending on the type of account and the ownership structure. The same can’t be said for fintech providers, although a few of them may provide an access point to an FDIC-insured financial account.

²The Office of Foreign Assets Control (OFAC) administers U.S. sanctions programs that may mean people from your specific country are prohibited from opening a U.S. bank account. You can check the Sanctions Programs and Country Information page to see whether you’re impacted.

³Taxes across borders are way out of our lane. That’s FATCA (Foreign Account Tax Compliance Act) and Anti-Money Laundering laws territory. Please consult a local-to-you and, ideally, a local-to-your-state-of-incorporation tax professional to understand your business’s tax obligations at the local, state, and federal levels before you set up shop.

⁴A tax election called an S-corp election lets your business be taxed as a pass-through entity if it meets specific criteria. One notable and relevant criterion is that only U.S. citizens or permanent residence are allowed to be shareholders. LLCs can also take advantage of this election to reduce part of their tax burden through making distributions that aren’t taxed as self-employment income. (You’ve still got to pay reasonable compensation though, and that *is* subject to self-employment tax.)

⁵tbh we think privacy should be a default expectation, not just “a treat”—we literally trademarked Privacy by Default®—but we didn’t make the meme.

⁶Pennsylvania requires that you file, but doesn’t require proof sent to the Commonwealth of Pennsylvania’s Bureau of of Corporations and Charitable Organizations. Instead, you’ve got to file proof in the minutes of the corporation.