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Do You Have to Be an American Citizen to Own an LLC?

Discussion in 'Business & Tax Advice' started by Rehzin, Jul 11, 2016.

  1. Rehzin

    Rehzin Registered Member

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    Hey there!

    I want to make things as legal as possible for my dropshipping business. Is it possible to get a LLC even though I am not an American Citizen?

    Have anyone done that? How much does it cost? Do you guys have pay taxes to the US government and your home country as well?

    One of the reasons I want to get a LLC is to apply for Stripe. I am having many problems with 2checkout and losing sales quite often because of them.

    I'd really appreciate advice from anyone that have done that!

    Thanks
     
  2. amoon

    amoon Jr. VIP Jr. VIP

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    I saw a post here in bhw about opening an LLC, the all process explained, if I well remember I think zwilicht wrote that guide
     
  3. amoon

    amoon Jr. VIP Jr. VIP

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  4. Rob.Medcash

    Rob.Medcash Newbie

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    Nope.. You can still get one even if your not an American. I'm not 100% sure on your other questions. It varies by state but I know you don't need to be an American to get an LLC.
     
  5. W9go

    W9go Jr. VIP Jr. VIP Premium Member

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    no ... i know some guys who have one. look in dellaware heard thats the best and easiest.
     
  6. Rob.Medcash

    Rob.Medcash Newbie

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    Yeah, I can second that based of personal experience. Delaware is the easiest to get set up.
     
  7. Reaver

    Reaver Jr. VIP Jr. VIP

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    Delaware actually encourages people from other countries to apply for an LLC with them. I believe it costs about $700 to get started. Whoever helps you set it up should know more about how taxes work, etc.
     
  8. RuthSam

    RuthSam Jr. VIP Jr. VIP Premium Member

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    It does not require a guide. contact Stripe.com/atlas and they will setup the entire thing for you!
     
  9. cooolforce

    cooolforce Registered Member

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    No. 100% sure.
    You CAN own a LLC in America without being an american or even have a green card.
    I don't know wether you will need a American business/tourist visa or be there for the registration.
    But i am 100% sure that you don't need to be an American or Hold a green Card to open a LLC in America.
     
  10. EpicApps

    EpicApps Junior Member

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    Hi, you don't have to be a US citizen to form an LLC and as far as taxes go, most people go with the LLC since the LLC will only be taxed in the US on income from US sources. So if you end up selling to someone outside the US you don't have to pay that tax. Otherwise you need to pay 30% of Profits in taxes. The good thing about the US tax system is if you end up paying more than the 30% you will get a refund. You'll also need to get an EIN which is a tax id for the US company.

    The only thing you will need to go to the US for is to open a US bank account. Don't believe ANYONE who says they can get you a bank account without having to go there. The only way to get a US bank account without going to the US is via some power of attorney which means you dont really own that acocunt. Some major banks like HSBC and Citibank will let you go to your local bank office and open the account from there but even that can be difficult.

    Hope that helps
     
  11. Rehzin

    Rehzin Registered Member

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    That's awesome! Thank you everyone for all the advices! I will check one-by-one.
     
  12. burnett4congress

    burnett4congress Regular Member

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    Note, I am an actual US tax preparer, work with thousands of clients, many of which are out of the US and have business interests in the US.

    On Owning Entities:

    Anybody can own a US corporation. Just like anybody can own a share of Apple, IBM, or Bank of America, you can own your own company in the US. However there are some issues you need to take into consideration.

    If you have a social security number (SSN) or individual taxpayer identification number (ITIN) or in some cases an employer identification number (EIN) then you can own any type of company or corporation in the US.

    If you do not have either of those numbers and don't plan on getting one, then you can only own what is called a C-corporation. What this means is the company pays its own taxes instead of the profits/losses flowing through to the individual owners. Partnerships and S-corporations are flow throughs and don't work if there is no US taxpayer to receive the flow through.

    For various legal reasons LLCs elect their tax treatment. So an LLC can elect to be a sole-prop/partnership (default), S-corporation, or C-corporation for tax purposes. So as a foreigner without an ITIN or SSN you can open an LLC, but you have to elect C-corporation tax treatment.

    On Paying Taxes:

    Someone mentioned that an LLC only pays tax on US sourced income. This is not true. The US taxes worldwide income for any taxpayer (one of the few countries in the world that does this).

    Each year the company will file a tax return with US federal government and usually the state as well (depends on the state). You list your gross income, list all your expenses, and pay taxes on your net income. How much that is will depend on how much you make. The US federal government and most states follow a graduated income tax policy, so the more you make (net) the more you pay both in absolute terms and in percentage terms.

    The usual due date for corporate tax returns is March 15 of the following year. So the filing due date for 2016 is going to be March 15, 2017. If you elect a different fiscal year, the return is due 75 days after the end of the year. Of course, you can file extensions and get 5-6 months extra but this only extends your time to file paperwork. It does not extend your time to pay (if you have a tax liability).

    So if you think you'll owe $10k on your corporation income taxes, the IRS wants their $10k by March 15 and you can file the actual return later. If you end up owing less, they will refund you the difference. Otherwise they will assess your corporation penalties and interest.

    On Bank Accounts:

    In order to open a US bank account the bank needs to follow what is know as know-your-customer regulations. So the bank will need someone's info (US based) to open the account. For example, when I started my hosting company with my Australian partner the bank got my SSN and driver's license info, and they got my partner's driver's license and passport info. And that worked fine.

    Of course, just because you have a US company does not mean you have to have a US bank account.

    On the 30% Rule:

    If a company is paying a foreigner and the payer does not have tax information for the payee, the payer is required to withhold 30% of the payment against any potential taxes. The idea here is that the US government doesn't want foreigners to escape from paying income taxes by just being out of jurisdiction.

    If that happens to you, you can file a non-resident US tax return (1040NR) along with a W-7 in order to apply for an ITIN. You send in your info, your identification documents, and then you'll get whatever refund you are due against the withholding. At that point you can do all the flow through entities you want because you have an ITIN.
     
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  13. zhmurki

    zhmurki Jr. VIP Jr. VIP

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    wow, that's a lot of useful info.
    do you know anyone trustworthy in helping to open LLC in US?
     
  14. burnett4congress

    burnett4congress Regular Member

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    Aside from myself? :)

    Stripe has a new program called Atlas that claims to be able to do everything including opening a bank account. I'd be interested to find out if anyone wants to try it.