When structured strategically, US LLCs can solve a range of problems for non-citizens and non-residents of the US.
Access to capital, privacy, and integration with payment platforms like Stripe are just a few of the reasons the LLC model is so prevalent among non-resident entrepreneurs.
However, which US state you choose for your LLC significantly impacts your benefits — particularly regarding owner privacy and annual compliance fees.
I’ll cover your choices in full below, including a rundown of costs and worst-case scenarios if you make the wrong choice.
Best US States For Non-Citizen LLCs
Delaware, Wyoming, and New Mexico are by far the most popular states for non-resident LLCs. But being popular doesn’t mean they’re best for you.
When I say “best,” what I really mean is “most popular.” Ultimately, the choice that is “best” will vary depending on you and your business’s unique requirements.
It’s a complex choice, since the costs and benefits between the three most popular states are similar:
|Low incorporation fees
|Low maintenance fees
|No Franchise tax
|LLC members privacy
|Allows single-member LLCs
The biggest difference between Delaware, Wyoming, and New Mexico for incorporation is that Delaware is chosen because investors prefer it. This makes Delaware more popular with high-growth startups entering the US market.
Wyoming and New Mexico offer lower costs and privacy for foreign owners, making them more popular with small-to-mid-size companies.
Delaware LLC for Non-Citizens
Delaware is a very popular choice among foreign founders who want to do business in-person in the United States. This state has a very good reputation among corporations because the state legislation is adjusted to companies. The most notable benefit is access to the Delaware Court of Chancery. This is a court specialized for commercial disputes. Instead of relying on a jury, it is made of five experts who solve disputes quickly and efficiently.
Aside from that, corporate income taxes are very low, but if you are not engaged in US trade or business, that doesn’t matter to you. It charges franchise tax for the privilege of doing business there, however. It is important to note that Delaware has gotten its reputation for the benefits it provides to C-Corps, not so much for LLCs. If you need to benefits of a Delaware C-Corp further down the road, you can always switch your LLC to a C-Corp. You can also transfer your LLC from another state to Delaware and change the structure to C-Corp.
Here’s a quick overview of the benefits:
- State fees. Incorporation fees cost $90, while the annual reporting fee is $125.-
- Taxes. LLCs are pass-through entities, so you shouldn’t be worried about ta-x-es.
- Franchise tax. Delaware LLCs are required to pay a flat $300 franchise tax by 1- -March each year.-
- Privacy. Delaware LLC member names are not publicly available.
Wyoming LLC for Non-Citizens
Due to the low incorporation and running costs and relaxed legislation toward LLCs, Wyoming LLCs have grown in popularity. Also, unlike Delaware and a few other states, Wyoming does not charge franchise tax, making it a great opportunity for entrepreneurs who want low maintenance costs.
- Taxes. No taxes whatsoever as long as you are not engaged in a US trade or business.
- Franchise tax. Wyoming does not charge any franchise tax.
- Privacy. Wyoming LLC member names are not publicly available.
New Mexico LLC for Non-Citizens
New Mexico updated its company legislation a few years ago to attract entrepreneurs from all over the United States and worldwide to incorporate there. The incorporation and recurring fees costs were reduced or eliminated, making it the most affordable US LLC for foreigners.
- State fees. Incorporating costs $50. There are no annual fees.
- Taxes. As anywhere else in the US, foreign-owned US LLCs do not pay taxes.
- Franchise tax. New Mexico charges a flat $50 franchise tax.
- Privacy. New Mexico LLC member names are not publicly available.
Unpopular US States for Foreign-Owned US LLCs
Nevada, California, and New York are common considerations among foreign entrepreneurs — but in my opinion, they shouldn’t be for the vast majority of founders not residing in the state.
California and New York have the allure of prestige, but there are better options for non-citizens. Nevada used to be a good option, but it is not now.
New York LLCs filing fees are low, but LLC founders must publish the incorporation in two newspapers, which will easily raise the costs to a few hundred dollars more.
The State of California requires an $800 franchise tax for all LLCs. If you are a foreign entrepreneur making around $1000 per month, which is $12.000 annually, you still must pay the $800 tax for the privilege of having a California business. You can get by for cheaper in other states.
On top of the state fees, Nevada requires $150 for filing the initial list of the company’s officers and an additional $200-500 for the obligatory business license for conducting business in the state.
Benefits of US LLCs for Non-Citizen and Non-Resident founders
There are several factors to consider when deciding where to register your global company. Most favor incorporating a non-resident LLC in the US because of its value to the members. It is a relatively small investment leading to great returns.
Some reasons for incorporating in the US as an international entrepreneur include the following:
A Reputable Jurisdiction
US companies have a good reputation globally. When you work with clients as a US entity, you are perceived differently.
There are many offshore jurisdictions where you can register your company, but not all businesses worldwide want to work with companies from these countries. Some of them have difficulties opening a bank account. Others remind your clients of shady business.
The United States is nothing like that. It is the startup hotbed of the world and probably the most reputable jurisdiction to incorporate offshore. Millions of international founders register companies in the US annually and only see benefits.
World-Class Financial Services
US businesses have access to the world’s best financial services for small and medium businesses. International entrepreneurs don’t have to travel to the US to open a bank account. If you incorporate in the US, you have access to many online banks, as well as services such as Stripe, Braintree, and others that don’t operate in all countries worldwide.
This requires some planning to pull off, but it doesn’t take much effort to reduce your effective corporate tax rate to 0% once you know the right actions.
LLCs are pass-through entities, meaning the company’s tax obligations are passed to the LLC members. Your LLC won’t be taxed, but you’ll be taxed. And if you are not a US tax resident, you won’t owe the IRS any taxes.
You just need to ensure that you:
- Do not spend more than 30 days in the US
- Do not employ any US employees (contractors do not count)
- Do not own your own premises in the US (using Amazon warehouses is fine).
Low Ongoing Costs
US LLCs have been designed to be easy to run. You’ll need to submit only the following:
- The annual report to the Secretary of State and
- Tax returns to the IRS, all of which are very simple.
In many cases, it would suffice for an accountant to review your transactions at the end of the year and prepare your tax forms.
You’ll also need to pay a small yearly fee for a registered agent.
LLC members enjoy privacy in some states, such as Wyoming and New Mexico. Their names are not mentioned anywhere in the company register. Only the registered agent’s name is there.
Access to Capital
Non-citizen LLCs’ access to capital in the US is more complex than citizen-owned LLCs. Yet, it is possible to access capital that wouldn’t be accessible if you registered your company in another country.
In addition, some US venture funds in recent years started investing in LLCs.
How to Choose the Best Non-Citizen LLC State
We usually recommend Wyoming and New Mexico to our clients as the best states for non-citizen LLCs. The low incorporation and maintenance costs separate them from Delaware, which imposes a franchise tax.
Delaware is a better option if you need funding and investors, but that will require you to turn your LLC into a C-Corp. Transforming your Wyoming LLC to a Delaware C-Corp is affordable and easy. In the meantime, you don’t have to pay the franchise tax in Delaware, so you can opt for Wyoming or New Mexico.
When researching and selecting a state, these are the key features to keep in mind which vary between states:
Some US states impose corporate income taxes on companies. Others impose gross receipts taxes. And many states impose sales taxes on businesses.
For foreign-owned LLCs that don’t engage in US trade or business, corporate taxes don’t matter because such an LLC is a disregarded entity anyway. The collection of sales taxes starts to matter only when your revenue in a specific state is over the prescribed threshold. These thresholds usually start at $100.000 annual revenue in the state where you sell.
Some US states charge businesses franchise tax for the opportunity to do business in that state. It is a lump sum or a small percentage of the revenue the company must pay yearly in addition to the income tax. In most states, it costs companies a few hundred dollars.
Only thirteen US states impose a franchise tax on LLCs.
State LLC Fees
Each state requires paying an annual fee along with the annual report. The state fees for incorporation vary from $50 to $500. The recurring annual fees vary from $0 to $300. Not paying the recurring fees will result in the dissolution of the company.
As explained above, some states do not include LLC members’ names in the company register, only the registered agent’s name. As a result, the names of the LLC members are not publicly available, and the LLC cannot be easily related to a specific individual.
If privacy is important to you, you need to consider this criterion.
Frequently Asked Questions
Which state is best for non-resident LLCs?
Wyoming, New Mexico, and Delaware are the best states for non-citizens to register LLCs in the US in terms of popularity. The factors driving their popularity with foreign founders are privacy, low costs, and funding-friendly local regulations.
What is the cheapest way to open a non-resident or non-citizen LLC?
Doola's Wyoming LLC packages are currently offers the cheapest overall path for foreign-owned LLCs, including compliance, banking, phone, and legal service.
Can I open a US LLC from India?
It is possible and even common to open US LLCs from India. The primary barrier is navigating tax and legal compliance. Most owners use a service such as Clerky or Doola to manage the process and paperwork, although it can be completed directly with the state where the LLC is registered. It is not required for Indian citizens and residents to travel to the US to open an LLC.
Can I run an LLC outside the US?
Non-citizen US LLCs are common and can be registered and managed remotely. The same is true for US business bank accounts.
Can a US LLC have a foreign address?
Your US LLC cannot have a foreign address. It will use the address of your registered agent, in the US state of your choice (typically Delaware, Wyoming, or New Mexico). You can get a virtual address for a small fee if you want a separate address. Many online services would provide you with one for a small monthly fee.