The LLC (Limited Liability Company) is a popular legal form for companies in the USA. It offers the advantage of limited liability for the partners, similar to a corporation, and at the same time the flexibility of a partnership when it comes to tax treatment.

Advantages of an LLC

• Limitation of liability: The partners are only liable for the obligations of the LLC with their capital contribution. This offers important protection for the private assets of the shareholders.
• Flexible tax treatment: The LLC can be taxed as a partnership or as a corporation. The choice of tax treatment can be made depending on the individual needs of the shareholders.
• Easy to form and manage: Forming and managing an LLC is relatively simple and inexpensive.
  Disadvantages of an LLC
• Complex corporate law: LLC corporate law varies by state. This can make forming and managing an LLC difficult.
• Limited Liability for Directors: Directors of an LLC are liable for liabilities of the LLC caused by their own negligence or willful acts.

Decision criteria

Deciding whether an LLC is worth it for you depends on a number of factors, including:

• The size and complexity of your business: An LLC is the ideal legal form for small and medium-sized businesses with limited liability needs. For larger companies or companies with complex structures, a different legal form, such as: B. a stock corporation, may be more suitable.
• Your tax needs: If you have the opportunity to choose the tax treatment of your LLC, you should carefully consider the pros and cons of each option.
• Your Budget: Forming and managing an LLC is relatively inexpensive. However, you should consider the costs of incorporation documents, annual tax return filing and other ongoing costs.

Conclusion

The LLC is a versatile legal form that offers a number of advantages. Deciding whether an LLC is worth it for you should be made carefully, taking into account your individual needs and circumstances.

additions

•  “According to tax law, profits are not taxed by the company, but by the individual partners of the LLC as income via their income tax return according to their share of the investment.”
• “The LLC exists in all 50 US states and in Puerto Rico. Corporate law differs slightly in all states, which is why LLCs are more recommended in some states than in others. There are no differences in tax terms”

What is a Disregarded Entity LLC?

The Limited Liability Company (LLC) is a relatively new legal form that was introduced in the United States in the 1970s. It offers the advantage of limited liability, like a corporation, and the flexibility of a partnership.

However, the IRS had difficulty classifying the LLC for tax purposes. A partnership usually consists of at least two people. An LLC with only one partner cannot therefore be clearly classified as a partnership.

The IRS solved this problem by classifying the single-member LLC as a “disregarded entity.” This means that the LLC is not treated as a separate company for tax purposes, but rather as part of the sole shareholder.

The LLC’s income and expenses are therefore declared as self-employment income on the partner’s personal tax return. So, the partner is responsible for paying income tax on the LLC’s income.

 

What is an Exempt LLC?

An Exempt LLC is a Disregarded Entity LLC formed by a nonresident alien who is not a United States tax resident.
In this case too, the LLC is not treated as an independent company for tax purposes, but rather as part of the shareholder. However, the LLC’s income is not considered self-employment income because the partner is not a resident of the United States and is not subject to tax in the United States.
For this reason, the LLC’s income is tax-free in the United States.

Conclusion

A Disregarded Entity LLC is a single-member LLC that is treated as part of the shareholder for tax purposes. The LLC’s income and expenses are declared on the partner’s personal tax return.

An Exempt LLC is a Disregarded Entity LLC formed by a nonresident alien who is not a United States tax resident. The income of the LLC is tax-free in the United States.

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Taxation of US Income of the LLC

The taxation of US income of an LLC depends on the legal form of the LLC and the personal situation of the shareholder.

Disregarded Entity LLC

A Disregarded Entity LLC is an LLC with only one member. In the USA, this type of LLC is not treated as a separate company for tax purposes, but rather as part of the shareholder. The LLC’s income and expenses are therefore declared as self-employment income on the partner’s personal tax return.

Exempt LLC

An Exempt LLC is a Disregarded Entity LLC formed by a nonresident alien who is not a United States tax resident. In this case, the LLC’s income is tax-free in the United States.

permanent establishment

The taxation of an LLC’s U.S. income may also depend on whether the LLC has a permanent establishment in the United States. A permanent establishment exists when the LLC has a fixed place of business in the United States through which its activities are carried out in whole or in part.

Examples of business establishments

• An office or warehouse in the United States
• An employee working in the United States
• A contractor operating in the United States

Tips for avoiding a permanent establishment

To avoid an LLC having a permanent establishment in the United States, the following actions should be taken:

• The LLC should not maintain any fixed place of business in the United States.
• The LLC should not employ any employees in the United States.
• The LLC should not contract with any person or entity in the United States that represents the LLC or acts for the LLC.

Conclusion
Taxation of an LLC’s U.S. income can be complex. It is therefore important to seek advice from a tax advisor to take individual circumstances into account.

 

Taxation of profits of an exempt LLC in the shareholder’s home country

The taxation of profits of an exempt LLC in the shareholder’s home country depends on the tax laws of the respective country. As a rule, the profits of the LLC are treated as business income for the partner and taxed accordingly.

However, in some countries there are regulations that limit or even completely exclude the taxation of profits from foreign sources. These regulations may apply to specific types of income or to specific countries.

Exemplary examples

In Germany, profits from an exempt LLC that are earned in a country with a double taxation agreement (DTA) signed in Germany are generally tax-free if the shareholder has unlimited tax liability in Germany. In this case, the profits of the LLC are not taxed in Germany, but only in the country in which the LLC was founded.

Conclusion

Taxation of an exempt LLC’s profits in the shareholder’s home country is a complex issue that depends on the tax laws of each country. It is therefore important to seek advice from a tax advisor to take individual circumstances into account.

“Even if the exempt LLC is tax-exempt in the USA, that says nothing about which taxes have to be paid at home, i.e. in the place where the sole partner lives and works.

According to the logic of the exempt LLC, the profits of the LLC are treated as business income in the partner’s home country and taxed accordingly.”

“This is one of the reasons why the Exempt LLC is only suitable for clients who live in a tax-favorable country of residence that, for example, exempts income from abroad from tax.”

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Taxation and reporting requirements of exempt LLCs in the USA

Exempt LLCs were previously exempt from filing tax returns with the IRS. However, this led to concerns from the IRS that foreign LLC entrepreneurs may be conducting taxable business in the United States without paying taxes.

A few years ago, US lawmakers passed new regulations that tightened the taxation and reporting requirements of exempt LLCs. Since then, Exempt

LLCs have been required to file a mini-tax return annually, in which they must provide the following information:

• The name and address of the beneficiary of the LLC
• The sales of the LLC
• The amount of taxes paid in the United States

In addition, exempt LLCs must file an FBAR (Foreign Bank Account Report) for each of the LLC’s foreign accounts.

It is important to note that filing these returns does not create any tax liability in the United States. The regulations are intended solely to inform the IRS about the activities of exempt LLCs.

Design of the exempt LLC

With regard to the new IRS regulations, it is important to consider the following points when designing and forming an exempt LLC:

• The LLC should have a clear beneficiary who is subject to US taxes.
• The LLC should not conduct taxable business in the United States.
• The LLC should not have a permanent establishment in the USA.

By adhering to these points, the shareholder of an exempt LLC can minimize the risks of an audit by the IRS.

Conclusion

The taxation and reporting requirements of exempt LLCs in the USA have become significantly stricter in recent years. Members of exempt LLCs should consider these changes when structuring and forming their LLC to minimize the risk of an audit by the IRS.

 

Tax status of the LLC outside the USA

LLC tax classification outside the US is complex and depends on a number of factors, including:
• The legal system of the respective country
• The type of LLC (Single Member LLC or Multi-Member LLC)
• The nature of the LLC’s business activities
• The personal circumstances of the shareholder

General principles

In most countries, the LLC is considered tax transparent. This means that the LLC’s income is attributed directly to the shareholder and is taxed in his or her state of residence.
In some countries, such as However, in certain countries such as Germany and Austria, the LLC can also be classified as “opaque”. This means that the LLC is treated as a separate tax entity and the profits of the LLC are taxed in the country in which the LLC is based.

 

Single Member LLC

The tax classification of single member LLCs is particularly complex. In some countries, such as B. Great Britain, the Single Member LLC is classified as “opaque” and treated as a separate tax entity. In other countries, such as B. Germany, the Single Member LLC can be viewed as tax transparent.

Tax optimization

The LLC can only be operated in a tax-optimized manner if the income of the LLC is taxed in a country that gives tax advantages on foreign income.

recommendations

We therefore recommend that all clients who live in a high-tax country such as Germany or Austria refrain from setting up an LLC. The zero-tax LLC described here is intended for tax nomads and people who live in tax-favored foreign countries.

Important instructions

The US zero tax LLC described and offered is only suitable for founders who are subject to tax in a tax-favorable country of residence or who are digital nomads/perpetual travelers. It is not possible to operate the US zero tax LLC legally and in a tax-optimized manner if you have unlimited tax liability in a country such as Germany or Austria.

Even if you live in a tax-efficient country, you must clarify with your tax advisor whether the use of the LLC is possible in a tax-optimized manner and how, for example. B. the triggering of a local permanent establishment can be avoided.

We can advise you on important fundamental questions.

No plaintiff, no judge

Here we are primarily referring to the use of the zero-tax LLC if, for example, you live in Germany (which we strictly advise against).

The fact that the USA is far away and does not participate in the automatic exchange of information according to the OECD CRS could lead some people to have the fatal opinion that they “won’t get caught anyway”.

Be assured that the tax office will get wind of your LLC faster than you would like. An account with Wise, Stripe, PayPal or a similar provider with an EU presence is sufficient. Because with all financial service providers, your place of residence is registered as the beneficiary of the LLC.

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Advantages of a US LLC for international entrepreneurs

The Limited Liability Company (LLC) is one of the most popular legal forms for companies in the USA. It offers a number of advantages that make it attractive for international entrepreneurs.

Tax benefits
One of the most important advantages of an LLC is its tax treatment. In the USA, LLCs that meet the requirements for a “Foreign-Owned Disregarded Entity” (FODE) are tax-exempt. This means that the LLC’s profits are not taxed in the United States.

The requirements for a FODE are:

• The LLC has only one partner.
• This partner is a natural person.
• This shareholder is not a US citizen, not a US resident and is not otherwise subject to US tax.
• The LLC has no permanent establishment in the USA.

Anonymity and data protection

LLCs also offer a high level of anonymity and privacy. In the USA, LLCs are not required to make their shareholders public. This means that the names of the shareholders do not have to be published in public registers such as the commercial register.

Additionally, LLCs in the United States are not required to publish financial statements or other financial information. This protects the privacy of the shareholders and the confidentiality of their business data.

International recognition

LLCs are recognized worldwide and enjoy a good reputation among business partners. They are an established legal form that is viewed as equivalent to other corporate forms in many countries.

Easy to set up and manage

LLCs are quick and easy to form. The incorporation can be done online and usually does not require a notary appointment or a personal journey.
Managing an LLC is also easy. All you need to do is file an annual tax return with the IRS. Additionally, LLCs are not required to form a board of directors or other bodies.

flexibility

LLCs offer a lot of flexibility. They can be used for a variety of business purposes, from small businesses to large corporations.

LLCs offer international entrepreneurs a number of benefits, including:

• Tax benefits
• Anonymity and data protection
• International recognition
• Easy to set up and manage
• Flexibility

Protection from the Great Reset

In recent years, the political and economic situation in the world has increasingly changed. Some experts are warning of a “Great Reset,” a reorganization of the world order.

An anonymous US LLC can be an effective protection against the effects of the Great Reset. It can help protect assets and prevent third-party access.

Conclusion

The Limited Liability Company (LLC) is an attractive legal form for international entrepreneurs. It offers a number of advantages, including tax advantages, anonymity and data protection, international recognition, ease of establishment and administration, and flexibility.

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The zero-tax LLC offers a number of asset protection benefits, including:

• Confidentiality and anonymity: LLCs in the USA are not required to make their shareholders public. This means that the names of the shareholders do not have to be published in public registers such as the commercial register.

• Liability protection: LLC members are only liable for their contribution, which can be $1. This means that the shareholders’ personal assets cannot be seized in the event of liability claims.

• Flexibility: LLCs can be used for a variety of assets, including real estate, securities, patents and cash.

Compared to other legal forms, such as the foundation, the LLC offers the following advantages:

• Less expensive: Forming and managing an LLC is typically less expensive than forming and managing a foundation.

• More flexible: LLCs are more flexible than trusts and can be used for a variety of purposes.

The following points illustrate how zero-tax LLC can improve asset protection:

• Precious metals: Precious metals can be stored in a safe or other secure storage location. However, an LLC can be used to document ownership of the precious metals. This can be useful to prevent access by third parties, e.g. B. by a bitter ex-wife or arbitrary authorities.

• Other Assets: Other assets, such as titles, securities, real estate, contracts, cash and patents, may also be held in an LLC. This offers the same protection as precious metals.

• Trust: A trust can also be used to protect assets. However, trusts are typically more expensive and less flexible than LLCs.

Overall, the zero-tax LLC is an attractive option for asset protection. It offers a number of benefits including confidentiality, liability protection and flexibility.

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Banking & Payments for your US LLC

Setting up a US Limited Liability Company (LLC) offers many advantages, including the choice between different banking and payment providers. In this article, we’ll introduce you to the most important options and show you how to find the best account for your needs.

 

Neobanks

Neobanks are digital banks that are characterized by a lean business model and innovative products. They have become increasingly popular in recent years, including in the USA.
Neobanks are particularly attractive for LLCs because they allow you to open an account directly with the company. With traditional banks, this usually requires a managing director or partner living in the USA.

Mercury
One of the best-known neobanks in the USA is Mercury. The Company offers LLCs a comprehensive suite of banking and payment services, including:

• A checking account with a Visa debit card
• A business loan
• A payment terminal
• An online payment system

More neobanks
In addition to Mercury, there are other neobanks that accept LLCs. These include, among others:

• Wise
• Payoneer
• Brex

Wise
Wise is a British neobank specializing in international payments. The company offers LLCs a multi-currency account that allows you to send and receive money in over 50 currencies.

Payoneer
Payoneer is a US neobank that specializes in payments from companies to freelancers and subcontractors. The company offers LLCs a Visa debit card business account that is ideal for accepting credit card payments.

Stripe
Stripe is a US company that provides payment solutions for online retailers. The Company offers LLCs an account that allows you to accept payments via credit card, debit card, wire transfer and other payment methods.

Conclusion

Choosing the right banking and payments provider for your US LLC depends on your individual needs. If you want to open an account directly with the company, a neobank is the best option. If you need a multi-currency account or the ability to accept credit card payments, Wise or Payoneer are good alternatives. And if you run an online store, Stripe is the ideal solution for you.

LLC account opening in the USA for foreigners

Forming a US Limited Liability Company (LLC) offers many advantages, including the ability to open a bank account in the US. This is essential for companies doing business with customers or partners in the United States.

Open a business account in the USA

Opening a business account in the US is not always easy for foreigners. Traditional banks typically require that the account holder or a partner reside in the United States. This is not possible or desirable for many companies.

Neobanks as an alternative

In recent years, neobanks have established themselves as an alternative to traditional banks. Neobanks offer a number of advantages, including the ability to open an account even if you are not a US resident.
Advantages of neobanks

Neobanks offer the following benefits for opening a business account in the USA:

• No residency requirement
• Simple and quick account opening
• Affordable fees
• Extensive range of services

Neobanks for LLCs

There are a number of neobanks that offer a business account to LLCs in the US. The best-known providers include:

• Mercury
• Wise
• Payoneer

Mercury
Mercury is a US neobank that specializes in business customers. The company offers LLCs a comprehensive suite of banking and payment services, including:

• A checking account with a Visa debit card
• A business loan
• A payment terminal
• An online payment system

Wise
Wise is a British neobank specializing in international payments. The company offers LLCs a multi-currency account that allows you to send and receive money in over 50 currencies.

Payoneer
Payoneer is a US neobank that specializes in payments from companies to freelancers and subcontractors. The company offers LLCs a Visa debit card business account that is ideal for accepting credit card payments.

Conclusion

Opening a business account in the USA is easy and cost-effective for LLCs with the help of a neobank. The neobanks offer a comprehensive range of services and meet all the requirements for a business account for LLCs.

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TCME – Group worldwide is a leading professional international foreign trade relations investment and consulting firm, with 17 different departments spread in different countries around the world, with its head office in Malaysia.

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