3 truths about taxes for foreign-owned LLCs in the US

February 9, 2021

One of the biggest headaches of opening and operating a foreign-owned LLC in the US is taxes. Every country has their own regulations codified in reams of legal jargon, and it can be overwhelming to unpack. But, with Accountants without Borders, we handle taxes for foreign-owned LLCs so they can just handle their business.

At Accountants without Borders, we’ve been providing premier assistance to people outside of the US who want to open businesses in the US, and vice versa. Our business is predicated on helping you. We personalize and tailor solutions to each individual client, and we promise to make crossing the border and setting up shop as easy as stepping through a door.

Here are 3 facts about taxes for foreign-owned LLCs in the US.

1. The US as a tax haven

One of the biggest things to know about taxes for foreign-owned LLCs is it can yield massive tax benefits. For example, a US opened business by a non-US citizen or nonresident can possibly permit tax-exempt earnings in the US. However, you need to understand the rules. Foreigners are only subject to US taxation when “engaged in a trade or business in the United States” (ETOB). If your business isn’t ETOB, it’s not taxable in the US even if it generates income.

Still, you need experts with experience to unpack and apply all appropriate laws and regulations to maximize your tax situation because there are sundry variables to consider. For example, you need at least one “dependent agent” in the US to be taxable, and you have to be engaged in “considerable, continuous, and regular” business in the US.

Basically, there are specific parameters to determine if you’re exempt to certain taxes, which requires expert tax counsel and strategic tax planning from Accountants without Borders to truly understand.

2. Accounting and bookkeeping

For foreign-owned LLCs, you aren’t required to submit all the accounting of your LLC. You don’t have to provide store receipts, restaurant bills, and monthly VAT reports. All you need is a simple profit-and-loss record that documents ingoing and outgoing payments. These can even be basic account statements and screenshots of payment platforms. And, best of all, you likely won’t have to endure tax inspectors or audits either.

But, still, having Accountants without Borders in your corner can work wonders! Because, while there may be fewer requirements, failing to satisfy exactly what’s expected of you can have devastating repercussions. So it’s important not to take it lightly.

3. Choosing your state

Choosing your state can have far-reaching ramifications for foreign-owned LLCs. But it’s not as complicated as you might think. Basically, when registering your LLC, there are a lot of state discrepancies that aren’t applicable to you.

For example, differences in tax rates aren’t applicable since you won’t be liable to pay them. However, some things to consider are things like your LLC formation costs, your annual franchise tag, the possibility of anonymity, and other laws and regulations that could be both detrimental and beneficial to your LLC.

Since every state is different and will have different sets of regulations, it can be a nightmare to sort through. But, lucky for you, we’ve been at this a long time and know the ins-and-outs of the different states and their requirements. We’ll assess your situation and find the best landing spot. You just have to worry about sticking the landing.

Contact us now to set up a meeting!

Contact us now to get started with your business and understanding of taxes for foreign-owned LLCs! We provide premier counsel and strategic planning to help you do meaningful work. At Accountants without Borders, we want to bring the world closer together. And this is a great start!

Our team specializes in taxes for foreign-owned LLCs to give you a warm welcome to your new home away from home!