Guide to Opening an LLC in the United States

Forming an LLC in the US: It's Easier Than You Think

Ever wondered how to create a Limited Liability Company in the United States? This article guides you through the process. Setting up a US company is simpler than you might think, with minimal requirements. We'll explain LLC characteristics, advantages, and important considerations for creation and launch. If you're considering Setting up a company in Colombia as a foreigner, this may also interest you.

What is an LLC?

An LLC is equivalent to a Limited Liability Company.

This means members' legal liability is limited to the company's assets; in any legal dispute, only company assets are at risk. LLCs are established in the US according to state statutes. For more information on Corporate Law, visit our blog.

Importantly, LLC members are called "members." A member's resignation requires written approval from others; responsibility can't be transferred without consent.

Benefits of an LLC

Limited Liability:

Liability is limited to company assets, protecting the owner's personal assets.

Tax Flexibility:

Legislation allows owners to choose how the company is taxed.

No Double Taxation:

LLCs aren't subject to federal or state corporate taxes; each member declares individually. For tax advice, consider contacting our Tax Lawyers in Colombia.

Minimal Documentation:

No US visa or Social Security Number (SSN) is needed to form an LLC.

Virtual Operation:

All LLC opening and operational procedures can be done 100% remotely.

How Many Members Should an LLC Have?

At least one member is required, but there's no upper limit.

How Much Does it Cost to Open an LLC?

Opening costs vary by state, including filing fees and taxes. Each state has its own regulations. Compare with How much does it cost to start a business in Colombia?. If interested in Investing in Colombia, find relevant information on our site.

Approximate Costs for LLC Creation:

Filing Fees:

States charge fees for filing formation documents. Costs range from $50 USD to $500 USD; Arizona, Colorado, and Iowa often have lower fees.

Name Reservation:

After selecting and verifying a name, pay around $10 USD (varies by state) to reserve it.

Registered Agent Service Fees:

Approximately $125 USD or more.

Maintenance:

See costs here: https://firmaway.us/fee-anual-y-vencimientos-en-cada-estado/

Taxes to Consider

US corporate taxes are federal and state. Only US-sourced income is subject to federal taxes (Internal Revenue Service – IRS). However, a foreign LLC won't pay federal taxes if:

• It has no permanent establishment in the US.
• It has no dependent agents or employees in the US.
• None of its members are US residents.

Meeting these requirements exempts you from corporate taxes; only personal taxes need to be declared annually. To understand Corporate Taxes in Colombia, see our guide. Learn about International Taxation and Double taxation.

State taxes vary by state. This tax applies when selling tangible goods in the US, exceeding a billing amount, or with increased profits. Rates range from 1% to 12%.

Steps to Open an LLC

Choosing the State of Incorporation:

States offer varying benefits (lower costs, member privacy, tax exemptions). Popular states include Florida, Wyoming, Delaware, and Nevada.

Choosing a Name for the LLC:

Select a name and check its availability.

Establishing a Virtual Business Address:

A remote address is legally required in the US.

Establishing a Registered Agent:

This person manages legal and tax documentation. Hiring one is usually mandatory.

Registering the LLC:

1. Submit a formation document to the state.
2. A certificate of incorporation is issued (minimum $90 USD).
3. Prepare articles of incorporation and, sometimes, an operating agreement. See the Step by Step to Create and Register a Company in Colombia.

Applying for an EIN (Employer Identification Number):

Fill out Form SS-4 and submit it to the IRS. This takes 45 business days. You need the EIN to operate. It's free.

Opening a Business Bank Account:

Many online banks allow for remote account opening. See more on Opening a Bank Account for LLC in the USA or Opening a Bank Account in Colombia from abroad.

Your LLC will be ready to operate after completing these steps. For information on Investing in Colombia and the Best Businesses to Invest in Colombia, see our resources.

Bibliography:

• Internal Revenue Service – IRS (2023). Limited Liability Company (LLC). Retrieved from: https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc
• Moyer, P (2023). How to set up an LLC in 6 steps. Retrieved from: https://money.com/how-to-start-an-llc/
• LLC buddy (2023). *Costo de LLC: ¿Cuánto cuesta formar una LLC?. Retrieved from: https://llcbuddy.com/es/llc-cost/#LLC%5FMaintenance%5FCosts
• Active Filings (2023). FAQs for Non Us residents incorporating in the USA. Retrieved from: https://www.activefilings.com/incorporation-services/international-plan/faqs/
• For further assistance, contact us at Contact Us