For many international founders, the formation of a US LLC is the most direct route to a lean, internationally recognised company: set up within days, no travel, no minimum capital and, in many cases, no US federal tax on profits earned outside the United States. Structured correctly, the limited liability company is one of the most flexible tools for internationally active entrepreneurs – and for those who want to bring investors on board, the Inc. is the right alternative.
LLC or Inc.: choosing the right legal form
Two legal forms dominate in the United States. The LLC combines the limited liability of a corporation with the tax flexibility of a partnership. The Inc. (corporation) is the classic company with shares, a board and shareholder meetings – the right choice when venture capital, employee equity or a later IPO is planned. The differences at a glance:
| LLC | Inc. (C corporation) | |
|---|---|---|
| Liability | Limited to company assets | Limited to company assets |
| US federal tax | Transparent, election as corporation possible | 21% on profits |
| Distributions to non-residents | No withholding tax for a transparent LLC | 30% withholding tax, usually 5–15% under a treaty |
| Formalities | Minimal, an operating agreement is sufficient | Board, minutes, bylaws |
| Investors | Less suited to venture capital | Standard for US investors |
Choosing between an LLC or Inc. is therefore a question of strategy. For operating businesses, consultants and online companies with an international client base, the LLC is generally the more efficient solution. The Inc. plays to its strengths as soon as capital is to be raised from investors, employees are to receive equity or profits are to be reinvested in the United States.
What is a disregarded entity?
What the term means: it comes from US tax law and describes a single-member LLC that is not treated as a separate taxpayer for federal income tax purposes. The IRS effectively looks through the company and attributes profits and losses directly to the owner. No corporate income tax is levied at the level of the LLC.
The distinction between tax law and company law is important: for tax purposes the disregarded entity is invisible, but legally it exists in full. It enters into contracts in its own name, holds its own assets and protects the owner from liability for the company’s debts.
If the owner lives outside the United States and the LLC has no office or staff there, profits from business outside the US are generally not subject to US federal tax. With several members, the LLC is treated as a partnership by default; using Form 8832, it can also elect to be taxed as a corporation. Anyone planning the formation of a US LLC with taxes in mind uses exactly this flexibility to align the company with their personal situation. Towards the IRS, a disregarded entity only files an annual information return on Form 5472.
How your home country classifies the LLC
The US classification does not automatically apply abroad. Many countries, including Germany and Austria, decide with their own comparison test whether the LLC corresponds to a domestic corporation or to a transparent entity. The decisive factors are the provisions of the operating agreement – on management, profit allocation, transferability of shares and the duration of the company.
How a country classifies the LLC determines everything that follows – and for founders this is good news, because the classification can be shaped. With a carefully drafted operating agreement and the right ownership structure, for example a holding company or a foundation as member, the LLC becomes a well-designed building block even for residents of high-tax countries. What matters is that the structure is in place before formation and aligned with the rules of the country where you live.
Choosing the right state
An LLC is not formed at federal level but in a specific state. Five states are particularly relevant for international founders, and for many an anonymous LLC is a key criterion: in Wyoming, Delaware, New Mexico and Nevada, an LLC can be formed without its members appearing in the public register. The five states compared:
| RecommendedWyoming | Delaware | New Mexico | Nevada | Florida | |
|---|---|---|---|---|---|
| Anonymous formation | Yes | Yes | Yes | Partly | No |
| Members in public register | No | No | No | No | Yes |
| Managers in public register | No | No | No | Yes | Yes |
| State tax on foreign profits | None | None | None | None | None |
| Annual state requirement | Annual Report | Flat tax, no report | None | Annual list and business licence | Annual Report |
| Ongoing administration | Low | Medium | Very low | High | Medium |
| Asset protection | Very high | High | Medium | Very high | Medium |
| Case law | Established | Court of Chancery | Established | Business Court | Established |
| Investor acceptance | Medium | Very high | Low | Medium | Medium |
| Registration | Active immediately online | 1–3 business days | A few business days | 1–2 business days | 1–3 business days |
| Ideal for | Online businesses, holdings | Investors, later Inc. | Minimal administration | Asset protection | Business in the US |
The right choice depends on your plans. A Wyoming LLC is the first choice for most founders without a US presence, while a Delaware LLC is recommended as soon as investors or a later conversion into an Inc. are conceivable. The company is registered with the Secretary of State of the chosen state – in Wyoming with the Business Division, in Delaware with the Division of Corporations. Anyone who actually does business in another state, for example with a warehouse or employees, registers there as well.
The formation process
Whether LLC or Inc., forming a US company is done entirely remotely. To form an LLC as a non-resident, the process involves the same steps as for a corporation – only the documents differ:
- Decide on legal form, state and name: the name must be available in the chosen state and include “LLC” or “Inc.” or “Corp.”.
- Appoint a registered agent: every company needs an address for service in the state of formation.
- File the formation document: the LLC is created with the articles of organization, the Inc. with the articles of incorporation, both filed with the Secretary of State.
- Set up internal governance: for the LLC the operating agreement, for the Inc. the bylaws, the appointment of the board and the issue of shares.
- Apply for an EIN: the IRS tax number is also available without a US social security number; non-residents apply using Form SS-4.
The overall process is straightforward: registration takes a few days depending on the state, and the EIN for non-resident members usually a few weeks.
Accounting and obligations
The key obligations for bookkeeping, accounts, audit and VAT at a glance – so you know from the start what running your company involves.
| Obligation | Rule |
|---|---|
| Bookkeeping | No prescribed format; complete records for the IRS filing |
| Annual accounts | No publication requirement |
| Statutory audit | Not required |
| Tax return | Annually Form 5472 with Form 1120 (foreign-owned LLC) |
| VAT: registration | No VAT; sales tax depending on the state |
| VAT: returns | Only where sales tax applies in a state |
| Ongoing register duties | Annual report or flat tax in the state of formation; registered agent |
The LLC files annually on Form 5472 with a pro forma Form 1120. An Inc. additionally holds board and shareholder meetings with minutes and files a full corporate tax return. Since March 2025, companies formed in the US no longer have to report beneficial owners to FinCEN.
As of 2026. Bookkeeping and filings are usually handled by specialised accountants in the target country.
The LLC for digital nomads
For digital nomads and anyone who works location-independently, the LLC is the ideal foundation. It is run entirely online, recognised by clients and payment providers worldwide and generates no US tax without US business. For them in particular, the formation of a US LLC pays off: the company stays firmly anchored in one place, while the owner lives wherever they choose.
The LLC reaches its full potential in combination with a residence in a country with low or territorial taxation. Dubai levies no personal income tax, Malta taxes foreign income of non-domiciled residents only when it is remitted to Malta, and Georgia offers an attractive regime for small businesses. With a verifiable residence in one of these countries, the result is a clear, legally sound structure – and the freedom to work from anywhere becomes a tax advantage as well.
Is a US LLC right for you?
Whether an LLC is right for you depends less on the United States than on residence, clients and business model:
Suitable for
- Online entrepreneurs with clients in many countries
- Digital nomads resident in a low-tax country
- Founders who want to enter the US market
- SaaS and software providers earning in US dollars
Less suitable for
- Bidders for public tenders in the EU
- Startups with US investors – here the Inc. fits
- Trades and retail shops serving local customers
- Operations with office and staff in Europe
If you want to build a team, hire staff or run an office in Europe, an EU company is the better fit: Hungary offers the lowest corporate tax rate in the EU at 9% and a well-trained workforce, while Bulgaria combines 10% tax with particularly low labour costs. All options are listed in the overview of all locations, and the tax comparison shows the rates side by side. Which structure fits in an individual case can be clarified in an initial consultation.
