US LLC for Non-Residents: Tax, Banking and the 4 Traps
Why a US LLC is worth owning if you are not American, what it costs, how to open one, and the 4 mistakes that turn a useful company into a serious problem.
A US LLC costs under $1,000, opens in a day, and gives a non-American founder banking and card processing that is genuinely hard to get anywhere else. On the US side it pays no tax at all, provided you are not American, you do not live there, and the business is not carried on inside the country.
It is also set up wrong more often than any company we deal with. 4 mistakes account for almost all of it, and they are the difference between an LLC that works and one that becomes a serious problem.
- Cost to form
- Under $1,000
- Time to form
- 1 day
- US federal tax
- None, without US nexus
- Minimum capital
- None
- Local director
- Not required
- Public accounts
- None filed
What an LLC actually is
An LLC is a limited liability company, and it is a company for every legal purpose. It signs contracts, it owns assets, and it keeps the business liabilities away from you personally.
For US federal tax it is not treated as a company at all. With a single owner the default is what the IRS calls a disregarded entity — they look straight through it and treat the income as yours. The LLC has no rate of its own and pays nothing.
So if you are not American, you do not live in the US, and the business is not carried on inside the US, the US does not tax that income.
If you do carry on business inside the US, the profit is taxed there. That line is the first trap below, and it is worth knowing now that selling to American customers does not cross it.
Why it is worth having
The tax
For a non-American living outside the US, the company pays nothing in the US. No corporate tax on the profit at all. Whether the whole arrangement ends up tax free depends on where you live — covered further down — but on the US side it is zero.
The payments
A US entity gets you American acquiring banks. If you sell to US customers online, whether that is e-commerce, SaaS or anything taking cards, that is the difference between processing cross-border and processing domestically.
Cross-border cards get declined more often, they cost more per transaction, and far fewer providers will take you at all. Domestic acquiring puts you on the same footing as an American company selling to Americans.
The banking
Real US banks, not fintech apps. Bank of America, Chase. US credit cards. You can build a US credit history without ever living there, and that credit sits separately from anything in your own country.
The trust
An American customer buying from a US company behaves differently to one buying from a foreign entity. The same is true of US suppliers and partners.
The cost and the speed
Under $1,000 to form, open within a day, no minimum capital, no notary, no local director. It is one of the cheapest companies in the world to own and to keep. There is almost no bookkeeping, and staying compliant is straightforward — the one annual obligation is set out below.
The privacy
In much of Europe your company files accounts every year that anyone can pull up: your revenue, your profit, sometimes what you pay people. A US LLC files nothing of the sort, and in the right state no owner and no manager appears on the public record.
Which state, and how to open it
We use Delaware or Wyoming.
| Compared | Delaware | Wyoming |
|---|---|---|
| Choose it when | There is any prospect of outside investment or a sale | Most other cases |
| Why | The corporate law is the most developed, and investors and their lawyers already know it | It is cheaper to form and to keep |
| Relative cost | Higher | Lower |
The steps are the same either way.
- 01
File the company in the state
Done in a day. - 02
Appoint a registered agent
A local address for official mail. Every state requires one. - 03
Get an EIN
The company's tax number with the IRS. - 04
Open the bank account and payment processing
The step that takes the time. For a first setup, a couple of weeks.
So days to weeks from starting to actually taking money. Not months.
The 4 traps
1. US nexus
Whether you are carrying on business inside the US comes down to presence, not customers.
People working for you in the US creates it. An office or premises there creates it. So does a dependent agent — someone in the US acting for you, closing deals on your behalf, working for you and nobody else. A contractor does not count automatically, but a contractor who works only for you and signs your deals is a dependent agent whatever the contract calls them.
What does not create it: American customers, a US bank account, or a US address on its own.
Holding stock in a US warehouse can count. It does not automatically, and it turns on where you live and how the business is set up, so it is a case-by-case question rather than a rule.
2. The annual filing
An LLC has no public accounts, no audit, and no bookkeeping in the way a European company has it. But a foreign-owned LLC does have a return that goes to the IRS every year, reporting the money that moves between you and the company.
It is a small job and it is cheap. It simply has to be done on time. Miss it and there are penalties, and they apply whether or not you owed a cent of tax.
3. The address
This is the one that closes accounts.
Opening a Mercury or a Wise account, or getting Stripe running, is easy — and that ease is the problem. They onboard fast because they review later, and a lot of these accounts are shut down sooner or later with the balance still sitting in them.
What gets you closed is looking like a shell: a registered agent's address, no lease, no presence, no obvious reason to exist. So you want a real address, usually a proper lease rather than a mailbox, and a clear reason why the business has a US entity at all. Sometimes a US-based representative or signer.
This has moved a long way in the last couple of years. An LLC that was fine to open cheaply and quietly a while ago can fail a review now on identical facts.
There is a tier above that: local acquiring directly with a large US bank, and a real business account with one of them. Chase, Bank of America. That is a different kind of relationship, and it does not get closed on a risk review.
The catch is that you normally cannot open those remotely. They want you there in person. So either you plan a trip, or you go through someone who can open them for you.
4. Where you live
The LLC is transparent, so it hands the profit to you. Where you are tax resident decides what happens to it. If that is somewhere taxing worldwide income, the profit lands on your personal return in the year the business earns it, whether you take it out or not.
2 more layers sit under that.
Your country runs its own test on what an LLC is, and it does not have to agree with the US. If it calls the LLC a company, you can find yourself inside controlled foreign company rules, which tax you on profits that were never distributed. Every EU member state has had those since 2019.
And a company is usually tax resident where it is really managed, not where it is registered. If you are the only person making the decisions, it is being managed wherever you are sitting. Putting someone else in as a director does not fix that on its own.
So it depends on where you live, how much you travel, whether you need real substance somewhere, and what you are already paying. That comes out different almost every time.
It still works in a high-tax country
A US LLC can make sense even if you live somewhere with high rates. It just is not a tax cut there.
You pay your local rate on the profit, often exactly what you are paying now. And you keep everything else: the banking, the American payment rails, the credit, the trust with US customers, the liability protection, and a clean entity to build the rest of a structure around later.
The question is what you are getting for it, not whether it is tax free.
Questions
Do I pay US tax on a US LLC if I am not American?
Not if you live outside the US and the business is not carried on inside the US. With a single owner the LLC is a disregarded entity for US federal tax: it has no rate of its own and pays nothing. If you have US nexus, the profit attributable to that activity is taxed in the US.
Do American customers create a US tax liability?
No. Selling to American customers does not create nexus on its own, and nor does a US bank account or a US address. What creates it is presence: people working for you in the US, premises there, or a dependent agent acting for you.
Does an LLC help if I am American or hold a green card?
No. US citizens and green card holders are taxed on worldwide income wherever they live, and an LLC changes nothing about that.
How long does the whole thing take?
The company itself is filed in a day. The EIN and the registered agent follow quickly. Banking and payment processing are the slow part — for a first setup, a couple of weeks. Days to weeks from starting to actually taking money.
Do I have to file anything each year?
Yes. A foreign-owned LLC files an annual return with the IRS reporting the money moving between you and the company. There are no public accounts and no audit. It is small and cheap, but the deadline matters — penalties apply whether or not any tax was owed.
Is a US LLC worth it if I live in a high-tax country?
Often, but not as a tax saving. You pay your local rate on the profit either way. What you gain is US banking, domestic card acquiring, US credit, customer trust and liability protection, plus a clean entity to build a structure around later.
What to do with this
The LLC is cheap, fast, and the best banking and payments you can attach to a small company. What it does not do on its own is decide your tax. That is decided by where you live, and if you are in a high-tax country that side has to be handled first.
If you are running a business at 7, 8 or 9 figures, tell us where you are and how you are set up, and we will tell you whether this is the right piece and what would have to sit around it.
