A Limited Liability Company (typically abbreviated as LLC) is a business structure with the limited liability of a corporation and the flexibility and lack of formalities awarded by a sole proprietorship or partnership.
An LLC constrains the liability for business debts and litigation to the company. The owner(s) and their assets are protected from the LLC’s financial and legal obligations. Every LLC ought to have an LLC operating agreement that stipulates the financial and working relations between members and management.
An LLC Agreement is a governing document that outlines the terms governing an LLC, management structure, ownership (interests), and the rights and obligations of the members of the LLC.
Forming an LLC in the US is not so complicated for non-residents. They can select the state where they would like to register the company, form the LLC, get an Employee Identification Number (EIN) and have a physical US mailing address. Also, one should open a bank account that can be used to make transactions with other US businesses. It is important to note that forming an LLC does not grant visas to work in the US.
Types of LLC Operating Agreement
LLC operating agreements and their contents will vary from one company to the other. Regardless of these variations, LLC operating agreements will have the following key sections; organization (ownership/interests), capital contributions, management and voting, membership changes, distribution (profits and losses), and dissolution. LLC agreements can be broadly categorized into:
Multi-Member LLC Operating Agreement Template
A multi-member operating agreement is used in an LLC that has more than one owner or member. Examples of multi-member LLCs are joint ventures between a group of investors and family businesses. Multi-member LLCs can be member-managed or manager-managed.
Download: Microsoft Word (.docx)
Single Member LLC Operating Agreement Template
A single-member operating agreement is created for an LLC owned by only one primary owner or member. It is recommended that they sign and date the agreement.
Download: Microsoft Word (.docx)
How to Form an LLC
Residents in any state in the US who intend to start a Limited Liability Company can follow the steps discussed below. However, always consult state laws when forming an LLC, as some of the steps are not mandatory in some states.
Choose a state
Select the jurisdiction that shall govern the company’s operation by selecting the state where the LLC will be based. Different states will have different requirements for start-ups, tax laws, permits, and other guidelines for forming an LLC. For example, having an LLC agreement is not a legal requirement for LLCs in most states; however, it is a requirement in states like California, Missouri, Delaware, Maine, and New York. States with less strict guidelines are desired, for example, states without state tax implications. However, consider other factors of the LLC that are influenced by location, such as target audience, market conditions, accessibility, and more. The LLC does not have to be located in the owner’s state of residence; it can be formed as a foreign LLC in another state.
Select a name for your LLC
Then select the preferred name for the LLC. Catchy and original names are preferred for marketing purposes and establishing the brand identity, respectively. However, the name should comply with state-specific guidelines. Some of the general guidelines to consider are;
- The name should have a limited liability company designator at the end by including the phrase “Limited Liability Company”, or abbreviated as L.L.C. or LLC.
- The LLC name should not be similar to that of another LLC or business entity registered in that state. This can be ascertained by conducting a name search.
- The name must not contain any word restricted by the state. Some states restrict owners from using certain words in their LLC name, for example, “Bank,” “University,” or “Insurance.” Check the state’s list of restricted words. The use of these words would require additional requirements to be met.
- Business owners are prohibited from using names that may be interpreted as government agencies such as “State Department,” “FBI,” or “Treasury,” and more.
- The LLC name should not be similar to that of an existing web domain/URL.
Hire a registered agent service
A registered agent is an individual/person or business entity with a physical address in the particular state or permits to operate in that state, appointed by an LLC to receive and send legal papers such as notices and lawsuit files from the state or other third parties on its behalf. A registered agent is also commonly referred to as a resident agent or a statutory agent. A registered agent can be a professional service, or in cases of single-member LLCs, the owner can act as the registered agent. Most states require that one hires a registered agent service before forming an LLC, and he or she should be identified in the LLC agreement.
File your LLC with the state
Next, file the LLC documents with the state. This is to declare the LLC’s existence in the said state officially. This is done by filling out the LLC’s Articles of Organization.
Filling out the LLC’s articles of organization
The articles of organizations are also referred to by a different name – “certificate of formation” depending on the state. However, the function is the same. It is an easy-to-fill-out document obtained from the state’s filing office or online and filed with the Secretary of State at the state’s corporate filing office. Its contents will vary depending on the state requirements; however, all that is needed is the name and address of the LLC and the names of the owners or members. In addition to the mentioned requirements, one will require to pay a filing fee ($80-$150 depending on the state), correspondence details (name and address), and the name and address of the LLC’s registered agent.
Sign an LLC operating agreement
Once the Limited Liability Company has been registered with the state, create an LLC agreement. Even though it is not required in most states, it is recommended that the owner(s) of the LLC create one. An LLC agreement ensures that all the involved parties are on the same page and have a guide on how they will operate the company. The LLC agreement does not require to be filed with any government office. Ensure the LLC agreement meets state requirements and contains all the members’ names and signatures to be valid.
Note: In the absence of an LLC agreement, state laws govern how the LLC is run.
Get an EIN
Next, ensure the LLC complies with tax and regulatory requirements. This involves registration for an Employer Identification Number (EIN). Then, complete an online EIN application found on the IRS website. Single-member LLCs require an EIN if there are employees or if the owner wants the LLC to be taxed as a corporation and not as a sole proprietorship. However, if it is a multi-member LLC, the LLC must obtain its own EIN even if there are no employees.
File an IRS Form SS-4
Filing for an EIN does not have to be online; LLC members can obtain the IRS Form SS-4 Application for Employee Identification Number, fill out, sign and send it to the IRS through fax or mail. At this point, apply for appropriate business licenses, which will depend on the type of business and the location of the LLC. Ensure that the LLC has the appropriate registration, licenses, and permits required to do business in the state.
Get a physical US mailing address
Afterward, obtain a physical mailing address in the state where the LLC is located. This can be done by setting up a physical presence such as an office in that state, especially if the business will need a physical presence. However, even if physical presence is not necessary, the LLC still needs a physical address which can be obtained via online platforms that form a US mailing address in the state on behalf of the LLC where they receive mail on behalf of the LLC and send it to the members via online means. A mailing address is also needed to open a bank account.
Open a US bank account
The next step involves opening a bank account for the LLC. This is an efficient way of limiting the owner’s liability because the business’ funds are separated from the owner’s funds. Different banks have different documentation requirements in regards to opening banks accounts. However, this step will commonly require the LLC owner to physically visit the bank as a requirement of the US money-laundering laws.
Forming a US LLC as a non-resident
Non-residents who intend to open an LLC in the US can follow the same procedure as long as they have a valid visa permitting them to travel to the US. The visa can be used to open a US bank account.
States have regulations in place that govern the forming and governing of LLCs. It is therefore imperative that individuals learn the specific requirements needed by the state when forming an LLC.
|AL – § 10A-5A-1.08||MT – § 35-8-109|
|AK – AS 10.50.095||NE – § 21-110|
|AZ – § 29-3105||NV – NRS 86.286|
|AR – § 4-32-405||NH – § 304-C:41|
|CA – Corp Code 17701.10||NJ – § 42-2C-11|
|CO – § 7-80-108||NM – § 53-19-19|
|CT – § 34-243d||NY – § 417|
|DE – § 18-101 to § 18-1109||NC – § 57D-2-30|
|FL – § 605.0105||ND – § 10-32.1-13|
|GA – Title 14, Chapter 11||OH – § 1705.081|
|HI – § 428-103||OK – § 18-2012.2|
|ID – § 30-25-105||OR – § 63.057|
|IL – 805 ILCS 180/||PA – § 8916|
|IN – IC 23-18-4-4||RI – § 7-16-22|
|IA – § 489.110||SC – § 33-44-103|
|KS – § 76-7672||SD – § 47-34A-103|
|KY – § 275-180||TN – § 48-206-101|
|LA – RS 12:1319||TX – Sec. 101.052|
|ME – § 31-1521||UT – § 48-3a-112|
|MD – § 4A–402||VT – 11 V.S.A. § 4003|
|MA – Chapter 156C||VA – § 13.1-1023|
|MI – § 450.4308||WA – RCW 25.15.018|
|MN – § 322C.0110||WV – § 31B-1-103|
|MS – § 79-29-123||WI – Chapter 183|
|MO – § 347.081||WY – § 17-29-110|
LLC in USA Template
Following are some free downloadable templates for you.
Frequently Asked Questions
Does my Bank Account Need to be Opened in the Same State as my LLC?
The LLC bank account does not have to be opened in the same state as where the LLC is located. However, the bank should be operational in that state.
What if I already have an account with a bank that’s also in the US?
Depending on the bank, one can prove their identity through an affiliate bank in the country when opening an LLC bank account without physically visiting the bank in the US. However, the branch in the US must first approve of this before one can commence the process.
Can I work for my business in the US If I’m not a citizen?
No, unless one has a green card. However, working for the US LLC from another country is permitted.
What Business Entity Types Can Foreign Nationals Open in the US?
Other than LLCs, foreign nationals can form a C-corporation in the US. Unlike an LLC, a C-Corporation is a business entity and structure that is not eligible for “pass-through” taxation. This means the LLC has to pay taxes as an entity and its owner(s) has to pay income taxes for dividends received.
Does the legal address of my company have to be located in the US?
The legal address of the LLC does not have to be located in the US. It can be located in any other country. However, the LLC must have an American mailing address and that of the registered agent
Can my company’s name and address act as my registered agent?
Yes. Provided there is always someone present at the named location/address during all standard working hours to receive and forward pertinent government documents. However, this might be less feasible for foreign nationals, and thus, hiring a registered agent is recommended.
I already own a company in my home country. Can I name that company as the owner of my new American business?
Yes. The existing company must, however, be named as the managing member of the US LLC.
I already own a company in my home country. Can I create an American branch of my existing company?
Yes. However, the company in the US would be considered a branch of the existing parent company if at all there isn’t an established relationship between the two business entities. A relationship can be proven through internal resolutions or ownership.