When you are looking to grow and protect your small business and assets, one of the first moves is to form a Limited Liability Company (LLC). The next question you may need to answer is whether you want to form a domestic LLC or a foreign LLC depending on how you want to conduct your business.
Let’s say you are a non-United States citizen who is looking to form an LLC in the U.S. What do you do then?
Don’t worry, we’ve got you covered on everything involving the difference between foreign, domestic and international LLCs. Oftentimes, people can get easily confused on the differences between LLCs and what is the correct one to establish for their business. Our goal is to help eliminate some of that confusion and bring your clarity. Let’s get started.
Domestic vs. Foreign
What is the difference between a domestic LLC and a foreign LLC? To begin with, a domestic LLC operates solely in the state where it was organized, whereas a foreign LLC is may be operated in a different state than the one it was organized in.
I know what you must be thinking, doesn’t the term “foreign” mean international? The answer is no. Foreign in this case simply means that the place you are conducting your business is outside of the one in which you organized the business.
Foreign vs. International
Having an international LLC is completely different, although the process is similar. A non-U.S. citizen is able to form an LLC in the U.S. just like a U.S. resident can. You do not need to be a citizen or have a green card to own an LLC formed in the U.S. If you are thinking, how is this possible? Well, that is a great question!
When you register for your LLC, you have to list a registered agent and a mailing address within the U.S. along with other tasks. This allows you to form your LLC in the U.S. Incfile can assist you with forming your LLC even if you are a non-U.S. citizen. After your LLC is established, it is at this point that you need to open a bank account in the U.S., as well as obtain a tax identification number (EIN).
More About Non-U.S. Citizens and LLCs
This is where the tricky parts comes in. There is a unique process for how the Internal Revenue Service (IRS) processes these foreigner requests. To apply for an EIN, you can do so by telephone. The number you need to call is (267) 941-1099 and unfortunately this is not a toll-free number.
You have to call between 6:00 a.m. and 11:00 p.m. Eastern Time (ET) Monday through Friday. But before you waste some time on the phone, be sure that you are the one who is authorized to receive the EIN and answer questions about the Form SS-4, Application for the EIN.
Annual Tax Returns
Once you establish your LLC in the U.S. as a non-U.S. citizen, you will have to file an annual tax return (IRS Form 1120 or 1120S) using your EIN so keep this handy when you are filing. You may also have requests to review your business within the state you organized in. Check in with the state you are organized in since it may vary from state to state.
Keep in mind that even if you own a domestic of foreign LLC, you still will have to file an annual tax return and use an EIN when you file.
Need More Help and Information When it Comes to LLCs?
Still having trouble understanding foreign, domestic, and international LLCs and everything they entail? Incfile can assist you each step of the way to ensure you are forming the correct LLC properly.