We tried to compile all the details you need to know about LLC, a business structure specific to the United States.
What is LLC?
LLC Company Formment
LLC Company Taxation
Thanks to this guide, you will learn all the details you need to know before forming an LLC company in Usa.
LLC Company Definition
Let's start our guide with the definition of LLC, and then we will continue by touching on other details about LLC.
What is LLC?
LLC is a US business structure that stands for Limited Liability Company. LLC stands for: “ Limited Liability Company ”. LLC can be translated into our language as a limited liability company.
LLC is a business structure that can combine the direct taxation of a joint business structure or sole proprietorship with the limited liability of a corporation. This business structure, which we often call an LLC company, is not actually an llc according to US state laws. LLC is the legal form of a corporation.
Why is an LLC Company Formed?
A Limited Liability Company also called an LLC , is a business structure that protects the personal assets of its owners (home, car, real estate, property, or personal bank accounts) in the event of possible lawsuits against a business.
Forming an LLC can have multiple purposes.
We can divide them into two: those living in the USA and those living outside the USA.
Why Do People Living in the USA Want to Form an LLC Company?
The main reason for those living in the USA to form an LLC company is to protect personal assets.
Individuals can create a protective wall between their business and personal assets (real estate, vehicles, boats, planes, bank accounts, etc.) by forming an LLC in their state.
If someone sues the LLC company, they can only go after business debts and trade receivables.
Personal assets and real estate are secured.
Personal assets are not considered a business part of a business. Without forming an LLC, one's personal assets are at risk if one's business is sued.
People living in the USA can form an LLC company to protect their assets as well as to conduct business.
Trade can be of any type, for example; It can be a shop, a physical store or an e-commerce business.
Purpose of Forming an LLC Company for Those Who Do Not Live in the USA
Trade is the primary reason for those who do not live in the USA (non-US citizens, foreigners in another country) to form an LLC in the USA.
This business could be a remotely operated physical store, a branch in the US, or an online E-commerce business.
Recently, many entrepreneurs from Turkey have been forming LLCs in the USA, especially for Dropshipping, Amazon FBA, Etsy, Ebay or digital product-service trading.
Another reason why people outside the USA form an LLC is for tax convenience, easy payment by credit cards from abroad, and the ability to transfer the income from their business there to their country via a bank account.
LLC Owners
The owner of an LLC is called a member.
- An LLC can be owned by a single person. This type of structure is called a single-member LLC (Single-Member LLC).
- LLC can also have a structure with partners owned by more than one person, and this is called multi-member LLC (Multi-Member LLC).
How to Form an LLC Company?
LLC companies are formed by filing an application form with the U.S. state Department of State or designated department and paying a one-time filing fee.
In the US, each state has a one-time filing fee for LLC formation.
These fees vary by state.
Cost of Establishing a Company in America page, you can find the establishment costs and standard annual fees for all states in the USA.
also our 50 states page for details such as state-by-state taxes, installation procedures and annual payments.
LLC and Corporation
The terms LLC and company are often confused. LLC is a Limited Liability Company, ending in Company. But the real company is Corporation. So Company and Corporation mean different meanings at this stage.
Most of us use the term LLC company, but there is no such thing as an LLC company. It must be specified as either LLC or Corporation.
LLC? Or is Corporation (C-corp) better?
LLC and Corporation have different characteristics, let's mention some of them.
- LLCs do not elect a board member, but in a Corporation structure, a board member must be present.
- LLCs do not hold board meetings, but Corporations do.
- LLCs are not required to keep records of their meetings, but in a Corporation structure, every meeting must be recorded.
- LLCs are exempt from double taxation Corporations are not.
- LLCs enforce decisions as they wish, but a Corporation cannot do so as easily as an LLC.
LLCs are the best choice for small businesses, e-commerce traders, foreigners, and especially entrepreneurs.
LLC Company Formation Costs
Forming an LLC is less expensive than a Corporation structure. To form an LLC, you just need to pay a Registered Agent fee and a state filing fee.
LLC company formation costs range from approximately $90 to $200, depending on the selected state. Even if you live outside the USA, you can easily form an online LLC remotely.
LLC Company Advantages
LLCs do not require much expense and maintenance compared to Corporation type structures.
After forming an LLC, there are a few routine steps that need to be taken to keep this structure afloat.
There is no need for anything else extra. We can list them as follows;
- Annual report and fee: Reporting must be made to the state annually. Many states require fees for annual reporting. These fees vary by state. here . State reporting can be done quickly with easy payment tools on all states' websites.
- Registered Agent fee: You can form registration agents that represent your company in the USA and keep your company healthy. These agencies receive address and agency fees on an annual basis. These fees average around $125.
How to Form an LLC Remotely in the USA?
In fact, after planning from the beginning and making some decisions, you can apply for an LLC in 10 minutes through a registration agency.
In total, the LLC will be established within a few days. The establishment process of an LLC is explained step by step in the Establishing a Company in America (Wyoming state) To put it even more simply, the process works as follows:
- First you must choose a state. There are many states in the USA and each state has its own laws. Additionally, LLC formation fees and annual reporting costs vary by state. Detailed information is available at this link
- After selecting the state, you must determine the name of your company. Names already in the state database may be the same as the name you selected. So do a search on your planning state's website and perform a name check. also Choosing the Name for the LLC Company .
- Choose a Registered Agent (LLC is the legal institution that provides company formation services). There is a lot of information and pricing on our website about which one to choose, on this page . Northwest is generally preferred.
- After choosing a Registered Agent, you can apply through the website of the company you have chosen (the Registered Agent site).
In addition, after the LLC establishment, you need to obtain an EIN (Federal Tax Identification Number) for your LLC company in order to open a bank account and get a virtual POS (stripe) in the USA. The EIN is issued free of charge by the US Internal Revenue Service (IRS). the Getting an EIN Number from America to get an EIN for free .
14 Comments . New Comment
Hello,
We previously established a company as Single Member (Disregarded Entity) LLC through Northwest. We received an EIN number from the IRS. Now we want to establish a Multi Member LLC. What path should we follow that is different from Single Member LLC? What action needs to be taken, especially on the IRS side.
Please provide information.
Thanks
Hello,
When ordering through Northwest agent, you will only need to add a member.
On the IRS side, we will make your eIN application and send your application as multi member llc.
I have an LLC company formed in Delaware in May 2021. I didn't do any business and I didn't pay any taxes. I don't have a bank account or anything, so there's nothing they can take from me. Closing it seems too costly and pointless due to state taxes. Does it have to be self-classified after 3 years?
If you have never made any annual payments in the state, your company has probably been administratively dissolved. If you registered and traded in banks or platforms with your EIN number, it would be beneficial to file your tax return and cancel your EIN number.
Hello, can the fields of activity be changed later when forming an LLC? Is it possible to add? If an addition is made, how long does it take and is there any cost?
Hello,
In LLCs, no field of activity is selected during formment, there is no such situation. You can do any type of business with an LLC, but if a final tax return is to be submitted, accountants ask about their fields of activity, and accordingly, the relevant field is marked and reported to the IRS.
Hello, I applied for an LLC company, my application was approved and I was sent 3 initial filings and 1 filing document. Do I need to keep them or do I need to sign them etc. or do anything else? I would appreciate it if you could give me detailed information about this. Have a nice day.
Hi, just keep it you don't need to sign and send it back
Hello,
LLCs are exempt from double taxation, what do you mean? So only the resident country taxes it?
Corporations do not pay double taxes in the United States compared to companies. Corporation type companies are taxed both as an llc and their shareholders pay income tax. Accordingly, only the company shareholders pay taxes for LLCs.
Hello,
First of all, thank you very much for the information! I don't know if you have additional information about Amazon, but I would like to ask something if possible. I am currently an Amazon seller. In order to avoid any tax problems, I plan to set up an LLC company after 1-2 months, switch to a business account on Amazon, get a tax number and transfer it to Amazon. Recently, it has been stated in various groups that Amazon is demanding a utility bill. Do you have any news or information? Also, if the company has 2 partners, will there be a difference in terms of procedure, operation and costs? Thanks
Hello,
we have a detailed guide on this subject, you can follow this link. Amazon does not want utility bills anymore. We recommend that you establish your company in Wyoming for Amazon. https://startupsole.com/amazon-icin-amerikada-sirket-kurmak/
Also, the comments under the topic in the link will be useful for you. The two-partner structure can eliminate the tax advantage of LLCs, so it is beneficial to establish a single-member LLC whenever possible.
Hello,
First of all, thank you for your detailed information. There is a double taxation agreement between the USA and Türkiye. When I establish an LLC in the USA as a resident of Turkey, do I have to pay all my taxes, including income tax, in the USA or can I also declare and pay taxes in Turkey?
Hello, income tax is paid in the USA, but in some cases, some of it can be paid in the USA and some in Turkey.
There may be many variables depending on your business type, income source and turnover amount.
For more detailed information, you can get consultancy from a consultant by explaining your business model.