Establishing a Company in the United States LLC

One of the most common ways to start a business for the Israeli investor is to establish a company in the United States.  The easiest and cheapest solution is to set up an LLC.  A common mistake is to mix the terms LLC-Limited Liability Company together with the free translation company Ltd.

It should be understood that these are two different concepts.

What is an LLC?

LLC is a business structure established under state law. he  Integrates the benefits of separating entities that exist in corporations.  The structure also combines individual taxation rates and the flexibility to do business that exists in partnerships and small businesses in the United States.

LLC can be composed by  Individuals, companies  And foreign entities. Also, there is no limit to the amount of owners, who are called "Members".

The LLC grants legal protection in the United States to its members. When there is  Financial liability of the LLC towards a particular party, there is protection of the private property of the owner of the LLC.

In fact, LLC is a transparent entity for tax purposes.  That is,  In terms of income tax in the United States, there is no separation between owner and LLC.

Establishment of a company  LLC  In the United States, it is done in accordance with the regulations and laws of the various states in the United States.  In order to establish the entity, the following steps must be taken:

  1. Submit an Article of Organization

  2. Sign an Operating Agreement

  3. Pay an annual fee each year to maintain the rights of the LLC.

The incorporation document will include the full details such as: business name, address, representatives and members of the entity.

  • The more complicated the business structure, the more documents will be required and the establishment of the company in the US will become more complex.

After establishing an LLC, there are defaults for classifying the entity, which depend on the number of members:

  1. Single-owned LLC - will automatically be considered a transparent entity for tax purposes (Disregarded Entity) and will submit a personal tax return every year 1040NR.

  2. LLC owned by many - will automatically be considered an American partnership and will be required to file a partnership report every year 1065, in addition to personal tax returns 1040NR.

In the case of incorporation as a partnership , there is a statutory obligation to deduct withholding tax for foreign partners, those who are not U.S. citizens or U.S. residents, at the highest marginal tax rate of 39.6%.  In this method, the U.S. Internal Revenue Service (IRS) is entitled to enforce the obligation to file tax returns by foreign investors, as they are entitled to tax refunds and will voluntarily submit the reports to the United States.

Establishing a company in the USA - Opening an LLC is part of the services of the TAX4US firm that accompanies us and will be happy to assist you in this matter and in other aspects of the world of taxation in the USA.