Starting An LLC in Nevada: A Guide For Non-US Residents

One of the great assets of Nevada is that it’s a business-friendly state open to foreigners.

Non-US citizens can register a limited liability company (LLC) in Nevada without needing a green card. After registering, they can easily operate their Nevada LLC and enjoy all the state’s benefits, like low tax rates and manageable compliance requirements. 

Ultimately, LLCs are relatively straightforward to organize. Still, if you need help finding out whether this entity is right for you, we can lend a hand. This article will explore the benefits of registering an LLC as a non-US citizen and how foreigners can open an LLC in Nevada.

Advantages of A Non-US Resident LLC

There are five commercial and practical benefits of organizing a non-US resident LLC.

Benefit #1: Liability Protection

When non-US citizens register LLCs, they gain personal liability protection. LLCs separate a foreigner’s personal assets from their venture. And by doing so, the owner’s home, car, and savings are protected should the company be sued.

Without personal liability protection, a business owner can be held accountable for offenses like fraud and negligence.

Benefit #2: Eliminates Double Taxation

Another excellent advantage of forming an LLC is that it prevents companies from being double-taxed by the IRS.

Typically, corporations are taxed both at the entity and individual levels. But because LLCs are pass-through entities, their profits go straight to their owners, who pay their individual taxes.

Benefit #3: Ownership & Management Flexibility

Ownership of an LLC is not limited to one non-US resident. An LLC can have several owners called “members,” ranging from individuals to IRAs. When it comes to managing their operations, they have several options to explore.

Members can manage it or create a management structure with a board of directors or corporate executives. Additionally, they can hire a non-member manager to handle their day-to-day operations.

Benefit #4: Easy Formation

LLC formation for non-US residents is more challenging than forming sole proprietorships. But they’re still not as complex as most people think.

Foreigners only need to file a few documents. If they find the process too challenging, they can always seek the help of a business formation specialist.

Benefit #5: Lower Fees

More often than not, non-US resident LLCs often come with lower fees, unlike other business structures, such as corporations. These lower fees can include registration costs, annual renewal fees, and ongoing compliance expenses.

Some jurisdictions also offer tax incentives or reduced tax rates for foreign-owned LLCs, further reducing the overall financial burden for non-US residents.

How to Open A Non-Resident LLC in the US

Step 1: Decide Where to Incorporate 

This decision will largely depend on factors like specific business requirements, tax implications, and legal considerations. Different states within the US offer varying business-friendly environments and regulatory frameworks. 

Some popular states for non-resident LLC formation include Nevada and Wyoming due to their business-friendly regulations and favorable tax laws.

Step 2: Choose a Name for Your LLC

The LLC’s name should comply with the regulations of the state where you’re incorporating and should not already be used by another business entity. Most states require the LLC name to include the phrase “Limited Liability Company” or its abbreviation (LLC or L.L.C.).

Make sure your desired name is available and not already in use by another business. You may also need to reserve the name for a certain period before filing your formation documents.

Step 3: Determine Your Non-Resident Alien Status

This particular step is especially important since non-US resident LLCs can avoid paying income taxes. However, the provision only applies if a business owner resides in countries not required to pay their federal income taxes in the US.

If members of an LLC want to avoid filing tax requirements to the IRS, they need to ensure each one has a non-resident alien status.

The IRS considers foreigners non-resident aliens if they are not the following:

• A US citizen
• A permanent US resident with a green card

Step 4: File & Pay for Formation Documents

LLC formation in Nevada requires you to file and pay these forms with the Secretary of the State. The documents may include your LLC’s Articles of Incorporation, List of Managers, and List of Officers.

Your formation documents will serve as the formal record of your Nevada LLC’s existence. Once the Secretary of State approves your application, you can apply for your business license.

Step 5: Look for a Resident Agent

Nevada doesn’t necessarily require you to have a local address when organizing an LLC. However, you will need a resident agent to handle important legal and tax documents like the Service of Process or Notice of Litigation.

These documents initiate lawsuits and other important state mail like annual reports or statements. Moreover, having a registered agent is a prerequisite to your next requirement.

Step 6: Apply for an LLC Employer Identification Number

Every business entity in the country must have an official tax identification number or a tax ID.

Residents typically have their Social Security number (SSN). In contrast, non-US residents registering an LLC must apply for an Individual Taxpayer Identification Number (ITIN) or an Employer Identification Number (EIN) to the IRS.

We suggest completing an IRS Form W-7 and submitting it via email or mail.

Step 7: Open a US Bank Account

Once you have a tax ID, you can open a US bank account.

Bear in mind that the requirements for opening a business account might vary from one bank to another. But they usually ask for your incorporation documents, your EIN, and two pieces of photo identification, such as your passport or ID.

A local bank account will help you pay bills and invoices. Additionally, they can aid in managing merchant accounts and creating payment processors.

Step 8: Draft an Operating Agreement

While not always required by law, drafting an operating agreement is highly recommended for LLCs as it outlines the ownership structure, management responsibilities, decision-making processes, and other important aspects of the business. The operating agreement serves as a roadmap for how the LLC will operate and can help prevent member disputes. 

A comprehensive operating agreement can help protect your interests and clarify expectations among members. Work with a legal professional experienced in business law to draft an operating agreement based on your LLC’s specific needs and requirements.

Taxation for a Non-Resident Owner of a US LLC

Non-resident aliens are subject to different tax rules than US citizens or residents. The taxation of LLC income for non-residents depends on whether the LLC is engaged in a US trade or business. If the LLC conducts business activities within the United States, its income may be subject to US federal income tax, as well as any applicable state taxes.

However, the taxation may differ if the LLC’s activities are purely passive, such as rental income from US real estate. Non-resident owners should also be aware of any tax treaties between their home country and the United States, which may affect the taxation of LLC income and provide opportunities for tax relief or exemptions. 

Register Your Non-US Resident LLC Today

Ultimately, the process of LLC formation for non-US residents in Nevada is pretty straightforward. But if you need more help working through each requirement, NCH’s business formation specialists are here to support you.

Our LLC formation services for Nevada provide non-US residents with a comprehensive legal and financial assessment. NCH’s legal representatives and formation specialists are trained to provide foreigners with a smart and safe option for business formation in the US.

To learn more, contact NCH today at 1-800-508-1729.

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.