North American LLCs are one of the best corporate vehicles for digital business entrepreneurs. The correct articles of incorporation, and the proper tax forms filed, will allow you to access a legal asset protection system and all the benefits related to a first-world jurisdiction, such as financial openness, reputation, banking, and commercial acceptance, and all this while maintaining a low tax rate.

Besides the "limited liability and asset protection in the name of an LLC," the following would be the 2 main reasons why you should consider registering it:

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FIRST: Reputation

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The United States remains one of the leading economies in the world. As a result, companies registered in its states enjoy a high level of global trust with banks, businesses, and financial institutions. In addition, your international customers will have no problem deducting invoices paid to a U.S. LLC.

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SECOND: Taxation

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An LLC registered by a "non-resident person" can earn "tax-free" profits from its international operations under the proper "advice of a qualified accounting firm" in the United States.

LLCs are "Flow-Through Entities" under U.S. tax laws and regulations. The tax liability of an LLC passes to the "member-owners of the LLC," who in turn may be individuals or corporations, non-residents, and non-taxpayers in the United States.

But even with this tax treatment for LLCs, you (under the right advice) must be careful that your digital business through an LLC is not considered to have an "economic or substantial presence" in the United States.

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In other words:

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Your LLC's business activities must have effects outside the United States.

For an LLC to be considered a "Flow-Through Entity," it cannot have "DEPENDENT AGENTS" such as employees or companies that provide services exclusively to the LLC (except "Administrative Services").

The LLC must not be doing business under the application of a "U.S. Tax Treaty" where it can be categorized as a "PERMANENT ESTABLISHMENT" with a formal "office" or "fixed place" of business within the United States.

If it does not meet these characteristics, an LLC created by an international "non-resident" obtains a "low tax rate," very convenient for managing international businesses, physical or digital (such as Affiliate Marketing, Monetized Platforms, Sale of Digital Products or Online Services, Copywriting, Dropshipping, among others).

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Important: We recommend that, when creating an LLC, you consult with a "Suitable Accounting Firm" in the United States to properly comply with the corresponding tax rules, depending on the type of business or digital venture you wish to carry out.

 

Tax Forms

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Although it is convenient to consider creating an LLC as a "non-resident" international entrepreneur, you should never forget that a US LLC must file tax forms "annually" to properly comply with the tax rules: form 5472 and form 1120. To do so, take into consideration the following:

• Have an EIN (Employer Identification Number) to file the forms.

• File the forms before April 15 each year to avoid penalties.

• Submit to your accountant "bank statements" of your LLC or "payment platforms statements" (Type: Paypal, Stripe, among others) for the correct filing of your annual return.

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Important: Fulfilling the corresponding tax forms with a competent accountant advisor in North America is advisable to avoid fines.