If you’re planning on doing business in the United States, you’ll need to set up a corporation or a limited liability company (LLC) if your business is built on that model.In general, the more people who are required to open an LLC or corporation in order to do business in the United States, the fewer people it’s going to be easy for the government to shut down.
There are some circumstances under which it might be easier for the government to force an American business owner to start an LLC than for another company based abroad.
Different Types of Limited Liability Companies in the United States
A limited liability company (LLC) is a business entity that is owned by and operated for the benefit of the owners, rather than by shareholders. When people talk about ‘incorporating’ or ‘incorporating’ a business, they usually mean that they’re setting up an LLC to operate as a business.
Some state laws allow anyone who has met the requirements to form an LLC in that state. The most common types of LLC in the United States are the general partnership, the limited liability partnership, and the limited liability company.
How to Start an LLC in the United States?
There are many online forms you can use to complete the paperwork and start the company structure process. You can also call a customer service number to speak with a representative who can assist you in setting up your new business. Some states, like California and New York, also offer free online services for the general public to form limited liability companies.
Step 1: Choose a Name and Register It
Begin by selecting a unique and compelling name for your LLC. Ensure compliance with the naming regulations of the state where you plan to start an LLC. Register the name with the appropriate state agency to secure your business identity, similar to the procedures followed during private limited registration.
Step 2: Choose a Registered Agent
In the US, each LLC must have a registered agent who handles all legal and business correspondence. Employing a registered agent service guarantees compliance and prompt document handling.
Step 3: Prepare an LLC Operating Agreement
Although not mandatory in all states, having an LLC operating agreement is highly recommended. This agreement outlines the ownership structure, member responsibilities, profit-sharing, and decision-making processes within the LLC. Seek legal assistance or use online resources to draft a comprehensive operating agreement.
Step 4: File LLC Articles of Organization
File the necessary paperwork, commonly known as “Articles of Organization,” with the state agency responsible for LLC formation. Provide required information such as the LLC’s name, registered agent details, and business purpose. Pay the filing fee and submit the documents following the state’s guidelines.
Step 5: Get an EIN and Bank Account
Obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). An EIN is crucial for tax purposes and allows you to open a business bank account. Maintaining a separate bank account for your LLC ensures clear financial separation and simplifies accounting.
Step 6: Obtain Business Licenses and Permits
Depending on your business and location, specific licenses and permits may be necessary. Research federal, state, and local requirements to ensure compliance and avoid legal issues.
Step 7: Get Tax Advice and File any Required Forms
Consult with a tax professional experienced in international tax laws to understand your tax obligations as an Indian entrepreneur start an LLC in the US. They can guide you on federal, state, and international tax requirements. Timely filing of all necessary tax forms and payments is essential.
Other Important Tasks When Creating an LLC
Besides the main steps, several other important tasks require attention during the LLC incorporation process. These include obtaining business insurance, drafting contracts and agreements, establishing an online presence, and developing a marketing strategy, similar to the comprehensive approach needed for company registration online in India.
Types of LLCs to Consider
Explore various types of LLCs available in the US based on your business goals and requirements. Options include single-member LLCs, multi-member LLCs, series LLCs, and professional LLCs. Research and consult professionals to determine the best fit.
How Is an LLC Taxed?
LLCs typically enjoy flexible taxation options. By default, they are treated as pass-through entities, with profits and losses flowing through to the owners’ individual tax returns. Consulting a tax advisor will help you select the most beneficial tax structure for your LLC.
What Are the Advantages and Disadvantages of Set Up an LLC in the United States?
There are a few advantages to start an LLC in the United States
- One of them is that it’s often easier for a business to get started than a traditional corporation. Depending on your unique situation, this may be a big plus or a minor one
- Another advantage is that your personal assets are protected by limited liability, so if any of the owners in an LLC die or become disabled, you won’t be personally financially responsible for the company’s debts. These things also apply to the LLC’s assets, as well.
Can an American Business Be Required to Start an LLC in the United States?
The answer to this question is complicated, depending on your circumstances. In general, no. There are a few special cases where the government might force a business to start an LLC in order to do business in the United States, but those will be discussed below. Note that there are also some state-specific requirements that apply to the formation of LLCs.
Pros and Cons of Being Required to Start an LLC in the United States
There are several advantages to being required for an LLC USA incorporation, including the following: It’s often easier to form an LLC in the United States than in a foreign country. You’re allowed to use the name of the person who set you up as the LLC’s legal name. If you close your doors for a period of time and lose touch with the outside world, it’s unlikely that the IRS would be able to trace your LLC back to you.
How to Determine if Your Business Is a Good Fit for Start an LLC in the United States
If you’re unsure whether or not your business is a good fit for Start an LLC in the United States, it’s a good idea to get some guidance. LLC experts can help you determine if your proposed business is worth the effort and expense. Here are a few things to keep in mind:
- Is your business idea unique?
- If not, there are plenty of other startups with interesting ideas who’ve failed but you haven’t
- Have you done market research to determine what type of business you plan on running?
- Have you interviewed investors who might be interested in seeing your business model?
- Do you have a specific market to serve?
FAQs on Start an LLC
How much does an LLC cost in California?
Forming an LLC in California incurs filing fees and other expenses, typically amounting to a few hundred dollars.
Do you have to pay the $800 California LLC fee the first year?
Yes, the $800 California LLC fee is due in the first year, regardless of when the LLC is formed.
Where should I form my LLC?
The choice of state to set up a LLC through incorporation depends on factors such as tax considerations, business-friendly regulations, and your specific needs.
What are the 4 types of LLC?
The four types of LLCs include single-member LLCs, multi-member LLCs, series LLCs, and professional LLCs.
How does LLC liability protection work?
LLC liability protection shields the owners' personal assets from the business's liabilities and debts, limiting personal financial risk.
How much money should you start an LLC with?
The required amount to start an LLC varies depending on your business plans, industry, and location. Consider initial capital, operating expenses, and marketing costs.
Is owning an LLC worth it?
Owning an LLC can provide several benefits, including personal asset protection, tax flexibility, and ease of management, making it a worthwhile option for many entrepreneurs.
What is the UK equivalent of an LLC?
The UK equivalent of an LLC is a private limited company (Ltd). If you want to start an LLC in the UK or US get in touch with the experts at Vakilsearch.
Summing Up
In conclusion, incorporating an LLC in the US as an Indian entrepreneur offers numerous advantages. By following the outlined steps and seeking professional assistance from Vakilsearch’s US company incorporation services, you can start an LLC confidently.
If you’re planning on doing business in the United States, you’ll need to set up a corporation or a limited liability company (LLC) if your business is built on that model. You can do this through an online forms tool or by calling a customer service number to request instructions. Either way, you’ll need to provide certain information before being able to proceed with the process.
In general, the more people who are required to open an LLC or corporation in order to do business in the United States, the fewer people it’s going to be easy for the government to shut down. That said, there are some circumstances under which it might be easier for the government to force an American business owner to start an LLC than for another company based abroad. You can reach out to us in Vakilsearch now for any queries!
