LLC
An LLC (Limited Liability Company) is a US business structure that separates your personal assets from business debts and lawsuits. It's the most popular choice for European founders launching US operations because it's flexible, tax-efficient, and requires minimal ongoing formality.
What is an LLC?
An LLC is a legal business entity registered in a US state. It creates a wall between you (the owner) and the business: if the company gets sued or owes money, your personal bank account and home are generally protected. This is "limited liability".
Unlike a Corporation, an LLC is not taxed as a separate entity by default. Instead, profits "pass through" to your personal tax return. You pay tax once, on your individual return, not at both company and personal level. This is called "pass-through taxation" and it saves money for most founders.
Why European Founders Choose an LLC
You don't need a US visa, Social Security Number, or green card to own one. Non-residents can obtain an ITIN (Individual Taxpayer Identification Number) in minutes online, then form an LLC in any state (Wyoming is popular because it's cheap and private). You can open a US business bank account and apply for a US business credit card entirely remotely.
Example: You're a German SaaS founder. You form a single-member LLC in Wyoming, get an ITIN and EIN (Employer Identification Number), open a Wise or Mercury account, and start invoicing US clients in USD. The LLC protects your personal assets. Profits flow to your personal German tax return, where you handle the crossborder implications with a local accountant.
Key Features
- Liability Protection: Personal assets stay separate from business debts.
- Pass-Through Taxation: Business income flows to your personal return. No double taxation.
- Flexibility: You can be the only owner (single-member LLC) or have partners.
- Minimal Paperwork: No board meetings, annual minutes, or complex filings like Corporations require.
- Remote Formation: Everything done online, no US residency needed.
LLC and US Tax Reporting
As a foreign-owned single-member LLC, the IRS treats you as a sole proprietor unless you elect otherwise. You file Form 1040-NR (non-resident alien income return) and attach Schedule C (business profit/loss). You'll also file Form 5472 (foreign ownership disclosure) even if you have zero income. This is informational, not a tax calculation, but missing it carries a $25,000 penalty.
If you have employees or want liability separation at the federal level, you can elect to be taxed as a Corporation (file Form 8832), but this is rare for bootstrapped founders and adds complexity.
How Founders Credit Helps
Forming an LLC remotely requires coordinating ITIN and EIN applications, choosing the right state, filing Articles of Organization, and ensuring tax compliance from day one. Founders Credit handles the entire process done-for-you: ITIN, EIN, LLC registration, banking setup, and a roadmap for ongoing filing obligations. Most European founders don't know about Form 5472 or the crossborder tax mechanics, so having expert guidance saves costly mistakes.
LLC vs. Corporation vs. Sole Proprietorship
| Feature | LLC | Corporation | Sole Proprietor |
|---|---|---|---|
| Liability Protection | Yes | Yes | No |
| Pass-Through Tax | Yes (default) | No (double tax) | Yes |
| Paperwork | Minimal | High | None |
| Cost to Form | $100-500 | $500-2000 | Free-50 |
| Best For | Most founders | Funded startups | Solo, low-risk |
Next Steps
If you're ready to launch a US business, start with an LLC in Wyoming or Delaware. Pair it with an ITIN and EIN, then open a Wise or Mercury account. File Form 5472 every year, even at zero income. Consider hiring a US accountant familiar with non-resident taxation, or use Founders Credit to navigate the setup and get initial compliance guidance.
Frequently asked questions
Can I form an LLC without a US address?
Yes. Most states accept a registered agent address (a service provided by companies like Registered Agent Inc.). You don't need to live in the US.
Do I need an EIN if I'm the only owner?
No, you can use your ITIN on business tax forms. But an EIN is free, protects your ITIN privacy, and is required if you have employees or want a business bank account. Get one.
Can I change from an LLC to a Corporation later?
Yes, but it's a conversion. Simpler to start as an LLC and add complexity only when needed (e.g., after funding).
What is Form 5472 and why does it matter?
Form 5472 reports that a foreign person owns the US LLC. It's informational (doesn't calculate tax) but is mandatory. Missing it triggers a $25,000 penalty.
Want this done for you?
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