Remote work encourages many young professionals to work for foreign companies, either through a contract or as freelancers. This can be very beneficial, but it raises some concern when it comes to receiving payments. A US LLC can make it easier for non-resident service providers.
How to receive payments from a foreign company? When faced with the opportunity to start working for a foreign company, one of the first questions that comes to mind is: How do I receive the money?
That’s where the conversations with acquaintances and friends begin to find out which method is most convenient. Most of them will suggest well-known payment platforms such as PayPal or Pioneer, among others.
In certain cases, these can be a great solution, however, it is important to understand that these sites often charge high commissions to their users. When a contracted worker or freelancer starts receiving bonuses or larger payments, the money that slips away in payment platform fees can be truly unsettling.
The question then is: What solution exists to facilitate payment receipt and avoid huge commissions?
What is a US LLC?
An attractive option for many is the creation of an LLC in the United States. Why?
Because, a US Limited Liability Company (LLC), is a type of business entity that combines the flexibility of a partnership with the limited liability protection of a corporation. It provides personal liability protection for the owners’ personal assets.
Although this business structure was designed for US companies, it is also a great tool for non-resident workers and entrepreneurs.
LLC taxes for non-residents of the United States
Unlike U.S. citizens, non-residents do not have to pay taxes in the United States for their LLCs when they are not engaged in a US trade or business (ETOB). It can be complex and nuanced to determine if a foreign-owned LLC is ETOB or not. Speak to an experienced accountant about your situation.
In general, you will not need to pay taxes if you offer professional services from outside the US. This includes consulting, coaching, web development, etc.
Even when you don’t owe any US tax, you still need to file IRS tax form 5472 every year.
Additional benefits of a US LLC
Another advantage of having an LLC in the United States is that it allows you to open a bank account in the country. This facilitates receiving payments from foreign clients or companies. We can help you open a US LLC and business bank account remotely.
In addition, having an LLC in the United States can give potential international clients a greater sense of security and confidence in the service that is intended to be sold. This can be especially important if freelance jobs involve carrying out large-scale projects or if you intend to work with prestigious companies.
Why non-US residents should consider a US LLC
For a non-resident contract worker or freelancer in the United States who is looking to expand their business and work with international clients, an LLC in the United States can be a great option.
With benefits such as limited personal liability protection, tax advantages, ease of receiving international payments, credibility with international clients, and the possibility of opening a bank account in the United States.
We can assist you with setting up an LLC and opening a US bank account. Please reach out or schedule a consultation (indicate if you prefer Spanish over English, so we can route you to the right person).
Take your career or business to the next level by opening an LLC in the United States!
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