Limited Liability Company Center
Can a Non-Resident of the United States Form or Own an LLC?
Generally, there is no restriction in state LLC laws that limit who can form a limited liability company or who can own a membership interest in an LLC. A non-resident of the U.S. is free to form an LLC under the laws of any state he chooses. Similarly, an entity based outside the U.S. may form and own a limited liability company in the United States.
Further, there is no requirement that the activities of the LLC be managed from within the United States or even that its activities be conducted within the United States. A foreign individual can form and operate his LLC from wherever he happens to be.
Although a non-resident of the U.S. can form and own an LLC generally, there are some restrictions on ownership of certain entities under various state laws that may restrict ownership for reasons other than citizenship or residency. For example, state law may require that all members of an LLC engaging in the practice of medicine be licensed physicians in that state or all members of an LLC engaging in the practice of law be licensed attorneys.
In addition, some requirements, such as obtaining a Federal Employer Identification Number (FEIN) from the Internal Revenue Service (IRS), are more complicated if the only members are non-resident aliens. The application for the FEIN, Form SS-4, requires the name and taxpayer identification number for one member of the LLC. The taxpayer ID for U.S. citizens is normally their social security number, which an non-resident alien would not have. In order to complete Form SS-4 and receive an FEIN for the LLC, a non-resident alien would need to obtain an individual tax identification number (ITIN) prior to submitting the Form SS-4.
S Corporation Election not Available
Even though a non-resident of the United States can own an interest in an LLC formed in the U.S. there is one caveat that must be noted. Frequently, members of an LLC find that they can reduce their overall tax burden by electing to have the LLC treated as an S corporation for Federal tax purposes. (see Should Your LLC Elect to be Treated as an S Corp? ) To elect S corporation treatment, the LLC must meet all of the same restrictions that a corporation must meet. One of those restrictions is that no members of the LLC can be non-resident aliens. Therefore, having even one member who is non-US resident and not a citizen of the United States will prevent the LLC from electing to be treated as an S corporation.
This article was written by David K. Staub. a mergers acquisitions attorney and frequent writer and speaker on limited liability companies. The site is for educational and informational purposes only and does not constitute legal advice. The information which is presented here is intended to make limited liability companies easier to understand, but weighing the tax, liability and operations issues requires a thorough understanding of the applicable law and cases. Anyone contemplating forming a limited liability company is urged to obtain proper legal advice.