As a non-US resident who wants to open a company that serves US consumers, you may have been advised to establish a Delaware limited liability company (LLC). While this isn’t the only way to start doing business in the United States, it offers many unique benefits and advantages.
In short, Delaware offers a clear path to LLC formation that is ideal for firm corporate structure and legal stability. This is primarily due to Delaware’s exemplary business law and financial systems, which are well-respected by US banks and investors for their fast and predictable processing decisions.
In some cases, the LLC regulations in Delaware are specifically friendly to non-US residents, limiting many of the hassles and expenses that go along with LLC formation. The process is far from automatic, but non-US residents can establish a Delaware LLC with very little complexity once they know what to expect.
With a bit of preparation and a few essential guidelines, you can realistically form an LLC in Delaware as a non-US resident by following a few relatively straightforward steps. In addition to answering common questions, this article will take you through each of the general steps that non-US residents must take to form a LLC in Delaware.
Delaware LLC non-resident: is it allowed?
A wide variety of non-US residents are permitted to establish a Delaware LLC. You do not need to be a US citizen or presently live in the United States to be an owner or a member of a Delaware LLC. However, all Delaware LLCs must have a Delaware registered agent with a valid address within The First State.
It is important to note that merely registering a Delaware LLC does not relieve its owners or members from full adherence to applicable tax laws, routine reporting regulations, and other compliance obligations at both the federal and state levels.
Why non-US founders choose Delaware
Experts commonly recommend Delaware LLCs for international business owners for a variety of reasons. Like all American states, Delaware permits full foreign ownership of LLCs. This means that LLC owners/members do not need to reside in Delaware nor physically operate their business out of Delaware.
Delaware sets itself apart from other states because it is a well-established jurisdiction that is widely recognized by prominent US platforms, investors, and partners. For many international entrepreneurs, this recognition makes Delaware a logical choice. Many online business services providers and financial payment processors are accustomed to working with Delaware entities.
That being stated, these are practical considerations, not guarantees. Establishing a Delaware LLC does not automatically resolve banking, tax, or compliance issues. It simply establishes a widely acceptable and legally viable business entity structure.
What you need before you form a Delaware LLC as a non-US resident
Before filing any documents, you must prepare a few basic essentials. By doing some careful work upfront, you can avoid costly delays later. In particular, it can be difficult to get a required Employer Identification Number (EIN) from the IRS without the proper preparation.
Important items to plan for include:
- Business Name Readiness: You will need to determine a name for your Delaware LLC that complies with Delaware’s naming conventions and has not been previously used by another Delaware LLC. Pre-checking name availability by doing a Delaware entity search prior to filing for registration will save you from filing and having those filings rejected.
- Registered Agent Requirement: Each Delaware LLC must have a registered agent with a valid, physical address in the State of Delaware. This is a mandatory requirement and not an optional service.
- Mail Address Planning: You will require a reliable mailing address to receive IRS notices and other forms of official correspondence. Failure to receive this type of correspondence can result in serious compliance issues.
- Ownership Structure Clarity: Decide whether the Delaware LLC will be a single-member LLC or a multi-member LLC. This decision will affect the internal operating agreement(s) of the LLC and may impact tax reporting obligations.
Having these elements established in advance will make the formation process easier and reduce potential miscommunication down the road.
How to form an LLC in Delaware as a non-US resident
When it comes to submitting a Certificate of Formation and performing other fundamental filing procedures to form a Delaware LLC, regulations are uniform for all filing parties regardless of owner/member location. Here are the unique aspects that non-US founders will need to consider:
Appointing a Delaware registered agent as a non-US resident
After choosing a unique name that includes “LLC” or “Limited Liability Company,” non-US founders of Delaware LLCs must appoint a registered agent with a physical address in Delaware. Regardless of whether a founder is a US citizen, the state of Delaware requires each LLC to have a registered agent who is physically located within the state. If you are a non-resident of the United States, you cannot act as your own registered agent unless you establish a qualifying physical address in the state of Delaware.
Although the registered agent’s responsibilities are limited, he or she is extremely important to the operation of the LLC. A registered agent acts as a contact for the LLC to receive official legal correspondence and other state-generated documents. Additionally, a registered agent ensures that the LLC has a valid in-state contact for service of process.
The purpose of a registered agent is to provide a legitimate in-state contact for official government and/or court correspondence. It will not necessarily double as a business address or mailing address.
Applying for an EIN as a non-US resident
An Employer Identification Number (EIN) is the unique identifier that assigned to your business by the Internal Revenue Service (IRS). International founders can complete the IRS Form SS-4 to apply for an EIN.
In many instances, an SSN (Social Security Number) or ITIN (Individual Taxpayer Identification Number) is not necessary to obtain an EIN for a foreign-owned LLC. However, the IRS will carefully check all provided information to ensure that it is both complete and valid. Therefore, you must complete the IRS Form SS-4 with absolute accuracy to avoid problems.
Delays due to EIN application issues are especially common among applicants from outside the United States. Because they often apply remotely, non-US resident LLC owners/members are prone to inaccuracies that can lead to application delay or denial.
The IRS will also look closely at non-US resident LLC owners/members to ensure that they have a reliable means of receiving mail. As the owner of an EIN, you may receive correspondence from the IRS regarding your EIN, tax forms, or compliance notifications. Failure to receive this communication may result in unnecessary issues with the IRS.
Planning for Delaware’s ongoing obligations from abroad
Establishing an LLC is merely the beginning of the business ownership odyssey. Regardless of where the owner resides or conducts business, the State of Delaware charges an annual LLC tax that you must be sure to pay. Non-US resident LLC owners/members must take extra precautions to keep open lines of communication with the State of Delaware for this reason and others.
As a non-resident of the United States, you will need to plan for the following:
- Annual Delaware LLC fees.
- Annual registered agent renewal.
- Other compliance requirements of the LLC while operating internationally.
These requirements apply to all LLCs, even those with limited business activity or no business activity at all. Establishing reminders and maintaining organized and accurate records will assist in ensuring timely compliance.
Understanding federal reporting requirements for foreign-owned LLCs
International owners of LLCs are often subject to federal reporting requirements, even if the LLC generates little or no income. For instance, certain foreign-owned single-member LLCs may need to file Form 5472 in conjunction with a pro forma Form 1120. These reports document the transactions among the LLC as a whole, the foreign owner, and/or related parties of the LLC.
Because federal reporting requirements can vary considerably according to the type of LLC you are operating and the specific activities of that LLC, these requirements can be quite tricky to navigate. Therefore, non-US resident LLC owners/members should seek the advice of a competent tax advisor with knowledge of both US and international business reporting.
US business bank accounts for non-US residents
Many non-US resident LLC founders incorrectly assume that establishing a Delaware LLC will automatically allow them to open an LLC business bank account in the United States. Actually, obtaining a US business bank account can be quite complex and unpredictable for non-US residents, even after they have established a Delaware LLC.
In short, establishment of a Delaware LLC does not ensure final account approval from a bank. Each bank has its own policies and requirements for opening a business account, and these requirements tend to change over time. Some banks will only approve accounts if the owner appears in person, and different banks will inevitably have different documentation requirements.
Typical documents needed include owner’s ID, proof of address, company formation forms, and your EIN. Some non-US resident LLC founders choose to utilize online financial institutions, while others prefer traditional banks. Regardless of the approach you take, approval is never guaranteed. Therefore, planning for alternative methods of approval is essential.
Do you really need a Delaware LLC as a non-US resident?
Delaware is popular for LLC formations due to its familiarity, flexibility, and reputation for being favorable to businesses; however, it is not the only option available to international founders. Other US states may be better suited for your situation depending on:
- Where your customers are located.
- Where your contractors or employees are located.
- Your platform, partner, and marketplace requirements.
In some instances, forming the LLC in the state where the business is operated is easier than forming the LLC in another state. Overall, Delaware offers many distinct benefits for non-US resident LLC founders, but it should not be the default choice in all cases.
Getting set up the right way before you start operating
Stress organization and clarity from the very earliest stages of your business start-up to build a strong foundation that can support ongoing success. From structural planning to paperwork processing, you should strive for long-term readiness as you prepare, identify, obtain, and/or consolidate all the following:
- Clear LLC structure and ownership documents.
- An EIN from the IRS.
- Operational business information and documents.
Throughout all these processes, you should strive for meticulous record-keeping. You should also keep your business finances entirely separate from your personal finances.
Fortunately, business-building platforms like Tailor Brands make the process significantly easier by handling company formation, organizing essential documents, and helping manage ongoing compliance requirements. While no service can guarantee bank approval, specific tax outcomes, or long-term business success, Tailor Brands provides the tools, guidance, and infrastructure founders need to start strong and stay on track. Ultimately, results depend on each company’s unique circumstances and how the business is managed over time.
Conclusion
Non-US residents can legally form a Delaware LLC with limited hassle and expense if they approach the process in a step-by-step manner. Many non-US resident founders consider the state an attractive location for their US companies due to the universally recognized status and flexible benefits of Delaware LLCs.
Delaware has earned a reputation as a great place to establish an LLC for many good reasons. However, different companies might find different states equally or even more attractive for a range of banking, tax, and compliance purposes. No matter where you ultimately locate your LLC, thoughtful set-up and professional guidance are essential.
FAQ
Yes. You don’t need US citizenship or residency to own a Delaware LLC, but you must appoint a registered agent with a physical Delaware address.
Delaware is widely recognized by banks, investors, and platforms and is known for business-friendly laws, which can make the entity more familiar and easier to work with.
Usually, yes. Non-US owners can apply for an EIN using IRS Form SS-4, and you may not need an SSN or ITIN, but accuracy and reliable mail access matter.
You’ll need to pay Delaware’s annual LLC tax, keep your registered agent active, and stay on top of required state and federal filings.
No. Bank approval varies by institution and may require specific documents or even an in-person visit, so it’s important to plan ahead and have backups.