Quick check: which US business entity is best for me?

On this page we walk through a few simple example cases and situations, along with the US business entity that suits each one best. We assume that all US business entities offer the same liability protection. So the question of the best entity comes down mainly to tax.

1Case 1:

I live in a low-tax country or have a tax-exempt status such as non-dom, Beckham, etc. (UK, Ireland, Malta, Cyprus, Thailand, Dubai, Portugal, Spain and so on) and earn passive income outside the USA

Want a US LLC that stays tax-free in the US? Then our sister site zerotax.llc is the right place. It covers the LLC for owners who live outside the US and whose business does not take place in the US: no permanent establishment, no US tax on the profit. This site covers the opposite: companies that genuinely operate in the US, have a permanent establishment there and pay taxes in the US. Both are run by the same firm in Austin, Mount Bonnell Advisors.

2Case 2:

3Case 3:

I'm founding a startup in the USA (possibly with investor capital). Profits come second. I make my money at the exit (sale, IPO, etc.)

• C Corporation
• Tax on profits: 40-50%
• Tax on sale: 0-25%

4Case 4:

I live in the USA or plan to move there within the next 12 months

• LLC
• US tax on profits: approx. 30%

5Case 5:

I want to set up a US subsidiary for my EU company

• C Corporation
• US tax on profits: 21-30%

6Case 6:

I want to form a tax-transparent company, but my accountant has advised me against an LLC

• limited partnership
• US tax on profits: 25-35%

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7What does this quick check tell you?

Anyone looking to start a business in the USA asks the same first question: what's the best entity for my new venture?

Americans famously love the LLC and like to sell foreigners on this attractive entity too. Unfortunately, it isn't that simple, especially if you live abroad. The special case from case 1, the US LLC without a US permanent establishment, is the core focus of our sister firm zerotax.llc.

This quick check is extremely simplified. It is only meant to give you a rough indication of a possible solution. As always, the devil is in the details.

Learn more about the common US business entities on this page.

Let's be clear: a few questions can't replace a consultation. So we always recommend getting tax and legal advice before you form a US company.

When in doubt, we recommend forming a C Corporation. It can change its entity type later if that really becomes necessary. You'll find all our formation services at a glance under Formation.

In short

• The quick check assumes that all US business entities offer the same liability protection. Tax is the deciding factor.
• If you live in a low-tax country or have a special tax status and earn passive income outside the USA, the tax-free LLC is your fit.
• A startup aiming for an exit and the subsidiary of an EU company suit the C Corporation, living in the USA suits the LLC, and if you want tax transparency but shouldn't use an LLC, you form a limited partnership.
• The check is extremely simplified and doesn't replace a consultation. When in doubt, we recommend a C Corporation, which can change its entity type later.

How we help you

• US Company FormationLLC, Inc or LP in Delaware, Florida, California, New York, Texas or Wyoming.
• Form a CorporationThe US corporation (Inc) for growth, investors and your visa.
• Form an LLCThe US LLC with a permanent establishment, turnkey in six states.
• Form a Limited PartnershipThe US LP for structures with a general partner and limited partners.
• Tax structureA clean structure between parent company and US subsidiary, or between you and your US company, coordinated with your accountant.
• Company formation consultationEntity type, state and tax consequences, before you commit.