First, it is important to distinguish between two setups for forming an LLC described on this page. Here you will find out which one applies to you and what to consider in each case.
1. With residence in the USA: The first setup for the LLCs we form as described in the services on this website is a trading US partnership with a permanent establishment in the USA, whose profits are taxed in the USA. The maximum tax rate is 29.6%, and in many cases it is much lower.
This option only makes sense if you live in the States or genuinely plan to move there. Otherwise the structure is far too complicated. You can find more on your visa options for moving to the USA here.
2. Without residence in the USA: This is the second way to structure your US LLC. It is designed for business with no ties or connection to the States. If you, as the owner, live in a non-dom country such as Ireland, Malta or similar (the UK abolished its non-dom regime on 6 April 2025), where foreign income is not taxed, this option is right for you.
Who is our offer for?
Again, we need to distinguish between the two setups:
1. WITH residence in the USA
Our LLC offer for this option is aimed mainly at entrepreneurs who are not fully taxable in their home country, who want to build a real business in the USA and expect revenue of at least $250,000 a year in the near term (if you are fully taxable at home, you may be better off forming a US Limited Partnership, which offers the same tax benefits as the LLC. More on this below).
Unlike other providers, we can on request take care of the initial substance in the USA your company needs, in the form of a local US managing director and a US business account. That way you are never running a shell company, yet you save on high administrative costs while your business is starting up.
We also handle the company's tax work, so all of your LLC's administration is in one pair of hands.
We know this is not a zero-tax offer. And it isn't meant to be. If US taxes are still too high for you even after the 2017 US tax reform, you are better off not forming a company there.
The second option is for people resident in a non-dom country and with no relevant business presence in the USA (this means you may sell to US customers, for example, as long as you have no dependent agent there, i.e. a representative who works mainly for your business and is effectively no different from an employee). If you are the sole owner of your LLC, it is treated in the States as a disregarded entity and therefore stays tax-free. You pay nothing in your country of residence either, because foreign income is not taxed there.
Beware of "tax-free LLCs" from budget formation services
As mentioned, based on our reading of current US tax law and in light of the latest tax reform, forming a "zero-tax LLC" whose income is not taxed in the USA is only advisable if the second setup applies to you. That means it only works with residence in a non-dom country and no business presence in the States that would trigger a tax liability, and even then only if you follow certain rules. You can learn more on our page about structuring a tax-free LLC.
Even if you meet the requirements for this model, we strongly advise you against budget formation services that only advertise tax freedom and leave out all the facts.
We want to be clear: we have nothing to do with bargain formation services, and we warn you about the online offers that promise you the formation of an LLC for a few hundred dollars. With these, your LLC can quickly turn into a tax trap, and the negative tax consequences can be serious.
Tax and filing obligations of the LLC and its members
As a partnership, the LLC is tax-transparent and pays no tax itself.
If you form your LLC as in setup 1, with residence and a permanent establishment in the USA, the profits the LLC earns must be taxed in the States by each LLC member. If the member is an individual, US income tax is due. If the member is a legal entity, US corporate income tax is due. There is no separate municipal trade tax in the USA. Note, however, that income and corporate tax may be due at both federal and state level, depending on the LLC's state.
Against this background, LLC members who are not US residents also have limited tax liability in the USA. They need a US tax number (an ITIN, which we obtain for you) and must file a US tax return every year on their US income, including income from the LLC (which we also handle for you).
For setup 2, without residence or a US connection that triggers tax liability, there has been a change for some years now: the LLC has filing obligations toward the US tax authorities. A single-member LLC is known as a disregarded entity, which means it pays no tax in the States. Because this feature was widely abused in the past, the IRS now also requires disregarded entities to file the following forms:
1. FBAR: The Foreign Bank Account Report, or FBAR, requires you to report foreign financial accounts totaling more than 10,000 USD. So the LLC files as soon as its accounts exceed this amount.
Since many LLCs now hold accounts with Wise (formerly TransferWise) or other fintech providers, these would have to be reported on the FBAR.
2. Form 5472: This form must be filed by every foreign-owned single-member LLC that had reportable transactions with its owner or other related parties during the year. It lists the LLC's transactions with its owner or other related persons or companies, in both directions, including contributions and distributions.
Note too that Form 5472 cannot be filed on its own. It must be accompanied by a pro forma Form 1120. This means Form 1120 can be a zero return.
It's important to note that these two forms are purely a reporting obligation. In this case the profits still remain tax-free.
There may also be situations where only part of the profits is taxable in the USA. If a disregarded entity has both foreign and US income, the member or owner of the LLC must file a Form 1040-NR, the US income tax return for nonresidents. On it, they declare only the part of the profit that is taxable. For this they need an ITIN (the US tax number for foreigners), which we apply for on your behalf through ITIN Express. It takes a few weeks to be issued: the IRS says about 7 weeks until you are notified of your application status, and 9 to 11 weeks during peak season (15 January to 30 April) and for applications from abroad.
If the LLC has two or more members, a partnership tax return must be filed and a zero-tax setup is no longer possible. For more on this, see our page on taking profits out of your US LLC.
Tax advantages of the LLC over a corporation
For setup 2, we already explained the tax advantages above. You live in a country that does not tax foreign income, have no significant business presence in the USA, and as a disregarded entity you stay tax-free in the States.
In many countries, income from trading partnerships abroad is exempt from tax. Since you have already paid tax in the US, your country of residence does not tax the profits of the LLC again. In some cases, however, a US Limited Partnership may be the better partnership for you. You can find the key advantages of the LLC here.
This is exactly what can make a partnership more attractive than a corporation, whose dividends are usually subject to withholding tax in your country of residence.
Which rule applies in your case is set out in the tax treaty between your country of residence and the US. Make sure you get advice on this from an accountant where you live.
The LLC for non-doms living in Malta and Ireland
The LLC is especially recommended for people who live as non-dom taxpayers in countries such as Malta and Ireland (the UK abolished its non-dom status on 6 April 2025).
As long as the income from the LLC is not transferred to an account in your country of residence, it stays tax-free there and does not have to be declared on a tax return.
Moving money between the US and Europe: find an overview here. Here you will find the key terms and facts about US health insurance. Go deeper: how the US LLC is taxed, the quick check for the best US entity and our overview of forming a company in the USA. For a tax-free US LLC without a US permanent establishment, our sister site zerotax.llc is the place to go.