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American LLC'S

US LLC - LIMITED LIABILITY COMPANY

FEATURES AND TAX ADVANTAGES


An LLC offer the ability to trade via an onshore vehicle 100% tax free provided the members are not US citizens or Green Card holders and no business is conducted in the United States. LLC’s are being successfully utilized by companies around the world with great success and also potentially offer a high degree of anonymity in some states.

The U.S. Limited Liability Company (LLC) has been an essential international tax planning tool for over 30 years because it is a pass through entity and not taxed as a corporation. Although the LLC is not a corporation it still protection from liability, but for tax purposes it is treated like a partnership. Because the LLC is a passthrough entity it pays no income tax itself and as a result liabilities pass to the "members” who if they are in a favourable tax position and non resident of their home country can effectively pay zero tax.

In some circumstances you might wish to combine a U.S. LLC with an offshore company such as a BVI or Belize company you can gain the benefits of both onshore and offshore structure because the offshore company can operate in the U.S. if required.. A carefully structured LLC will enable you to avoid the possible scrutiny of offshore companies and present the acceptable face of a U.S. company plus the added tax advantages of an offshore company. We find the LLC functions extremely well when it is combined with a maildrop in the US or Canada and a voicemail service or live answering plus a frontman who can increase believability as and when needed.

The most popular states for LLC formation are Delaware, Oregon, Wyoming, Nevada and Florida although we form LLC’s in all 50 states. It should be noted that 60% of the LLC’s we form are in Delaware. Although in most ways Delaware LLC's and those from other states are quite similar the vital difference is that the register of members in Delaware is not open to the public which guarantees rock solid privacy. It is this factor together with the efficiency and speed of formation - 7 days start to delivery worldwide - that makes Delaware the leading US state for the formation of LLC’s. We appreciate that in some cases (maybe for contractual or business reasons) another state might be better for your needs where the members appear on public record but for privacy Delaware is the state of choice. We deal with all 50 states so feel free to give us a call or send an email and we can advise you on your specific needs along with the various considerations which apply to that particular state.

The key features of a Delaware LLC are outlined below along with the basic requirements to render it tax efficient.

The Tax Saving benefits of an American LLC

For most clients the primary benefit of an LLC is the "pass-through" taxation. Keep in mind as outlined earlier that the LLC remains tax free on business transactions and benefits only when they are derived outside the United States and the members are non-resident foreigners.

Features of a Delaware Limited Liability Company

  • A Delaware LLC may be formed by one or more organizer or member. For tax purposes, non-resident legal entities (such as companies or Corporations) who are members of the LLC may cause the IRS to classify the LLC as a branch of a foreign company in the US, and the LLC will be taxed on its worldwide income. It is therefore recommended that the non-resident members of Delaware offshore companies be physical persons.
  • An LLC does not issue shares and therefore does not have shareholders. The owners of an LLC are referred to as members.
  • A Delaware LLC is a legal entity, registered with the state, and is treated separate from its members.
  • The Delaware LLC is recognized anywhere in the world as a legally registered US company.
  • Because of the Limited Liability status, the law protects the members (owners) from the debts and other obligations of the LLC.
  • After Delaware offshore incorporation, the risk to an owner of a Delaware offshore LLC is to the extent of his investment in the LLC, and all his personal assets are protected.
  • A Delaware Limited Liability Company may be fully owned by non-resident aliens.
  • An LLC may also be owned by Corporations (companies limited by shares), Partnerships, Trusts, Charitable Organizations and Pension Plans.
  • After Delaware company formation, the Limited Liability Company must have these words after the company name or the abbreviation thereof i.e. "Limited Liability Company", "L.L.C.", or "LLC".
  • The IRS tax treatment of a Delaware LLC is on the flow-through tax basis. That is the LLC is not taxed on its profits.
  • Non-resident aliens are not taxable by the US on income derived outside of the US. If an LLC derives its income outside of the US, the non-resident members do not need to file US tax returns.
  • There is no limit on the number of members allowed in a Delaware LLC.
  • The Management of an LLC is usually undertaken by its members. If it is found necessary, an outside manager may be employed and would report directly to the members.
  • The structure of the LLC does not provide for a Board of Directors. The flexibility in the law allows the members by agreement, written or oral, to decide on the most appropriate management system and on the distribution of profits.
  • The voting authority usually is in direct proportion to member's interest in profits.
  • The manager of a Delaware LLC may also be a member.
  • There are no statutory requirements concerning meetings of members or record keeping. It is recommended that with two or more members, Members' Agreements be entered into.
  • If meetings are held by members, this may be done anywhere in the world and in any way convenient to the members.
  • A Delaware Limited Liability Company (LLC) is a good vehicle for non-resident aliens to earn tax free income (not derived in the USA), utilizing a US business entity.
  • Members of a Delaware LLC are not liable for tax to the United States providing that:
  • The members are non-resident aliens.
  • The LLC does not employ US residents as permanent staff, or rely on a dedicated place of business within the United States.
  • The LLC does not undertake any business activity that is effectively connected with business or trade within the United States.
  • The Delaware LLC has a perpetual life and membership is easily transferable. It is advisable to enter into a Members' Agreement if alternative conditions are required.

Nominees and Managers
Nominees and managers are an option which you might decide to use or decide can be dispensed with but in many ways nominees and managers fulfill a similar and often crucial function. Their main job is to act as a voice and contact point for the company, handle the odd call here and there or convince anyone trying to figure out who owns and controls the structure that they are the true owner. In other words they put distance between the company and the true owners. The key difference between a nominee and a manager is that a nominee controls the bank account and appears on all the records where the manager does not in reality control anything but will convince anyone snooping around that he does and usually stop most problems before they even have chance to escalate. Keep in mind that should you decide to use the services of nominees or managers this service includes the occasional use of their phone and also a dedicated email address which will be provided for the company. Their fee of $225 (£150) per annum includes up to 5 hours work - the only charge is the cost of any phone calls they make on the LLC's behalf or stamps if they re-mail letters. Always be cautious regarding nominees or managers because many offshore company service providers use nominees and managers who charge up to $160 / £100 per hour on top of their annual fee which is often $400 / £270 each. The cost of using them can therefore be much higher that it looks at first glance; I always see it as a bit like car rental the sign says $300 a week but by the time everything else has been added it ends up at $550! We often hear stories of annual fees for disbursements totalling $1500 for only 10 hours work. With us it is clear cut and there is a simple flat fee with no hidden charges. The reason ORCA can provide these services so much cheaper than our competitors is that we have a large network of nominees and managers who also assist clients with other services such as setting up phone lines, arranging fulfillment services for orders, bank introductions, and finding local lawyers and accountants to assist you if needed - around half of our individual nominees are lawyers, business consultants or accountants themselves, the other half are active or retired businessman with a variety of specialist skills which might be needed at some point in the future. Because the nominees and managers carry out a wide range of functions assisting both ourselves and each other they can afford to offer their services at a keen price. The additional benefit of this arrangement is that if you need further services they are in the right place to set up any other local facilities you might need.

In summary these are the main points in which an LLC tends to score highly
  • Fast 12 hour formation in Delaware and 7 days start to delivery worldwide
  • No filing of accounts
  • Onshore presence with offshore benefits
  • Anonymity
  • Respectable onshore location
  • Flexible
  • Reasonable initial formation and ongoing costs
  • Conversion between Corporations & LLC's is possible

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(INTERNATIONAL +1 954 866 5986)
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