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    Forming an LLC

    Forming an LLC in United States

    Each US state has its own LLC laws. In order to form an LLC entity, an Article of Organization must be submitted along with payment.

    The article will include full details such as: business name, address, representatives, and members.

    More complex structures require more documents.

    Once an LLC is formed, several options exist, depending on the number of members:

    1. An individual will be regarded as a disregarded entity and submit a personal tax statement.
    2. Multiple persons will be regarded as a partnership and be required to submit a partnership report in addition to personal statements. Moreover, a partnership is legally obligated to withhold taxes at source to foreign partners; this withholding shall be from the highest marginal tax of 36.9%. In this manner, the tax authorities guarantee tax reporting by foreigners, since they are entitled to a tax rebate.

    Should the investors wish to categorize the LLC differently, they may do so by:

    1. Filing form 8832 which re-categorizes the entity as a corporation, subject to double taxation, corporate tax, and distributed dividend tax.
    2. Filing form 2553 which categorizes the entity as an S-corp (small business corporation). Only US citizens or residents are eligible. This formation allows a company to enjoy the benefits of an LLC alongside those of a corporation: on the one hand, it is disregarded for tax purposes, but on the other one can receive payment in the form of salary.

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