How to Start an LLC as a Non-U.S. Resident in Delaware

Avatar photo
by How to Start an LLC Team
Last updated: June 22nd, 2024

For non-U.S. residents interested in joining Delaware’s thriving business ecosystem, this guide provides comprehensive steps to get started. Note that non-U.S. citizens face similar challenges and can benefit from this guide as well.

We might receive compensation from the companies whose products we review. We are independently owned and the opinions here are our own.

Jump to

Delaware is renowned as a business-friendly state, making it the top choice for entrepreneurs in the United States and abroad looking to establish a Limited Liability Company (LLC). Its favorable tax laws and streamlined regulations create an ideal environment for business growth.

1
Choose a name for your LLC

Any business formed in Delaware will need a unique company name before paperwork can be filed. Your name should reflect your business and marketing, as well as following all state guidelines.

Ensure that your chosen name complies with Delaware’s LLC naming requirements, which typically include the phrase “Limited Liability Company” or its abbreviations (LLC or L.L.C.). The name will also need to avoid certain phrases and cannot be misleading in any way.

It will also need to be totally unique from all other business names in the state – you can use the State of Delaware’s Entity Search to see if a given name is taken before moving forward.

If you find a name but are not ready to file, you can also use a name reservation option. This holds the name for 120 days, for a $75 fee, and is non-refundable.

2
Appoint a Delaware registered agent

All LLCs in Delaware, including non-resident LLCs, are required to designate a registered agent with a physical address in the state. The registered agent serves as the LLC’s official point of contact for legal and administrative purposes, including receiving legal documents, service of process, and official correspondence on behalf of the company.

Registered agents must have a U.S. address (not a P.O. box) in the state of Delaware. This can be the business owner or anyone you name. But if you are not physically in the state, you may need to find a registered agent service. These services will take an annual fee to act as your registered agent and be named on your company formation documents.

Our picks for best registered agent services

  • Same day filing service
  • Affordable pricing
  • Strict ethical code
  • Set up LLC without hassle
  • Take you through all steps
  • Start your LLC worry-free
  • Excellent option for multi-state firms
  • Help with compliance for highly regulated industries
  • Complete solution for entity management, taxes, and licensing

3
File the Certificate of Formation

To formally establish your non-resident LLC in Delaware, you’ll need to file a Certificate of Formation with the Delaware Division of Corporations. The Certificate of Formation typically requires basic information about your LLC, including its name, registered agent, principal business address, and the names and addresses of its members or managers.

Certificates of Formation can be submitted online through the Division of Corporations’ Document Filing and Certificate Request Service or you can submit it by mail. If you choose to mail it in, include a cover sheet with your name, entity name, return address, and phone number. The mailing address is: Division of Corporations, John G. Townsend Building, 401 Federal Street, Suite 4, Dover, DE 19901

4
Draft an operating agreement

While not required by Delaware law, drafting an operating agreement is highly recommended for LLCs, including non-resident LLCs. An operating agreement outlines the management structure, ownership interests, voting rights, and operational procedures of the LLC. It helps clarify the rights and responsibilities of the LLC’s members and managers and can prevent disputes in the future. For complex businesses, you may seek legal counsel when drafting an LLC operating agreement.

Some things you may want to consider before drafting this document are:

  • Will the LLC be member-managed or manager-managed?
  • Is this a single-member LLC or a multi-member LLC?
  • How will profits be managed and taxed?

5
Obtain necessary business licenses and permits

All LLCs in Delaware must obtain a general business license at the state level, before operations begin. This can be done via Delaware’s Business First Steps portal. During this process, you can also check for a list of professions and industries that require additional state licensing depending on your type of business. 

Along with these state licenses, you will need to contact the county, city, and/or town where your business is located to learn about their own licensing and permitting regulations. Contact information for each municipality can be found here.

6
File for an Employer Identification Number (EIN)

Non-resident Limited Liability Companies (LLCs) operating in the United States typically need an Employer Identification Number (EIN) for various purposes, including opening a U.S. business bank account, hiring employees, and filing taxes.

An EIN serves as the LLC’s unique tax ID for U.S. tax purposes and is required to report income and pay taxes to the Internal Revenue Service (IRS). Non-residents can obtain an EIN for their LLC by applying directly with the Internal Revenue Service (IRS) online, by mail, fax, or phone.

Important note for non-resident aliens and non-U.S. citizens

  • Social Security number holders: If you have a U.S. Social Security number, use it to apply for an EIN.
  • Individuals without a Social Security Number (SSN): Apply for an Individual Taxpayer Identification Number (ITIN) via the IRS to then obtain an EIN.
  • Green card holders: Use your green card number for EIN application purposes.

7
Open a U.S. business bank account

Opening a U.S. business bank account as a non-resident LLC owner is crucial for financial management and maintaining LLC protections. It also simplifies transactions, enables access to U.S. banking services, and lends credibility to your business.

Consider the following when opening your account:

  • Research and select banks that are accustomed to working with international clients and understand the specifics of non-resident business operations.
  • Documentation requirements may include your LLC’s official formation documents, Employer Identification Number (EIN), and personal identification, such as a passport.
  • Determine whether you need to be present in the U.S. to open the account or if it can be done remotely. Look into RelayFi, Found, and Mercury for remote banking options.

How much does it cost to start a non-resident LLC in Delaware?

While Delaware LLCs are known for being a cost-effective option when starting a business, there are some upfront expenses to consider. This includes mandatory filing fees, as well as recommended and optional costs.

  • Incorporation fees: The primary, and mandatory, cost for forming an LLC is the filing of your Certificate of Formation. The filing fee for a Delaware company registration is $110. For an additional $50, this process can be expedited within 24 hours, or for $100 it can be processed the same day. There are also additional fees for things like certified copies of your formation documents.
  • Registered agent fees: All LLCs are required to designate a registered agent in Delaware to receive legal documents and official correspondence on behalf of the company. This person can be the business owner or an associate, but they must have a physical address within Delaware. For foreign owners, a registered agent service can act on your behalf. Registered agent services typically cost between $100 to $300 annually.
  • Various application fees: When forming your LLC, there are a number of permits and licenses you may need to apply for before operations begin. These costs vary by state and locality, but should be taken into account early on. You may also choose to pay for documents like a Certificate of Good Standing.
  • Professional services: Many LLCs, especially those owned by non-residents, will choose to work with tax and legal professionals before forming their business. These services can help draft an operating agreement or be sure that your business is in compliance with all tax laws. Costs will vary by service, but may be important for your business.

What’s the cost difference between non-U.S. resident LLCs and resident LLCs? 

Costs associated with formation of your LLC in Delaware won’t changed based on where the owner is located. However, non-U.S. resident owners will likely choose to spend more upfront on some costs that are important for compliance. These may include:

  • Registered agent services to fulfill the requirement of a Delaware address.
  • Legal representation to ensure compliance with all laws.
  • Additional tax payments to home countries and other entities.
  • Tax guidance from a CPA or other professional.
  • Higher administrative costs around communication, documentation, and compliance efforts.
  • Costs for international banking, currency exchange, and cross-border transactions.

These costs are all important to consider when deciding to form an LLC in Delaware as a non-U.S. resident.

What state tax obligations does a non-U.S. resident LLC need to meet?

Any LLC in the USA will need to meet a certain set of tax obligations; for those owned by a non-U.S. resident, there may be additional federal tax implications based on treaties with your home country. But when it comes to state taxes, Delaware is very friendly to all LLCS. Below are the main state tax obligations to be prepared for.

  • Annual franchise tax: Non-U.S. resident LLCs operating in Delaware are subject to the state’s annual franchise tax, which is based on the company’s authorized shares or the value of its assets in the state. The minimum franchise tax is $300 per year, with additional fees based on capitalization.
  • Income tax reporting: Non-U.S. resident LLCs may be required to report income earned within the United States to the Internal Revenue Service (IRS). While Delaware does not impose a state-level income tax on LLCs, non-resident owners must ensure compliance with federal tax laws and regulations governing foreign-owned business entities.
  • Withholding taxes: Depending on the nature of the LLC’s business activities and income sources, non-U.S. resident LLCs may be subject to U.S. withholding taxes on certain types of income, such as dividends, interest, royalties, and rental income.
  • Sales and use tax: Non-U.S. resident LLCs engaging in business activities that involve sales of goods or services in Delaware may be required to collect and remit sales and use taxes to the state. Understanding sales tax nexus rules and registration requirements is essential for compliance with state tax obligations.
  • Employment taxes: If a non-U.S. resident LLC has employees working within the United States, it may be responsible for withholding and remitting payroll taxes, such as federal income tax, Social Security tax, and Medicare tax, as well as complying with employment tax reporting requirements.

Why is Delaware a good choice to start a non-resident LLC?

When considering where to establish a Limited Liability Company (LLC) as a non-resident in the United States, Delaware consistently stands out as a top choice due to its favorable business climate and unique advantages.

  • Business-friendly legal environment: Delaware has a well-established and respected legal system with specialized courts, like the Court of Chancery, dedicated to resolving business disputes. This extensive body of corporate law provides clarity and predictability, making it a favorable environment for businesses of all sizes and industries.
  • Streamlined incorporation process: Delaware offers a highly efficient and streamlined process for LLC formation, allowing those without U.S. residency to establish their businesses quickly and with minimal bureaucracy. Online filing options and expedited processing services further simplify the process, so that business owners can focus their efforts on their own operations and not paperwork.
  • Flexible operating agreements: Delaware’s LLC laws provide a lot of flexibility in crafting operating agreements which are not required but recommended. These documents allow non-resident owners to customize governance structures, management arrangements, and profit-sharing mechanisms to suit their specific needs and preferences. Delaware’s flexibility means that business owners can remain in control of their organization.
  • Privacy protections for business owners: Delaware offers robust privacy protections for business owners, allowing them to maintain anonymity and shield personal information from the public domain. Non-residents can utilize nominee services or appoint trusted representatives to maintain confidentiality while doing business in the state.
  • Tax advantages and predictability: Delaware’s tax law is known for its simplicity, predictability, and favorable treatment of LLCs. The state imposes no sales tax on intangible assets and has no corporate income tax for income that is not US-sourced income. Additionally, Delaware provides clear guidelines on tax obligations, offering non-resident LLC owners peace of mind and certainty in their tax planning strategies.

Why do non-residents start LLCs in the US?

Entrepreneurs from around the world are drawn to the United States to start their businesses, especially in states like Delaware. There are a wide range of benefits to making this choice – here are just some:

  • Access to the American market: The U.S. boasts the world’s largest consumer market, offering unparalleled opportunities for business growth and expansion that most other places cannot.
  • Legal protection and stability: The U.S. legal system provides robust protections for intellectual property rights and contracts, which is especially powerful for innovation-driven industries.
  • Enhanced credibility: Establishing an LLC in the U.S. can improve credibility and legitimacy, instilling confidence in customers, partners, and investors by signaling a commitment to compliance with U.S. regulations and standards.
  • Tax advantages: Certain states, such as Delaware, offer favorable tax environments with low corporate taxes and business-friendly policies, enabling non-resident entrepreneurs to minimize tax liabilities and maximize profits.
  • Global market positioning: Starting an LLC in the U.S. strategically positions non-resident businesses in the global marketplace, facilitating long-term success and prosperity.

What is an LLC?

A Limited Liability Company, often called an LLC, is a flexible and popular U.S. business structure. These entities combine elements of c-corporations, sole proprietorships, and limited partnerships to offer an advantageous structure for small and medium businesses.

One of the primary benefits of an LLC is that it offers limited liability protection to its owners, known as members. This means that the members are not personally liable for the debts and obligations of the company, protecting their personal assets from any business liabilities.

LLCs also enjoy pass-through taxation benefits. Profits and losses are passed through to members’ personal tax returns, meaning they are taxed at personal income tax rates rather than the higher corporate tax rates.

There is also considerable flexibility in an LLC that other business structures may not offer. While corporations tend to have strict bylaws and a rigid hierarchy structure with shareholders, directors, and officers, LLCs are more informal and can be managed by either the owners or appointed managers. They can also have single or multiple members, making LLCs suitable for a range of business sizes, from startups to huge organizations. 

FAQs

Does a non-U.S. resident LLC need a business license in Delaware?

All LLCs in Delaware are required to have a general business license, including those owned by non-residents. In addition, businesses may need specific licenses related to their industry and location, so it is important to research and comply with Delaware’s licensing regulations.

Is it complicated to set up a non-U.S. resident LLC in Delaware?

Setting up a non-U.S. resident LLC in Delaware can be relatively straightforward, but it may involve complexities compared to forming a domestic LLC. Non-residents may encounter challenges navigating unfamiliar legal and regulatory requirements, such as tax obligations, registered agent services, and compliance with state laws.

What other states are ideal to set up a non-U.S. resident LLC?

Wyoming is another ideal state to set up a non-U.S. resident LLC due to its business-friendly environment. It is known for its low filing fees, minimal reporting requirements, and strong privacy protections. Additionally, the state’s favorable tax policies and efficient incorporation processes make it a compelling choice for non-U.S. residents seeking to form an LLC in the United States.

What’s the main reason to open an LLC in Delaware if you’re not a U.S. resident?

The primary reason to open an LLC in Delaware as a non-U.S. resident is the state’s reputation for providing a business-friendly environment with robust legal protections, favorable tax laws, and efficient incorporation processes. Delaware’s well-established corporate laws, offer clarity, predictability, and flexibility for businesses of all sizes and industries.

What forms are filed with the start to establish a non-U.S. resident LLC?

To establish a non-U.S. resident LLC in Delaware, several forms need to be filed with the Delaware Division of Corporations, including the Certificate of Formation and the Appointment of Registered Agent and Registered Office. Additionally, non-residents may need to file other forms or documents depending on their specific business.

Does a non-U.S. resident LLC need to file a BOI report?

Yes. Recent federal legislation that aims to crack down on money laundering requires all LLCs to file a Beneficial Ownership Report, which provides a list of LLC owners to the Financial Crimes Enforcement Network, or FinCEN.

Start Your LLC Today

Click on the state below to get started.

Back to top