LLCs protect business owners, also referred to as members, from being held personally liable for the actions of the LLC. This limited liability typically protects you from the personal risks involved if a lawsuit were to arise concerning your business — safeguarding your personal assets. A couple additional benefits of an LLC include:

Flexibility in management – LLCs consist of members and a manager. One of the members is generally selected as the managing member. The managing member usually will select a manager, which could be himself or any person, to manage elements of the business.

Pass-through taxation – With pass-through taxation, taxes are not paid at the business level. If you choose to become an LLC, income/loss would be reported on your personal tax return. If any taxes were due, they would be paid on the individual level. This would most likely result in a lower tax liability overall.

Operating Agreement – the members will agree to and sign an operation agreement for the LLC. This is a contract between members of the LLC that will discuss each member’s obligations, responsibilities, and capital investments.

There are 2 main types of corporations. 1. S Corporation 2. C Corporation.

S Corporation may not have any non-resident members or partners. An S corp is a “pass-through” tax entity, like the LLC.

C corps are taxed as separate entities. They are also subject to “double taxation” if corporate profits are distributed to owners (shareholders) in the form of dividends. C corporations pay tax on their profits first at the entity level and then owners pay taxes at the individual level on profits received as dividends, resulting in the double tax.

Owners are Shareholders.

Managed by a Board of Directors.

State Tax may also apply.

After you’ve decided what type of company to create, you can also decide what is the best State for Incorporation. In many cases, it is preferable to incorporate in the state that you are planning on doing business in. However, there may be other factors that cause you to choose a different state. For non-residents of USA, we typically recommend Florida or Delaware. Both states have great tax incentives that can will help reduce your tax liability.

FLORIDA – In almost all states, there is a state level personal income tax. In the state of Florida, however, there is no personal income tax. The only issue we don’t like about Florida is that their website for incorporation is public. This means the state of Florida releases this information for free to anybody that requests it. It could also mean that the company’s owners could show up on public websites when somebody does a search. But Florida is an easy state to incorporate.

DELAWARE – Delaware also has the benefit of having no state level personal income tax. But Delaware is different than Florida because their incorporation website is private, not public. This means somebody would have to pay their website to search for the company’s owners. For any non-residents that would prefer to maintain anonymous, Delaware is the best choice.

BRITISH VIRGIN ISLANDS (BVI) – Some people prefer to open an offshore company for privacy, anonymity, and/or other reasons. If you are interested in a BVI, please let us know and we will explain everything there is to know about offshore companies and taxation.