Form an LLC

Why founders choose an LLC

An LLC separates your personal assets from your business, so your house and savings aren't on the line for business debts. By default it's taxed as a pass-through — profits flow to your personal return and there's no separate corporate tax — which keeps things simple and avoids the double taxation a C-Corp faces.

LLCs also require far less formality than corporations: no board meetings, no minutes, no share classes to manage.

• Personal liability protection
• Pass-through taxation by default (no double tax)
• Flexible profit distribution among members
• Minimal ongoing formalities

When an LLC is the right choice

An LLC is ideal for e-commerce sellers, freelancers, agencies, SaaS side-projects, consultants, and most bootstrapped businesses — anyone who wants protection and simplicity without planning to raise venture capital.

If you intend to raise money from institutional VCs or issue stock options to employees, a C-Corp is usually expected instead — and you can convert an LLC to a C-Corp later when the time comes.

For non-US founders

A US LLC is fully available to non-residents — no SSN, no US address, and no travel required. A single-member LLC owned by a non-resident is a pass-through, but note it has a special IRS reporting requirement (Form 5472); we can guide you on that.

How your LLC is taxed (federal)

By default an LLC pays no federal income tax itself — profits pass through to the owners, who report and pay the tax.

A foreign-owned single-member LLC stays a disregarded entity, but it must file Form 5472 attached to a pro-forma Form 1120 for any year it has a 'reportable transaction' with its owner — and the capital you put in at formation counts, so in practice almost every active foreign-owned LLC files it. Missing it carries a $25,000 penalty. A pure pass-through with no income effectively connected to a US trade or business (ECI) usually owes no US income tax and the owner files no 1040-NR; where there is US ECI, the non-resident owner files Form 1040-NR. Multi-member LLCs with foreign partners must also withhold on US-connected income under §1446 (Forms 8804/8805).

• No entity-level federal income tax by default — profit flows to the owners' returns, avoiding the corporate double tax.
• Single-member LLC with a US owner: report business income on Schedule C of your personal Form 1040; self-employment tax (15.3%) applies.
• Multi-member LLC: file Form 1065 and issue a Schedule K-1 to each member by March 15.
• You can elect corporate taxation (Form 8832) or, if eligible, S-corp status (Form 2553) when it saves tax.

Annual compliance & filings

The lightest ongoing burden of any structure — an operating agreement, your state report, and a yearly federal return.

• Maintain an operating agreement and basic membership/ownership records.
• No board, no annual meetings, no minutes required in most states — far less formality than a corporation.
• File your state annual/biennial report and keep a registered agent in the formation state.
• File the federal return every year (Form 1065, or Form 5472 + 1120 for a foreign-owned single-member LLC) even in a year with no US profit.