2023-10-20 09:10:44
For Latin Americans, an LLC is the preferred type of legal company in the United States, because it allows them to save on taxes and the requirements to keep it operational are minimal.
LLC means Limited Liability Company, that is, it is an entity similar to local LLCs. Now, they have a key difference: the amount of taxes they pay.
An Argentine company must pay VAT, profits taxes and gross income. Meanwhile, its owners, in parallel, must pay income taxes and retirement contributions. This phenomenon is known as “double taxation.”
Well then, A US LLC with foreign owners does not pay double taxation, because it is considered a “transparent entity” in fiscal terms. This means that the company does not pay taxes as a legal entity. Instead, taxes are collected from the individual of each of its owners.
Furthermore, the United States practically no taxes to LLCs without a physical presence in the US or that do not involve US assets in their businesses.
But in case, due to your type of business, your LLC had to pay taxes in the US, your most likely taxes would be:
- federal income tax. It is equivalent to 10% of taxable income if it does not exceed US$11,000 annually, and increases gradually the further away it is from that amount. As we already explained, this is not charged to the legal figure of the company as a legal entity, but to each of the owners as a natural person in their annual tax return.
- State annual maintenance tax or fee: This is paid annually and depends on the state where your LLC is located. For example, some states, such as New Mexico, do not even charge this fee. Meanwhile, in another of the most popular states, Wyoming, the fee only costs US$60.
Let’s look at a concrete example. Let’s assume that your company in Argentina generates a net profit of ARS$27,000,000 per year. Income tax alone, you would have to pay $7,384,939, almost 30%. Now, with your LLC in the United States, the dollar equivalent of that same profit, at official trading, would be approximately US$74,000. Of this amount, you should pay US$8,660 in income tax, that is, less than 12%. In this scenario, with an LLC instead of an Argentine company, you would be saving around ARS$4,860,000 in taxes.
How to open an LLC in the United States from Argentina?
Dealing with the language barrier and understanding foreign laws are an unavoidable part of opening an LLC, and they can be overwhelming. Therefore, it is best to seek advice from experts and not try to do it alone (which can result in making very expensive mistakes).
Firmaway is an Argentine company that helps businessmen and entrepreneurs who want to scale their business abroad, managing the opening of their LLC. They offer a free initial advice session, and two service packages: one aimed at multi-member companies, and another for sole proprietors.
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