When it comes to setting up an LLC, Australia is not the country to be stuck in. Company tax rates are high, and finding growth opportunities can pose a challenge, thus moving to America might be the best choice.
While the task of relocating geographies seems tough, it’s very practical as long as you have the right approach and tools.
We have come up with an exhaustive guide that can help set up an LLC from Australia.
Step 1: Choose the Right State for Your LLC
Once the aforementioned has been established, it’s critical, to begin with, the first and most important step, step number one. The step entails selecting a single state from the various states, where the LLC shall be registered. Every state has its laws, the tax requirements differ as well, and more importantly, compliance obligations are never the same across the states.
Factors to Consider When Choosing a State
Business-Friendly Laws:
Delaware, Wyoming, and Nevada have pretty much established themselves as the few go-to states, with enticing business-developing environments, so here’s what we can tell you:
- Delaware: Declared as the “Corporate Capital of the World,” the state has tremendous business strategies in place, there are specialist business courts, and courts dealing them with very low fee requirements as well.
- Wyoming: Has established its name as one of the best tax havens, it has almost no taxes and offers great privacy measures to LLC members.
- Nevada: Finally, corporate and personal income taxes can both be avoided in the state, alongside strong asset protection laws.
Where You Plan to Operate:
For those of you who anticipate most of your operations in a specific state, that is the place you would want to register your LLC. Doing business in another state where your LLC is not incorporated will involve foreign registration which means incurs added expenses and paperwork.
Tax Implications:
It is very important to keep in mind that each state has a list of crucial tax regulations, especially tax states that are convenient for bigger business targets. For instance, avoid states that levy corporate or franchise tax because this minimizes costs for your business.
Step 2: Select a Name for Your LLC
The name of your LLC is one of the key elements in determining whether the business will succeed or fail. With that being said, remember that each U.S. state has its own set of rules on naming which is why you need to stick out to the following:
Naming Requirements
Unique Name:
The name must not violate in any manner the interests of another entity residing in the state. Check the official website of the Secretary of State to conduct a name search.
Use of LLC Designator:
A registered LLC title must necessarily have the words “LLC,” “L.L.C.,” or “Limited Liability Company,” or any dedicated equivalent approved by the authorities.
Avoid Restricted Terms:
Some words require the specification of more approval or policies such as “banking” “insurance,” or “government.”
Domain Name Check:
Connect with a domain registrar that has the exact domain name corresponding to your registered LLC in case you want to create an online presence.
Trademark Search:
Search through the records of the United States Patent and Trademark Office (USPTO) to ensure that the name you want to use does not conflict with existing registered marks.
Step 3: Appoint a Registered Agent
A registered agent is an individual or business entity designated by an LLC to be the point of contact for receiving various official documents or notices, including a tax notice. All LLCs in the United States legally need to have registered agents.
Registered Agent Responsibilities
- Should be open during normal office hours.
- Should possess a concrete workplace (a private mailbox does not meet this requirement) in the state in which incorporated.
Options for Australian Entrepreneurs
Since you are located in Australia, employing a registered agent service seems like a more convenient option for you. Numerous companies provide these services for a minimal yearly fee between $100 and $300 and comply with the requirements of issuing reminders and handling mail.
Step 4: File the Articles of Organization
The LLC has to file an organization article form or a formal article that serves as an official document for establishing a company in the state. The step to filing an organization is as follows:
Prepare the Required Information:
- LLC registered name,
- Business registered agent’s details,
- Purpose owned by the business and the intent (The majority of states say that general business works),
- And, A major business location.
Submit to the Secretary of State:
Most states allow online filing, but paper forms can also be mailed. Processing times vary from instant approvals to several weeks.
Pay the Filing Fee:
Filing fees range from $50 (Kentucky) to $500 (Massachusetts), depending on the state.
Step 5: Obtain an EIN (Employer Identification Number)
Applying for an EIN (Employer Identification Number) in the states may ease the taxation complexities for a lot of international people. An individual is required a tax identification number to do the things given below:
- Establishing a bank account in the United States,
- Hiring people for work in the United States,
- Filing tax reforms for the federal government.
How to Apply
Online Application:
The fastest option for businesses with a U.S.-based individual. Unfortunately, foreign-owned LLCs often cannot use this option.
Form SS-4:
- Complete Form SS-4, providing your LLC’s details and selecting the appropriate tax classification.
- Fax or mail the completed form to the IRS.
Processing Time:
- Fax Applications do take a while to be processed but not more than 5 business days.
- Mail Applications however can take a bit longer, sometimes taking around 6 weeks.
Step 6: Open a U.S. Business Bank Account
This is considered the most vital factor that aids in the finance management of the business LLC on the one hand and enables to keep in check the credibility on the other hand, while at all times ensuring compliance with due laws.
What You’ll Need:
- Articles of Organization
- Confirmation letter EIN
- A passport or any other government; photo ID
- Proof of USA residency (a lot of banks will require this)
Options for Australian Entrepreneurs
If visiting the U.S. isn’t feasible, consider online banks like Mercury or Brex, which cater to international LLC owners and offer simple application processes.
Step 7: Understand Tax and Reporting Obligations
Taxes on the LLC depend on earnings within the USA or the structure of the LLC.
Federal Taxes
- Single-Member LLC: This income will automatically appear as personal income within the tax return files of the USA.
- Multi-Member LLCs: It would define a partnership which will require form 1065 to define what would be the returns.
State Taxes
Every state has its requirements which could include; franchise taxes, income taxes, and sales taxes to name a few.
Elusive to double taxation
Australia and the US have a tax treaty on double taxation, and working with someone who knows how US-Australia taxes work is ideal.
Step 8: Draft an Operating Agreement
An Operating Agreement is an internal document that lays out the formation and structure of the LLC.
Contents of an Operating Agreement
- The Members in Their Functions and Description
- The Allocation of Profits and Losses
- The procedures of management
- The steps involved in winding up
Although most states do not require one, an Operating Agreement is a necessity for clarification and dispute avoidance especially in many member LLCs.
Step 9: Ongoing Compliance
Protect the state formalities after the formation of the Limited Liability Company.
Annual requirements
- File annual reports (or biennial reports in some states).
- Annual Franchise tax and or any other applicable annual fees to the state.
Registered Agent Updates
- Keep your registered agent from going inactive and the address up to date.
How Easyfiling Can Help?
Establishing an LLC in the U.S. from Australia yes logically possible as long as you have resources and expertise. It involves picking a state and filing your LLC, then applying for an EIN, and complying with formalities. However, the compliance aspect for cross-border regulations, taxation, and documentation can be daunting.
Here at EasyFiling, we assist international entrepreneurs through all the LLC formation procedures. Our experienced team does the hard work for you, from choosing a state and filing documents, acquiring your EIN, and ensuring that you follow all the regulations, leaving you to focus on building your business.
EasyFiling makes it easy, quick, and affordable for international entrepreneurs to launch LLCs in the United States whether they require assistance, a dependable registered agent service, or desire a simple formation.
Book a free consultation today with Easyfiling to form your LLC from Australia.
Nabin Adhikari
