How to Open an LLC in Delaware as a Foreigner?

Delaware was the first US state that started offering LLC formation, all the way back in 1991. By 1996, all other states followed, but it was too late — Delaware’s 5-year head start, coupled with its business-friendly environment, flexible legal framework, and favorable tax policies, made this state extremely popular for LLC formation. Each year, around 290,000 new business entities are formed in Delaware by foreigners and US citizens. 

If you’re interested in the process of Delaware company registration for nonresidents and want to become an owner of an LLC in the US, you’re in the right place. In this article, we’ll share with you how to open an LLC in Delaware as a foreigner and will talk about some of the benefits that come with it (spoiler alert: With a Delaware foreign LLC, and under the right conditions, you can pay 0% in taxes in the USA)  

Now, with that short intro out of the way, let’s start. 

Delaware LLC for Non-US Residents: Main Benefits

Here are some of the main benefits of opening a Delware LLC as a foreigner:

• Access to excellent legal services and liability protection
• High anonymity (no public disclosure of the names of LLC members or managers)
• No state income and sales tax for foreign-owned LLCs
• Access to US markets and financial institutions
• High levels of protection for personal assets
• Inexpensive formation and yearly cost
• LLC formation times under 24h
• The entire Delaware company registration for nonresidents process can be done online
• The Delaware Court of Chancery (a unique court that only deals with business matters)

Can I Form an LLC in Delaware Without Living There?

Yes, you can form an LLC in Delaware, even if you’re not a US resident. Almost all foreigners are eligible to open a Delaware LLC for non-US residents. The only exceptions are people from countries under sanction by the United States federal government. 

Delaware is one of the best US states for forming an LLC as a nonresident. Over 230,000 new LLCs are formed in this state annually by foreigners and US citizens. The main reasons for this are the amazing tax benefits and legal protection that Delaware offers business owners. 

Apart from Delaware, Wyoming is another great state where you can open an LLC as a foreigner. It offers almost the same benefits to LLC owners, and it does so for a smaller price.  Check out our article about opening an LLC in Wyoming as a nonresident to learn more. It will help you better understand the benefits of opening an LLC in each state and make the best decision for your business. 

Delaware LLC Taxation for Non-US Residents: 3 Things to Know

Opening a Delaware LLC for non-US residents is the easiest way to ensure your business is completely tax-free. However, before you can enjoy being legally tax-free, you’ll need to make sure that the following is true:

• Delaware LLC is not owned by a US citizen or Green Card holder
• Delaware LLC doesn’t have employees or facilities in the US
• Delaware LLC doesn’t generate US-source income

Do you want to open a tax-free Delaware foreign LLC? For a fee of $1,500, we can help you open a Delaware business entity and create a tax-free corporate structure. Book a free call to learn more. 

How to Open an LLC in Delaware as a Foreigner?: 8 Easy Steps

Here are the main steps to help you in the process of Delaware company registration for nonresidents:

1. Check Eligibility 

The first step in Delaware Company Registration for Nonresidents is to make sure you’re actually eligible to form an LLC in this state. To see if you are, you should check local government laws to ensure you can legally own a business in the States. Also, make sure that the US does not impose sanctions on your country that would prevent you from opening an LLC there.

2. Chose a Name

The second step in opening a Delaware LLC for non-US residents is to pick a name for your business. The name you settle on must include “Limited Liability Company” or an abbreviation like “LLC” or “L.L.C.” (e.g., “My Business Name LLC” or “My Business Name Limited Liability Company”).

Once you’ve chosen the name for your Delaware foreign LLC, go to the Delaware Division of Corporations site to ensure it’s not already taken. If it’s available, you’re good to go, and if it’s not, you can change it or try to buy the name rights from the current owner.

3. Connect with a Registered Agent in Delaware

All businesses in Delaware must have a registered agent, an individual, or an entity with a physical address in the state. Businesses that operate in Delaware and have a physical address there can serve as their own registered agents. However, businesses that do not physically operate in the state must hire a registered agent. 

The main responsibilities of register agents in Delaware are:

• Accept Service of Process (in the case that a business entity is being sued) and inform LLC owners about the procedure
• Accept all correspondence between the State of Delaware and business owners/members
• Provide billing information and tax obligations to the business 
• Satisfy and adhere to Agency Regulations and maintain accurate records of it
• Be available during regular Delaware business hours

To learn more about the state’s rules for registered agents, check out the Delaware Division of Corporations’ Registered Agents FAQ page. 

Do you want to open a Delware LLC as a foreigner? At NRI, we’ll guide you through the entire formation process and ensure you get your US bank account as fast as possible.

4. File the Certificate of Formation

Filing the Certificate of Formation (also known as Articles of Organization) is the fourth step in the process of Delaware company registration for nonresidents. You must do this to officially form your Delaware foreign LLC. Some of the information you’ll be required to provide in the Certificate of Formation includes:

• The name of your LLC
• The name and address of your registered agent
• Corporate and membership structure of your business entity 

You can file the Certificate of Formation by completing the paperwork online or mailing the necessary documents to the state’s address. 

5. Get an Employer Identification Number (EIN)

EIN, or Employer Identification Number, is one of the 3 Taxpayer Identification Numbers in the US (the other 2 being ITIN and SSN). It’s a 9-digit number issued to all business entities in the US by the Internal Revenue Service. This number allows the US regulators to easily distinguish between various entities, mostly for tax and legal reasons. 

To get an EIN for your LLC as a nonresident, you must fill out the SS-4 form. The type of information you’ll be asked to provide on this form includes:

• The exact type of your business entity
• The reasons for applying
• Your industry
• The formation date 
• Address of a registered agent

The monetary cost of obtaining an EIN is $0; however, the process can take up a lot of your time. The usual processing times are between 3-4 weeks, and that’s only if you fill out the SS-4 form correctly on your first try, which is rarely the case. And what happens if you make a mistake? Well, you gotta do the whole thing all over again, meaning that — every mistake on the SS-4 form can cost you an additional 3-4 weeks of your time.  So, to save time, it’s best to leave the EIN application to professionals. 

Get in touch with us, and we’ll make sure your EIN application paperwork is done correctly the first time! Book a free call to learn how we can help set up an LLC in Delaware as a foreigner and get an EIN number.

6. Create an Operating Agreement 

Creating an operating agreement is one of the most important steps in the process of Delaware company registration for nonresidents. 

For single-member LLCs the process is relatively straightforward. It should include information about the business and management structure, operational purpose, tax obligations, and more. And, even though it seems arbitrary to write everything down if you’re the sole owner and manager of an LLC, it’s extremely important to do so. Having a good operating agreement is the best way to protect yourself from liability and ensure your personal assets are always kept safe. 

Now, where things get exponentially complicated is when you’re trying to create an operating agreement for multi-member LLCs or partnerships. The more owners or members an LLC has, the more difficult it becomes to outline all responsibilities, operational procedures, business operations, etc. Not to mention that, if you ever want to get a business loan, invest in US real estate as a foreigner, have some issues with other LLC members, or end up in a lawsuit, the first thing people will pay attention to is your operating agreement. That’s why ensuring it’s done right is extremely important. Every business is unique, so it’s best to contact professionals to help you tailor an operating agreement that suits your situation.  

7. Open a US Bank Account

You must open a US bank account before you can actually start to do business with your Delaware LLC for non-US residents. To begin that process of getting a US business account, you’ll need to have the following ready:

• An EIN
• Certificate of Formation 
• An operating agreement
• An official company website 
• A physical address for your LLC 

The majority of people have the most difficulty obtaining the last thing on the list — a physical address for their Delaware foreign LLC. Why? You see, in the past, many banks would accept the registered agent’s address as the LLC’s address. But that’s not the case anymore for US LLCs owned by foreigners. 

The rules are now stricter, and most banks will require foreign-owned LLCs to have an address separate from their registered agent’s one. And, not only that, but banks will also send out teams to verify the address you provide. This means that getting a bank account will be more challenging if your company is registered at some random PO box. To avoid this major issue, you should get in touch with professionals. Here at NRI, we’ll ensure that the physical address for your LLC is 100% legitimate and will pass the bank’s inspection, allowing you to not only open but also keep your US bank account for many years to come. 

Now, there are two types of banks where you can open a US business account — regional or online banks. Most regional banks will want to meet with you directly before opening your account, meaning you’ll have to travel to the US. Apart from that, they also have stricter rules and higher rejection rates than online banks, especially when it comes to foreign citizens. In short, even if you fly to the US and meet with the bank’s personnel in person, you’re not guaranteed to get an account.  

On the other hand, online banks are much more lenient when compared to their regional counterparts. It’s easier to get an account with them, and you don’t have to travel to the US to do it. That’s why they are extremely popular with nonresidents who own LLCs in the US. Some of the best online banks that you can use to open a business account for your Delaware foreign LLC:

• Wise
• Mercury
• Revolut Bank 

8. File BOI Report

A Beneficial Ownership Information Report, or BOI, is a legal document all US business entities must file within the first 30 days of formation. The entire process can be done online through the Financial Crimes Enforcement Network (FinCEN) website. Filing a BOI report is free and only has to be done when the company is formed or when information about the company changes (e.g., change in ownership, address, etc.)

Delaware Foreign LLC: Maintaining Your Tax-Free Business 

To make sure your Delaware LLC for non-US residents is not prematurely closed by the US government and you end up losing your tax-free business, you must do the following each year:

Pay an Annual Tax of $300 

In the state of Delaware, all annual taxes for the previous year are due by June 1. If you don’t pay the 300$ fee by that time, you’ll have to pay a penalty of 200$ plus 1,5% interest on both owed taxes and the penalty. 

File the 5472 Form

The 5472 form is an informational tax form that must be filed annually with the IRS. Don’t worry; filing this form doesn’t mean you have to pay taxes. The 5472 form is only for informational purposes.