How to open your LLC in the United States from Spain?

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Opening an LLC in the United States from Spain is an increasingly popular option among Spanish entrepreneurs. This legal structure offers you tax advantages, such as not paying federal taxes in the United States if you are not ETBUS, and avoiding double taxation by paying taxes only in Spain. In addition, a Limited Liability Company (LLC) protects your personal assets, facilitates business management from abroad and allows you to access the international market with low operating costs and flexibility.

In this article, we will tell you in detail how to set up an LLC in the United States as a Spanish resident,  comply with regulations and understand the tax implications in both the USA and Spain. With this guide, you will be able to make informed decisions and successfully expand your business internationally.

What is an LLC?

An LLC (Limited Liability Company) is a business structure in the United States that offers limited liability, which means that the owners' personal assets are protected in case of debts or lawsuits against the company. In addition, it offers tax transparency: the company's profits are transferred directly to the members, who declare them on their personal taxes. If your LLC does not generate income in the United States, you will not have to pay taxes there.

The creation of an LLC allows you to operate remotely, without residing in the USA, which makes it easier to open bank accounts and access financial benefits. States like Delaware and Nevada offer favorable environments to reduce tax burdens and increase privacy.

Requirements to open an LLC from Spain

To open an LLC from Spain, the requirements are simple: you need a valid identification document (DNI or passport) and be over 18 years of age. It is not necessary to travel to the United States to establish the company, which facilitates the process for Spanish businessmen interested in expanding to the US market.

However, it is recommended to hire specialized advice to manage key procedures such as the presentation of the Articles of Organization and obtaining the EIN. This ensures that you comply with tax and legal regulations, avoiding errors and delays that could generate additional costs.

Steps to open your LLC in the USA as a Spanish resident

You already know what an LLC is and you meet the requirements to open it in the US from Spain. Now, let's look at the steps necessary to successfully establish and operate your LLC.

1. Define the status of your LLC

Carefully choose the state in which you want to register your LLC. Each state has different costs and regulations, which will affect your annual expenses and the privacy of your data. The three main criteria to consider are:

• Cost of registration fee: The opening fee is a one-time fee that you have to pay to the state at the time of registering your LLC.
• Annual report in which you must provide updated information about your company. Some states may go as high as annual fees.
• Anonymity: The names of the members or owners will not be published publicly, providing greater privacy.

However, anonymity does not exempt from complying with tax obligations, since the competent authorities such as the IRS (Treasury) will have access to the necessary information.

Here we compare the main states in the United States to open your LLC so you can make the best choice. decision.

Some states, such as New Mexico, offer competitive rates, which can be ideal for reducing upfront costs. New Mexico also does not have an annual report. On the other hand, if you value privacy and favorable case law, Delaware is a good option. 

The decision to choose in which state to open your LLCimpacts both costs and operation. Evaluate your priorities, such as rates, privacy, and ease of management, to make the best strategic decision for your company.

2. Choose the name of your LLC

When choosing the name for your LLC, you should comply with state laws and consider your branding strategy. Most states require the name to be unique in their jurisdiction, with no overlap with existing businesses. Use the name validation tools available in your chosen state to confirm its availability.

It is mandatory to include the acronym "LLC" in the name, which indicates the legal structure and protects the owners from personal liability. Additionally, some states prohibit the use of specific terms such as "bank" or "university" unless the business is in those industries.

Check state laws to avoid registration problems and rejections. Make sure the name complies with all regulations to start your LLC on a solid foundation.

3. Choose the registered agent

When forming an LLC in the United States without residing in the country, you must designate a registered agent in the state where you register the company. This agent, which can be a person or an entity with a physical address in the USA, is responsible for receiving legal and official documents on behalf of your LLC. Their role is crucial in ensuring that all important correspondence, such as subpoenas or tax notices, reaches you on time.

The registered agent must be available during business hours and have an address in the state of registration to ensure that you do not miss essential legal notices, thus avoiding potential fines or problems with your LLC.

Both a person over 18 years of age in the US or a company specializing inregistered agent services can fulfill this role. These services are usually renewed annually, so it is key to know the responsibilities of the registered agent and keep the information updated to comply with all your legal obligations.

4. Complete the "Articles of Organization" form

To formally register your LLC, you must file the "Articles of Organization" document with the appropriate state agency. This document sets out the key legal aspects of your business, including:

• The name of your LLC
• The primary address
• The registered agent
• The names of the members or managers.

The filing fee varies between $50 and $500, depending on the state.

Understanding the the Articles of Organization filing process ensures that your application meets all state requirements for avoid possible delays or rejections that could delay the start of your commercial operations.

Once approved, you will receive a training certificate. This certificate is a document that confirms that your LLC is officially registered and operational. With this certificate, you will be able to open a bank account in the USA, obtain a tax identification number (EIN), and carry out other important procedures to operate your company.

5. Create your operating agreement

The Operating Agreement is a document that defines how your LLC will be managed and the rights and responsibilities of each member. Si bien no es obligatorio, es altamente recomendable que cuentes con este acuerdo por escrito para proteger legalmente a tu empresa.

Este acuerdo cubre aspectos esenciales como la distribución de ganancias y pérdidas, aportes de capital y procedimientos para resolver conflictos o manejar la salida de un socio. In addition, it offers flexibility by allowing management to be shared between members or delegated to an external manager.

Having a well-personalized Operating Agreement that addresses the specific needs of your business is essential. It ensures clarity in daily management, minimizes future conflicts and improves the image of your LLC before banks or investors.

6. Get an EIN

Once your LLC is registered in the United States, you will need to request an Employer Identification Number (EIN) from the IRS. This number is essential for managing fiscal and administrative obligations, such as paying taxes and payroll.

The EIN is essential if you plan to hire employees, open a business bank account, or if your LLC has more than one member. In addition, it allows to separate personal finances from business finances, protecting your information.

To obtain it, complete Form SS-4 on the IRS website. The process is free and can be done online, being essential to comply with your federal tax obligations.

7. Keep your LLC active

Once your LLC is registered and operational, you must keep it active and in compliance with state laws to avoid legal and financial problems. Make sure you comply with all regulatory obligations and respect the deadlines of the state where your LLC is registered.

Most states in the USA require you to file an annual report to update information about your LLC, such as address, member information, etc. Failure to comply with this requirement may result in sanctions, fines or even dissolution of the LLC. Some states impose an annual fee for this process.

Also, be sure to renew the necessary licenses and permits so that your LLC continues to operate legally. A due date calendar will guarantee you meet all your obligations on time.

Delegate the creation of your LLC and avoid all these complex processes

How does an LLC pay taxes in Spain?

If you register and manage a company in Spain, you must comply with certain tax requirements. This includes:

• Companies: Pay the Corporate Tax, which applies 25% annually on profits. For new companies, this percentage can be reduced to 15% during the first two years.
• Self-employed: Pay the monthly fee for self-employed workers, which varies between 230 and 500 euros.

However, with an LLC, your company will not be based in Spain, so you will not have to pay these taxes.

Important: With an LLC, you will not contribute to the Spanish social security system. Therefore, you will not contribute to your retirement, you lose the right to unemployment, etc... So take this into account to organize your personal finances.

However, as the LLC works through fiscal transparency, yesyou will have to pay the Personal Income Tax (IRPF) on all the profits obtained. This tax must be declared at the end of the fiscal year. If you do not pay personal income tax, you could face significant fines, late payment interest, and evencriminal proceedings in serious cases.

Also, the accounting management of an LLC is extremely simpler than that of a company incorporated in Spain. The costs of an accountant will be much lower.

What to do after creating my LLC?

After registering your LLC, it is crucial to establish a solid financial and tax foundation. Here three key points to consider:

Open a bank account dedicated to your LLC

After registering your LLC, it is essential to open a business bank account to separate your personal finances from those of your business, which protects the company's limited liability.

This unique account facilitates financial management and simplifies accounting, making the tax filing process more streamlined.

Somerecommended options for non-US residents include Mercury, Relay, Revolut, AirWallex, Wise, Bank of America y Chase.  When choosing a bank review: the associated fees, such as maintenance costs, international transfers and quality of customer service.

Plan the taxation of your LLC

As a transparent tax entity, an LLC does not pay corporate taxes directly. Instead, the income is transferred to the members, who must report it and pay personal taxes.

The taxation of your LLC may be affected if it is classified as Engaged in Trade or Business in the US (ETBUS), which applies if you carry out activities in the USA, such as physical sales, trading, dropshipping, or using platforms such as FBA.

Plan your taxation based on your LLC's activities to ensure proper compliance.

Meet your obligations

Your LLC must annually renew the Registered Agent, who receives legal and tax notifications in the United States. This renewal is mandatory in all states and usually has a fee.

Also, many states require an Annual Report, which details the structure and activity of the company, with fees that vary by state.

Even if your LLC does not generate income or pay taxes in the USA, it must submit its annual tax activity to the IRS. This can include forms such as the 5472 for a single foreign owner or 1065 for LLCs with multiple members. 

FAQ: Opening of LLCs from Spain

Why open an LLC as a Spanish resident?

Among the main advantages of opening an LLC in the United States as a non-resident, we can name:

• Transparent taxation: The LLC is a “pass-through” entity, which means that taxes are transferred to the owners, who declare them personally.

• Legal separation of assets: Protect your personal assets by keeping the company's assets separate from yours in case of legal problems.

• Professional image and market access: Provide credibility to your business and facilitate access to the US market, allowing you to operate in dollars and establish business relationships.

• Easy tax obligations: Obligations such as the renewal of the registered agent and the presentation of annual reports are easy to manage from Spain.

¿Cuánto cuesta y cuanto tarda abrir una LLC en Estados Unidos?

The cost to register an LLC in the USA varies by state, from $50 to more than $500. States like Delaware and Wyoming are popular for their low rates and tax benefits. Additionally, there are annual costs, such as the registered agent fee, which can range from $50 to $300, and annual reporting or state taxes, which depend on the state. Opening time also varies: in states like Delaware and Wyoming, the process can take 5 to 10 business days. However, registration can take 3 to 4 weeks in states with longer processes, such as California or New York. Opting for expedited registration can reduce the time to 2 or 3 business days, although there is usually an additional cost.

What are the different types of LLC?

There are different types of LLC that can be adapted to the specific needs of each business. Among the main ones, we find:

• Single Member LLC: Ideal for a single owner. Profits and losses are transferred directly to your personal return.
• Multi-Member LLC: Designed for two or more owners. Income and expenses are distributed among members as agreed in the operating agreement.
• Professional LLC: In some states, certain professionals such as lawyers or accountants must form a professional LLC (PLLC) to offer specialized services.
• Anonymous LLC: This structure allows owners to remain anonymous, which can be helpful if you want to protect your identity while running your business.

What types of business are suitable for LLCs from Spain?

LLCs in the US are ideal for various types of businesses managed from Spain, thanks to their flexibility and protection. Here are some examples:

• E-commerce and Dropshipping: They facilitate the management of international sales and protect the owner's personal assets, handling multiple transactions without additional legal complications.
• Consulting and Professional Services: They offer a professional structure that increases credibility with clients and partners in areas such as digital marketing and financial consulting.
• Digital Products and Online Training: They protect property intellectual property and simplify the administration of international sales and tax compliance of digital products.
• Technology and Software Services: They provide protection against risks associated with the development of technological products and services, ideal for the technology sector.

Is it legal to open an LLC as a Spanish resident?

Yes, it is legal for a Spanish resident to open an LLC in the United States, since the jurisdiction of an LLC is subject to the laws of the state where it is registered, not Spanish laws. Therefore, as long as the LLC does not have a permanent establishment in Spain, that is, it does not have offices or employees in the country, it would not be required to follow Spanish tax rules. The owner would only be required to pay personal income tax on the profits generated by the LLC, which can result in tax advantages if the LLC structure is transparent.

However, a crucial aspect to consider is the “place of effective management.” If the activities of the LLC are controlled from Spain, the Tax Agency could consider that the company has a tax residence in the country. To avoid this risk, it is recommended to appoint a manager to manage the LLC from abroad. This strategy allows the effective management to not be considered Spanish, protecting the owner from possible tax implications in Spain. Consulting with a tax advisor is essential to ensure proper compliance with regulations.

How does the double taxation agreement between Spain and the USA work?

The double taxation agreement between Spain and the United States aims to prevent people and companies that generate income in both countries from paying taxes twice for the same concept. This treaty establishes clear rules on where and how much to tax, facilitating investment and trade between the two nations. In practice, if a Spanish resident earns income in the United States and has already paid taxes there, they can deduct that amount from what they would have to pay in Spain, which alleviates the tax burden. In this way, double taxation of income obtained in both territories is avoided, applying a system of tax credits.

In addition, this agreement has additional benefits, such as the reduction of withholdings at source on dividends, interests and royalties. It also extends to LLCs that operate under the income attribution regime (RAR), which means that the profits obtained by an LLC in the US are distributed among its partners, who are taxed in their country of residence. To ensure that tax regulations are correctly complied with, it is advisable to have a tax advisor specialized in both markets, which guarantees taking advantage of all the advantages and proper compliance with tax obligations.