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How to open a company in the USA while maintaining residence in Italy
It is one of the best ways for the Italian citizen to manage their business. This corporate vehicle allows access to multiple advantages of an advanced jurisdiction such as the US and also manages to maintain a low tax rate with very manageable levels of accounting and bureaucracy.
In Europe there are many nations that, in order to avoid problems with corporate foreign investment, have implemented very strict regulations to which attention must be paid when opening a foreign company.
Jurisdiction in the USA
Unbelievable but true, the American LLC (comparable to the Italian limited liability company) is much more convenient for those who are not American citizens. These are cheap companies to incorporate and which can be opened in less than a week at ridiculously low prices.
Some of the merits of the American jurisdiction are:
- Good reputation internationally (registering your company in the USA will give you a high level of trust around the world)
- Low opening costs
- Very easy access to the means of payment and the banking structure
- Taxation can also be canceled
The benefits for non-resident or non-US citizens
For all those who do not hold a US residence, the USA can represent a real tax haven. Earnings can be almost completely tax free!
This is because the LLC is an entity defined as transparent(pass-through) therefore the tax obligations are all borne by the members of the LLC which must be included in the personal tax return to be made in the USA.
Therefore, for members of the LLC who are not resident in the United States or non-citizens of the United States, there will be no tax payable.
The criteria that the LLC must meet in order not to be subject to US federal income tax:
- Be 100% owned by non-US tax resident persons
- They have no personal presence or economic substance in the US
- The company's income must not be generated from the US
Who are the Resident Alien?
These are those who for the USA are considered non-resident foreigners. To be so you must NOT be part of one of these categories:
- Be an American citizen
- A permanent resident of the USA (therefore green card holder)
- Having lived in the US long enough to pass the substantial presence test
Additionally, you are not subject to U.S. business tax if you DO NOT meet these other conditions:
- You are engaged in a commercial activity in the USA (ETBUS): for this to be true you must have at least one "employee agent" (employees or companies that work almost exclusively for you) in the USA and the latter must do something substantial to promote your business in the USA.
- You operate in the United States through a "permanent establishment".
Accounting requirements in the United States
Your duties from an accounting point of view:
- Request and keep invoices and / or receipts for each purchase made;
- Submit active invoices;
- Prepare complete monthly VAT reports.
You will only need a profit and loss account that is capable of showing incoming and outgoing payments made by your LLC.
By managing an LLC as a transparent entity you will not have to worry about particular accounting obligations, it will all be very simple and lean to manage.
Open LLC in the USA residing in Italy
Opening an LLC in the USA as a non-resident is possible and very interesting to save significantly(or totally) on taxes. But this does not mean that you will be able to operate on the Italian market taking advantage of the US advantages.
Many entrepreneurs, especially in the digital field, believe they can take advantage of the tax advantages of the USA to open their online businesses while continuing to operate in other states, such as Italy.
All this takes the name of tax inversion and it is a crime that is punished with very high penalties, which is why I invite you to be very careful before taking any step and to get adequate advice.
Do not confuse the advantage of setting up a company and operating in the United States as a non-resident with the idea of using this opportunity to invoice "black" in Italy.
If you set up your LLC in the USA taking advantage of the tax advantages, you will also need to operate and invoice in that market. Otherwise, expect the Italian taxman to knock on your door to ask for compensation for everything you have escaped.
LLC opening in the USA
Opening an LLC is very easy, fast and inexpensive.
- Decide in which state to set it up
- Choose a company name and make sure it doesn't already exist
- Use a service provider to open the LLC and act as a registered agent
- Apply for an EIN (employer identification number)
- Open the necessary bank accounts and request payment processors
What is it and how to get the EIN
The Exployer Identification Number is a unique 9-digit number assigned to your LLC by the I RS. It is used to fiscally identify a company and is necessary for the establishment of the business.
You will have to fill in a specific application to obtain the EIN (Form SS-4) and you will need to be in possession of:
- A trade name
- A business address in the USA
- An explanation of the main business and the main product / service you will sell
In short, at this point in the reading, the advantages for non-residents of setting up a company in the United States will be clear to you. What must be equally clear to you is that this is not a way to evade the tax authorities and not pay taxes.
Although the US offers many benefits to foreign businesses, it is important to comply with certain requirements and operate with the utmost transparency in order to take advantage of them and not take risks.
If you want to know more, deepen the topic and study the advantages you can have with your company by opening an office in the USA while residing in Italy, fill out the form below and let's chat without obligation.