In this article, we answer “what is a single-member LLC?”
But more importantly, we’ll discuss the nuances related to registering a single-member US LLC and who might want to consider one for their future business needs.
Of course, if you already have a single-member US LLC and you’d like to explore US business bank account for your LLC (especially as a foreign non-resident), you can access our free guide by clicking here.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- What Is a Single-Member LLC?
- Who Can Register a Single-Member LLC?
- Benefits of Registering a Single-Member LLC?
- Frequently Asked Questions
- Ready to Explore Your Options?
What Is a Single-Member LLC?
Single-member LLC is a type of US limited liability company. It is formed with a single owner, called a member. The single-member LLC is commonly used by foreign non-residents looking to set up a US business as it can offer significant tax efficiencies when certain criteria are met.
When owned by a foreign non-resident, a single-member LLC is commonly referred to as a foreign-owned single-member US LLC or a FOSM LLC for short. When this type of US LLC does not have any qualifying income, known as effectively connected income (or ECI), it typically does not have tax liabilities in the United States. Instead, the only obligations involve limited informational reporting about the business activities and finances.
Of course, if you are a foreign non-resident individual considering a US LLC for its tax efficiencies, it’s important that you consult a qualified tax advisor before making any decisions. Otherwise, you may find yourself with a company that does not meet your specific objectives.
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Who Can Register a Single-Member LLC?
Anyone can register a single-member US LLC if they are willing to pay the necessary registration fees and provide the required information. In fact, the most popular states used by foreign non-residents when registering LLCs do not have any restrictions on the citizenship of the owners.
Benefits of Registering a Single-Member LLC in the US?
The benefits of registering a single-member LLC in the US include:
- Low-cost company registration fees
- Low-cost company maintenance fees
- Limited state and federal reporting requirements
- Semi-anonymous registration available in several states
- Completely anonymous registration available in certain states
- Accessible bank account opening including in-person and remote
Banking Options for Single-Member US LLCs
The specific banks that a single-member LLC will be able to open accounts with will depend on a number of key factors, including:
- In-person or remote opening
- Deposit amount
- Business activities
- Citizenship and residency of the owner
- Transaction activities
- Countries sending and receiving transfers to
- And more…
If you are interested in opening a bank account for your single-member US LLC and would like to know how realistic account opening is, feel free to chat with us now or send us a message on our contact page.
How to Register a Single-Member US LLC
To register a single-member US LLC, you first need to choose which state you will be using for registration. This is a very important consideration as there are key differences between states in terms of fees, reporting, privacy, and much more.
The most popular states that foreign non-residents of the United States use when registering LLCs typically include:
- New Mexico
Of course, when registering a local business (with local activities) it often makes sense to register an LLC in the state where the activities are being carried out.
Requirements for Registering a Small Business as a Single-Member US LLC
The requirements for registering a small business as a single-member US LLC include contracting a local registered agent, filing the necessary documents, owner information, and operating agreement with the state, and receiving state approval.
Of course, each state is different and the specific information that they require you to submit will vary. With this in mind, if privacy is a concern, you may want to consider one of the privacy-oriented states like Wyoming.
Frequently Asked Questions
Below are three of the most common questions that we receive from people looking into what is a single-member LLC. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
What Are the Disadvantages of a Single-Member LLC?
The disadvantages of a single-member LLC depend on the state of registration. Also, whether the LLC has effectively connected income (ECI) is a consideration. And, how the actual use of the LLC is also important to consider.
For example, certain states have onerous reporting requirements, high maintenance fees, and state taxes, while other states do not have any reporting requirements, minimum fees, and no state taxes. Likewise, if a US LLC has effectively connected income, it will likely be liable for federal income tax, while it would likely not owe federal income tax if it does not have effectively connected income.
What Is the Difference Between Single-Member LLC and Sole Proprietorship?
The main difference between a single-member LLC and a sole proprietorship is that a single-member LLC is a registered business entity that separates personal and business assets and liabilities while a sole proprietorship is unregistered and does not separate personal and business assets and liabilities.
Is It Better to Be a Single-Member LLC or a Multi-Member LLC?
Whether it is better to be a single-member LLC or a multi-member LLC should be a decision about the ownership of the business. In other words, if a business has multiple owners, a multi-member may make sense. However, if a business has a single owner, a single member will make sense.
Ready to Explore Your Options?
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