Starting a global business is a serious step into getting your financial situation in order. Congrats on considering taking this step.
At Neubase, we truly care that you and your business have a smooth flow and growth. With that being said, you must be aware that many tasks need proper management on the entrepreneurial journey.
Getting around legal and regulatory frameworks requires careful planning and precision.
We created this guide to help you do it like a pro and avoid some of the most common mistakes when you start and run your global business remotely.
Let’s explore the essential steps and common oversights in remotely setting up a US LLC.
Selecting the Wrong Entity Structure
You must have heard the startup bro on Twitter suggesting you start a Delaware C-Corp in the US because, hey, if Fortune 500 companies do it, that must be the best option for everyone.
Wrong.
Starting a C-Corp is very bad compliance and tax advice unless your next step is raising venture capital or having an IPO. In all other cases, LLC is the better option (oh, and in Wyoming, not Delaware, here’s why).
Choosing the wrong entity type for your business can have serious consequences, including unexpected tax liabilities, legal issues, and inefficiencies in your operations. This decision can significantly impact your business’s financial and legal structure, potentially leading to complications in the future.
Making the wrong choice can also undermine the benefits you may seek from forming an LLC, such as protecting your personal assets and tax advantages.
Choose the company structure that aligns with your business goals and personal circumstances. An LLC will keep you safe from legal trouble, paying income taxes in the US, and complex reporting requirements.
In conclusion, if you are about to raise money, choose C-Corp. In all other cases, choose LLC.
Incorporating in the Wrong State
Incorporating in California or New York may sound cool to your friends. Incorporating in Delaware will make you feel closer to the Fortune 500. However, that may not be the right criteria for choosing your state because you have unique business goals.
Every state in the United States has unique laws, tax codes, and business environments. These differences can significantly impact your LLC’s operational costs, tax obligations, and legal requirements.
We incorporate all of our clients in Wyoming unless they explicitly require otherwise. From our experience, we find it to be the place to include non-residents. The sales tax laws are friendly; incorporation is fast and affordable, and maintenance and closing down are affordable. Compared to Delaware, Wyoming has no $300 yearly fee.
So, if you plan to start your US LLC from Europe, then don’t look any further than Wyoming. You may want to consider another state, but only some business circumstances require it.
Learn more from our article on where to set up your LLC: Wyoming v. Delaware.
Choosing an Unreliable Registered Agent
Any foreigner with an LLC in the US must have a registered agent. The registered agent serves as the official contact for receiving all legal documents, tax notices, and government correspondence on behalf of your company. This is not just a formality but a legal obligation in all states.
If you live in the US, you can be your registered agent for your state. But you live abroad, so using registered agent services is a must. However, someone receiving the mail from the IRS and the Secretary of State is important, so you have to choose a reliable registered agent.
The consequences can range from missing crucial legal notices to falling out of compliance with state laws, which may result in penalties, fines, or even the involuntary dissolution of your LLC.
When choosing one, please have two important things on top of your mind:
- Your registered agent should have a physical address in the state of incorporation
- Make sure that he will be available during standard business hours to receive important documents and promptly forward them to you. Commercial registered agents always are.
For non-US residents, our advice is always to hire a professional registered agent who meets these basic requirements and offers additional support, including compliance alerts and assistance with document filing.
By selecting a reputable registered agent, you can ensure your LLC’s compliance and have peace of mind.
We created a dedicated article explaining what a ‘registered agent’ is. Feel free to check it out.
Forgetting to be LLC-Compliant
Maintaining LLC compliance is an ongoing process that goes beyond the initial setup. It involves meeting state-specific requirements such as filing annual reports, paying taxes, and maintaining a registered agent.
Compliance is crucial to complying with legal mandates and providing that your business has a solid legal standing and operational legitimacy in the United States.
Non-US residents need to pay close attention to the complexity of these requirements to avoid unintentional non-compliance. Ignoring these requirements may lead to severe repercussions such as penalties, fines, or even the administrative dissolution of your LLC, which can harm your business’s operations and reputation.
Staying on Top of LLC Compliance
It is important to understand the annual requirements in your state of incorporation, such as filings and tax obligations, and stay alert about any changes in state laws that could have an impact on your business.
If you’re a entrepreneur who needs help navigating the complexities of compliance, we can provide tailored services to keep your LLC in good standing. Our services include reminder systems and direct assistance with filing requirements to help you stay on track.
Don’t leave your investment at risk – make sure your LLC stays compliant.
Not Keeping Records
To have a strong business structure, you must have well-organized record-keeping.
Proper documentation is not just a best practice but a legal requirement protecting your LLC. This barrier protects your assets from business liabilities; insufficient records can put this shield at risk.
Many new business owners must pay more attention to consistent and accurate record-keeping. Without proper documentation to support their position, record-keeping can lead to problems in proving the separation of personal and business affairs.
This can complicate tax filings and even result in legal disputes. It is critical to pay close attention to record-keeping to avoid these issues and ensure the success of your LLC.
Implementing Effective Record-Keeping Practices
Recordkeeping involves more than just storing receipts. It includes keeping track of everything about your business, from meeting minutes to financial statements to contracts to correspondence.
In conclusion, if you use digital tools and cloud storage, you can make document access easier and ensure security. Additionally, it’s wise to consult with legal and accounting professionals to understand the specific record-keeping requirements applicable to your LLC.
PRO Advice:
As a business owner of a global remote company, we are 100% sure that you are juggling between tasks and responsibilities too much and too often. And mistakes are sometimes inevitable. Unfortunately, some can cost you in the long run and even affect your future business projections.
Having professionals by your side will save you money, time, and legal and tax-related worries.
Check out Neubase packages and learn more about the process and everything we cover. We have created service packages that will never allow you to miss important deadlines; we have your back.
