What is an LLC?
An LLC is a Limited Liability Company. In practice, it means a subsidiary of an international business setting up in the USA limits its liability for legal and tax affairs. However, in the US, an LLC must file a US federal income tax return, and it’s typically more expensive for an LLC to form and organise than it is for a corporation.
When you’re setting up a subsidiary in the US, you’ll need to decide what form the subsidiary will take. ‘Form’ refers to the legal structure of the subsidiary, and an LLC is just one such form. LLC stands for ‘Limited Liability Company’, and has the advantage of limiting your business regarding legal affairs, tax affairs and costs. However, there are some disadvantages to forming an LLC:
- There are circumstances under which a LLC may offer less limited liability than a corporation does.
- LLCs are sometimes more expensive to set up than a corporation.
- An LLC will need to file a US federal income tax return every year, which can be expensive and time consuming, as well as confusing.
Nonetheless, there are very good reasons to set up your subsidiary as an LLC, so be sure to talk it through with your appointed lawyer so you can make the right decision for your business. Alternatively, you could simply use Foothold America’s services if you’d prefer not establish a US entity.
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