In this article
If you live outside the United States and want a US company, the first choice is the type: an LLC or a C corporation. Both can be owned by a foreigner and both can be formed online. They differ in tax, in how easy they are to run and in who they suit. This guide compares them for non-resident founders. For the setup itself, see our LLC registration in the USA for non-residents or our company formation in the USA page.
Key takeaways
- An LLC is simpler and cheaper to run. It suits freelancers, agencies, e-commerce and online service businesses.
- A C corporation suits founders who want to raise money from investors or issue shares and stock options.
- Neither type requires you to be a US citizen or resident.
- S corporation status is generally not open to non-resident owners.
- Your home country's tax rules matter as much as the US ones.
The two at a glance
| LLC | C corporation | |
|---|---|---|
| Owned by | Members | Shareholders |
| Foreign owners allowed | Yes | Yes |
| US tax by default | Pass-through (single-member is disregarded) | Company pays corporate tax |
| Yearly filings | Form 5472 and pro forma 1120 for a single foreign owner; state report where required | Form 1120, state report, and more formalities |
| Rules to follow | Few | Board, officers, bylaws and minutes |
| Investor-friendly | Less so | Yes, this is the standard for venture funding |
Why most non-resident freelancers and online businesses choose an LLC
- Less paperwork. No board meetings or minutes are required.
- Flexible ownership. One owner or many, with the split written in an operating agreement.
- No US income tax in many cases. A single-member LLC owned by a non-resident, with no US-source income of the kind the US taxes, usually owes no US federal income tax, though it still files. Read do non-residents pay tax on a US LLC?
When a C corporation makes more sense
- You plan to raise money from US investors who expect to hold shares.
- You want to give employees stock options.
- You want to keep profit inside the company and decide later what to pay out.
A C corporation pays corporate tax, and dividends paid to a foreign owner can face US withholding. Read LLC vs C corp taxes for the detail, and how to convert an LLC to a C corp if you start with an LLC and later need to change.
What about an S corporation?
The IRS generally limits S corporation shareholders to US citizens and residents, so a non-resident founder usually cannot use it. That is why the choice for foreigners is nearly always between an LLC and a C corporation.
Your home country
The US is one side of the picture. Your home country may tax the company's profit or treat the LLC or corporation differently. Talk to a local tax adviser before you decide, because that can change which type costs less overall.
Frequently asked questions
Can a non-resident own a C corporation?
Yes. A non-resident can be the sole shareholder, director and officer of a US C corporation.
Is an LLC or an Inc better for a foreigner?
An LLC for most small online businesses and freelancers. An Inc (C corporation) if you expect to raise investment.
Can I change later?
Yes. An LLC can be converted to a C corporation when the business grows, though the conversion has its own steps and tax effects.
Choose and start
Not sure which suits you? Compare company types, or start with LLC registration for non-residents.
Related guides
Written by the Jupiter Filing team
Jupiter Filing helps founders from any country form and run a US company online: formation, EIN, registered agent and yearly compliance. This guide is general information, not legal or tax advice.
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