Features and Advantages
of a Pennsylvania Limited Liability Company
The name of a Pennsylvania LLC must not bare any similarity to an existing company registered in Pennsylvania and must end with the words “Limited Liability Company”, “Company”, “L.L.C.” or “LLC”.
A registered agent with a registered office, with a street in Pennsylvania is required. You may wish to have an office with an address where mail may be directed. We will provide these services.
The Registered Agent will prepare and file the Articles of Organization with the Pennsylvania Secretary-of-State, at which time the Limited Liability Company will legally exist.
A Pennsylvania LLC is a legal business entity and treated as separate from its owners.
The LLC does not issue shares therefore does not have shareholders. Its owners are members of the LLC.
A Pennsylvania LLC may be organized with a minimum of one member; however this is not recommended for a non-resident alien. An LLC with just one member may be treated like a Sole Proprietorship and the member will be tax liable for worldwide income.
When formed by two or more physical non-resident members, the tax treatment is much more favourable.
The members of a Pennsylvania LLC usually manage the business. The authority of the members is normally in direct proportion to their interest in the profits of the LLC.
A manager may be appointed if this option is found to be convenient.
The manager may be a member.
There is no Board of Directors. The manager is directly responsible to the members.
A Pennsylvania LLC is owned by its members.
Non-resident aliens and/or companies may fully own a Pennsylvania LLC.
The LLC may also be owned by Corporations (companies limited by shares), other LLC’s, Partnerships, Trusts, Pension Plans, Charitable Organization and US residents.
There are no restrictions as to the number of members and their residence or citizenship.
Liabilities and Obligations
A Pennsylvania LLC offers asset protection to its owners. The Limited Liability status ensures that debt and other obligations are the sole responsibility of the company
A Pennsylvania LLC is a tax-free business entity.
Income from the distribution of profits to the owners is taxed on the Personal income basis of the owner.
If no income is derived from doing business or trade within the US, the non-resident alien members are not liable for United States tax and do not have to file tax returns.
It is recommended that when organizing an LLC, non-resident members should be physical persons. IF it is formed by non-resident legal entities, such as companies or corporations, the LLC may be considered by the IRS as a branch of a foreign company in the US and the LLC will therefore be taxed on its worldwide income.
Income is said not to have been derived from the United States, providing that:
The LLC is not effectively connected with trade or business within the United States.
It does not employ US residents on a permanent basis.
It does not rely on a dedicated place of business within the United States. This does not apply to an office which is infrequently used.
Meetings and Records
Meeting of the members of an Pennsylvania Limited Liability Company is not a statutory requirement. The members may meet if necessary, anywhere and by what means they choose.
Accounts and other records do not have to be filed with the exception of Form 1065, which is filed with the IRS annually, to ensure US residents properly report their income.
How you can Benefit by Forming a Tax-Free
The US LLC
The U.S. Limited Liability Company (LLC) is becoming an essential international tax planning tool through the advantages of “flow-through” taxation. Like a U.S. corporation, the LLC provides protection from liability, but for tax purposes it is treated like a partnership. This means the LLC itself pays no income tax. Instead, all income and expenses “flow” directly to the owners.
By forming and using a U.S. LLC in conjunction with an offshore company, you can combine the best of both the onshore and offshore worlds. A carefully LLC will enable you to avoid the increased scrutiny of offshore companies and gain the acceptability of a U.S. company with the tax advantages of an offshore company.
How does it Work?
For a U.S. LLC to be tax free in the United States, the LLC must meet the following requirements: it must have no income or expenses in the U.S., and it must be owned by a foreign company or by a non-U.S. citizen who lives outside the U.S.
Once established, you do business with your U.S. company counterpart by receiving invoices from and making payments to the U.S. company. The U.S. LLC, in turn, deposits the funds in its bank account. The money is transferred to your offshore company’s bank account. You can then spend or invest the money tax free.
Our Firm specializes in the formation of U.S. companies for use in international tax planning strategies.
We have implemented our unique approaches for helping foreign companies achieve tax advantages for the past 7 years.
Our services include all of the necessary elements to form your U.S. LLC and maximize your success by creating a “believable image” that will avoid the scrutiny of tax authorities.
Our Firm has several key elements that will ensure your success. Our strategies are built on sound legal advice from leading U.S. tax attorneys. We have extensive experience in company formation and U.S. tax law. We work directly with tax and financial professionals, never with taxpayers. And finally, we have a proven ability to take you through the process of creating a “believable image” with a Virtual Office that includes mail, phone and fax forwarding and professional business identity packages.