Free LLC Guide

U.S. Limited Liability Companies: Everything You Need to Know

Learn how to start your Limited Liability Company (LLC) the right way! Whether you want to learn how to start your LLC yourself or hire us to form your LLC for you, you’ll find the easiest path forward with our pro tips and choices all outlined below.

What is a Limited Liability Company (LLC)?

An LLC, or Limited Liability Company, is a business structure that offers flexibility in management and taxation, similar to a corporation. It is formed at the state level and provides limited liability protection to its owners, meaning that the debts and assets of the business are separate from the personal assets of the owners. If the LLC is sued, the damages are typically limited to the assets of the business rather than those of the individual owners.

The owners of a Limited Liability Company (LLC) are referred to as “members.” Most states permit “single-member” LLCs, those having only one owner. So an LLC can have only one owner, known as a single-member LLC, or can have multiple owners, known as a multi-member LLC. Most states also do not restrict ownership, so these members can be individuals, corporations, other LLCs, or foreign entities, and there is no limit to the number of members that an LLC can have. So it is important to note that the term “member” does not necessarily refer to a person, as an LLC can also be owned by a business entity such as another LLC or corporation.

The LLC is created by a filing form (called an LLC Articles of Organization) typically with your state’s Secretary of State office, or similar government agency, and paying a one-time filing fee.

The formation date of an LLC refers to the date on which the LLC was legally established and registered with the state in which it is located. The consequences of the formation date of an LLC can vary, but may have some potential implications in certain states such as Delaware.

History Of The LLC

The Limited Liability Company (LLC) was first introduced in the United States in the state of Wyoming in 1977. It quickly gained popularity and revolutionized the way businesses operate in the U.S.A. Although Delaware is often associated with LLCs, it was actually Wyoming that was the birthplace of this type of business entity.

The LLC was officially established in Wyoming in 1977. The State of Delaware didn’t offer LLCs until 1991.

Prior to the creation of the LLC, business owners had two main options for organizing their businesses: a sole proprietorship or a corporation. A sole proprietorship offered simplicity and flexibility, but the owner was personally liable for all business debts and obligations. A corporation offered limited liability for its owners (also known as shareholders), but it was a more complex and expensive structure to set up and maintain.

The LLC was designed to provide the best of both worlds: the simplicity and flexibility of a sole proprietorship with the liability protection of a corporation. In an LLC, the owners (called “members”) are not personally liable for the debts and obligations of the business. This means that if the LLC is sued or incurs debt, the members’ personal assets (such as their homes, cars, and savings) are generally not at risk.

LLCs have become a popular choice for small businesses in the United States because they offer a relatively simple and flexible structure with the added benefit of limited liability protection. Today, LLCs are recognized in all 50 states and the District of Columbia, and they are used by a wide range of businesses, from small startups to large enterprises.

The Effective Date of Formation for an LLC

The formation date of an LLC refers to the date on which the LLC was legally established and registered with the state in which it is located. The consequences of the formation date of an LLC can vary, but some potential implications may include:

  1. Tax implications: The formation date of an LLC may affect the tax year in which the LLC is required to file its taxes.
  2. Liability protection: The formation date of an LLC may determine the point at which the LLC is legally protected from liability for the actions of the business.
  3. Duration of the LLC: The formation date of an LLC may affect the duration of the LLC, as some states have rules regarding the minimum length of time an LLC must be in existence before it can be dissolved.
  4. Transfer of ownership: The formation date of an LLC may be relevant in the event of a transfer of ownership, as the length of time the LLC has been in existence may affect the value of the business.

On our Delaware LLC formation forms, there is an “Effective Date of Formation” field for the date that the LLC was formed. In the state of Delaware, for an LLC, you can enter an effective date up to 180 days in the future for this field. The date of submission to the state will be the filing date, but the LLC’s formation will not be considered official until the effective date.

In Wyoming, the effective date of formation for an LLC does not have the same implications as it does in Delaware. In Wyoming, annual reports for corporations and LLCs are due on the first day of the anniversary month of the entity’s formation. For example, if an LLC’s initial filing date is December 30th, its annual report will be due on December 1st every year.

It is important for LLC owners to be aware of the potential consequences of the formation date of their LLC and to consult with a legal or financial professional if they have any questions or concerns.

How an LLC Pays Taxes?

Limited Liability Companies (LLCs) are considered a type of pass-through tax entity, which means that the LLC itself is not taxed on its income. Instead, the profits and losses of the LLC are passed through to the individual members, who report their share of the LLC’s income on their personal tax returns. This is known as “pass-through taxation.”

LLCs have the option to be taxed as a sole proprietorship, partnership, or corporation, depending on the number of members and how the LLC is structured. Single-member LLCs are taxed as sole proprietorships by default, unless the owner chooses to be taxed as a corporation. Multi-member LLCs are taxed as partnerships by default, unless the LLC elects to be taxed as a corporation.

LLC TAX Classifications: Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”). Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation. For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation. However, for purposes of employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity.

Effective Date of Election: An LLC that does not want to accept its default federal tax classification, or that wishes to change its classification, uses Form 8832, Entity Classification Election (PDF), to elect how it will be classified for federal tax purposes. Generally, an election specifying an LLC’s classification cannot take effect more than 75 days prior to the date the election is filed, nor can it take effect later than 12 months after the date the election is filed. An LLC may be eligible for late election relief in certain circumstances. See About Form 8832, Entity Classification Election for more information.

Limited Liability Company (LLC) – IRS.GOV

In some cases, LLCs may be required to pay state and local taxes, such as sales tax, property tax, and employment taxes. It’s important for LLCs to understand their tax obligations and to file and pay taxes correctly to avoid penalties and fines.

Limited Liability

The LLC offers limited liability protection to its owners, similar to a corporation. This type of company is denoted by the initials “LLC,” which stand for “Limited Liability Company”. This means the business and all its liabilities are considered to be legally separate from its owners. Any business debts or assets belong to the business. This personal liability protection aspect of LLC is much different from a general partnership or sole proprietorship, where there’s no legal separation between the business and its owners.

Limited liability is one of the primary benefits of forming a Limited Liability Company (LLC). It means that the members of the LLC are generally not personally liable for the debts and obligations of the LLC. This is in contrast to a sole proprietorship or partnership, where the owner(s) are personally liable for all debts and obligations of the business.

In an LLC, the members’ personal assets, such as their homes, cars, and savings, are generally protected from the claims of creditors and other third parties.

A creditor cannot go after your personal assets

If the LLC is sued or incurs debt, the creditors can only pursue the assets of the LLC, not the personal assets of the members.

However, it is important to note that limited liability is not absolute for LLC members. In certain situations, such as when an LLC member personally guarantees a debt or engages in illegal or fraudulent activities, they may be held personally liable. Additionally, if proper corporate formalities are not followed and the LLC is not maintained as a separate entity, a creditor’s attorney(s) may be able to pierce the shield of the LLC, resulting in personal liability for the member. To ensure the protection of limited liability, it is essential for LLC members to follow the rules established by their state and to have a solid operating agreement in place.

LLC Operating Agreement

An LLC operating agreement is a legally binding document that outlines the terms and conditions under which an LLC will operate. It is a crucial document that establishes the rights, duties, and responsibilities of the LLC’s members, as well as the management and ownership structure of the LLC.

The operating agreement typically covers a wide range of topics, including the purpose and objectives of the LLC, the management and decision-making process, the distribution of profits and losses, the admission and withdrawal of members, and the dissolution and winding up of the LLC.

An LLC operating agreement is not required by law in all states, but it is highly recommended for all LLCs, especially multi-member LLCs. Having a written operating agreement can help prevent disputes and misunderstandings among the members, and can provide a clear roadmap for how the LLC will be run. It can also protect the LLC’s limited liability status and provide evidence of the LLC’s existence in case of legal challenges.

Single Member LLCs: For single member LLCs, the operating agreement is simply an agreement between the owner and themselves. However, we include a transfer on death provision in the agreement to ensure that the company will be transferred to the designated party upon the owner’s death. If no one is named, the company may be dissolved or go through probate upon the owner’s death.

Multi Member LLCs: For multi-member LLCs, the operating agreement serves several purposes, including defining ownership percentages, outlining the responsibilities of managers, acting as a non-disclosure agreement, and preventing shareholders from selling to outsiders. Without a signed operating agreement, there may be confusion and disputes among the members.

It may be tempting to view an LLC’s operating agreement as a bureaucratic inconvenience, but we believe that doing so may not be in your best interest and could have consequences in the future.

As part of your new company formation documents, we include a free copy of an operating agreement. Regardless of whether you have one or multiple members, we recommend completing the operating agreement as soon as possible.

Privacy & Anonymity

Starting a business can raise concerns about personal privacy for many owners. While LLCs, like corporations, require public state filings, they do offer the potential for privacy and anonymity. As separate legal entities from their owners, known as members, LLCs do not publicly disclose the personal information of their members in certain states. However, in most states, ownership information must be disclosed when an LLC is formed. To protect privacy to the extent possible, it is advisable to hire a reputable business formation or registered agent service that can assist with keeping certain information private. It is important to note that complete privacy is not guaranteed in most states.

If privacy and anonymity are of paramount importance to you, then an Anonymous LLC may be a better option. An Anonymous LLC allows for private ownership of assets, such as property or eCommerce site, and can protect your personal information by keeping your name and address off the internet. Similar to a regular LLC, an anonymous LLC does not require the disclosure of ownership information in the state of registration. Some people refer to these as “confidential LLCs” or “private LLCs,” and they are currently permitted in Delaware, Nevada, New Mexico, and Wyoming.

Wyoming is a popular choice for those seeking privacy and anonymity with their LLC. The state’s strict privacy laws make Wyoming LLCs particularly advantageous. The Secretary of State does not require the listing of owners or managers on the Articles of Organization, and there is no income tax for corporations or individuals in Wyoming. This means that your LLC will not have to file any personally identifying information with the state. Using a reputable business formation service can help ensure that the money trail ends with the service provider rather than with the state, further protecting your privacy.

Anonymous LLC as a Holding Company

An LLC holding company is a type of company that owns and controls other assets, such as real estate, intellectual property, cash, and other companies. It is not formed differently from other companies, but rather, its operations are structured differently to provide enhanced asset protection, privacy, and potentially lower taxes.

An anonymous Wyoming LLC can act as a holding company and can own other LLCs and corporations. An exception to this is S-Corporations; an LLC cannot own an S-Corp. Subchapter S restricts the ownership of S-Corps to individuals, certain types of trusts and estates. Other business entities like LLCs cannot be shareholders of an S corp but a C-Corporation.

The holding company may be owned by individuals, other investors, other LLCs, or other corporations. Wyoming law is flexible and offers various options for structuring business affairs. LLC holding companies can be useful for real estate investors, eCommerce sellers, investors, and individuals who value privacy.

To find out how a Wyoming LLC can be used as a holding company to enhance privacy, asset protection, and potentially lower taxes, follow the provided link below. We discuss how real estate investors, e-commerce sellers, investors, and individuals who value privacy can benefit from using a Wyoming LLC as a holding company as part of their anonymity planning.

For those desiring anonymity in other states, your anonymous Wyoming LLC may be used as the publicly listed owner of another LLC. For example, the owner of a Florida LLC, which publicly lists its owner, can be a private Wyoming company. This way, if someone searches the Florida LLC, they will only “discover” the anonymous Wyoming LLC.

This double LLC setup can be used in many but not all states though. Follow the link below for a fuller explanation of Anonymity Planning.

LLC for Non-U.S. Person / Non-Resident / International Entrepreneur / Digital Nomad

You can own an LLC in the U.S.A. as a non-U.S. citizen or a permanent U.S. resident without even setting a foot on U.S. soil.

Wyoming is a popular state for non-residents and those living overseas. This is due to the simplicity of forming and maintaining an LLC in Wyoming. There are no state taxes or tax returns to file. You only have to file a federal return, which is the same for all Limited Liability Companies. Everything can be handled online. There is no need to visit neither Wyoming or the U.S.A.

It’s important to note that even though Wyoming does not have a state income tax, you may still be required to pay federal income taxes to the IRS if your income is sourced in the United States. On the other hand, income sourced outside the United States is generally not subject to taxation.

If you want to open a U.S. bank account or need to meet federal tax filing requirements, you will need to obtain an Employer Identification Number (EIN) from the IRS. We can help you obtaining an EIN for a fee of $150.

In addition, regardless of your income, you will need to file Form 5472 with the IRS to remain in compliance. This is a new requirement and noncompliance can result in significant penalties. It may be advisable to seek the advice of a tax professional or legal advisor to understand any potential tax consequences and to ensure compliance with all applicable laws and regulations.

Non-U.S. Foreign Company Becoming a Member of a U.S. LLC

If you own a foreign, non-U.S. company in your home country, it is possible for your company to become a member of a U.S. Limited Liability Company (LLC) instead of you personally. There are no specific restrictions on the type of foreign, non-U.S. company that can join a U.S. LLC. However, the foreign company may need to meet certain legal and regulatory requirements to do business in the United States and become a member of the LLC. This may include obtaining a tax identification number from the Internal Revenue Service (IRS) and registering with the appropriate state agency, as well as complying with U.S. immigration laws if the company plans to send employees to work in the U.S.

If you are looking to form a Holding Company in the U.S. then a Wyoming LLC or C-Corp may be your best option. Please click here to find out more.

As an International business owner you have other options to consider as well. Please click here to read our “C-Corp vs. LLC: Which is the Better Choice for International Person(s) ?” article for more information.

WE HAVE Answers

Ask Us Anything

When choosing a name for a business in the United States, it is important to consider a few key factors including availability, distinctiveness, legality and branding.

If you are setting up a Limited Liability Company (LLC) or a Corporation, you will also need to include a designator (suffix) in your business name, such as “LLC” or “INC.” This will help to differentiate your business from other types of legal entities.

Please click here to find out more.

It is not easy to determine which type of business entity, an LLC or corporation, is best for you as it depends on multiple factors such as your business goals, the nature of your business, and your individual circumstances.

If you are a U.S. person / U.S. resident please click here to find out more.

If you are a non-U.S. person / non-U.S. resident please click here to find out more.

Wyoming is a leading incorporation domicile due to low fees, no taxes, simple filing and maintenance requirements along with allowing anonymous LLCs and corporations.

For more information please click here.

If you are a U.S. resident not living in Delaware or Wyoming, the best state to form your business depends on various factors. Typically, it’s advantageous for a U.S. citizen or permanent resident to form the business entity in their home state. However, for most businesses forming a company in Wyoming is also a great choice.

If privacy and anonymity are important to you, forming a Holding Company in a state like Wyoming may be a better choice. Holding Companies can choose their domicile as they are only considered as transacting business if they engage in activities beyond holding assets and leasing them.

For further information, click here.

Common choices for a holding company (a.k.a parent company) are Wyoming, Nevada, Delaware and New Mexico. Wyoming is currently the leading state to form a Holding Company (LLC or Corporation) due to the specific statutes, anonymity, asset protection and comparatively low fees.

Please click here to find out more.

In order to incorporate in Wyoming, you need to have a company name, business address, registered agent, share count, par value, and incorporator. These are the only requirements by law to establish a corporation.

For more information please click here.

Yes, as a non-U.S. person / Non-U.S. resident / International Entrepreneur / International Founder / Digital Nomad you can form an LLC or C-Corp in the United States. In fact, it is not even necessary to physically visit the U.S.A, as it is possible to set up your LLC or C-Corp online.

Please click here to find out more.

You don’t need an SSN (Social Security Number) or ITIN (Individual Taxpayer Identification Number) to get an Employer Identification Number (EIN) from the IRS. An Employer Identification Number (EIN), also known as a Federal Tax Identification Number or a Federal Business Tax ID, is used to identify a business entity not an individual. You only need an SSN (or ITIN) if you want to apply for an EIN online with the IRS.

We have business formation packages for Non-U.S. owner(s) that includes EIN application for a discounted fee of $150. You can also hire us to obtain your EIN from the IRS for a fee of $175.

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS) for individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security Number (SSN) from the Social Security Administration (SSA). ITINs are issued to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for SSNs.

The first step is to get an EIN from the IRS. You cannot open up a U.S. bank account without an EIN for your LLC or Corporation.

The easiest option is to opening up a business bank account online with a Fintech company like Mercury, Novel etc.

Another solution is to visit the United States yourself.

For other options and more information to open up a U.S. business bank account please click here.

Wyoming is a leading incorporation provider with low fees and no corporate income taxes. Delaware is generally only used by those raising venture capital or looking to go public.

For more information please click here.

How Triple B Business can help in starting your new company?

The fastest, easiest way to start your new company? Hire us and get everything you need: registered agent service, privacy, free mail forwarding, and the guidance of local experts.

We currently offer Business Formation Services only in the States of Wyoming and Delaware because these two great states offer multitude of advantages to new small business owners.

Here’s how you can start the process with Triple B Business today in 3 easy steps:


Tell Us Your Business Name

If you have already decided your new business name then simply enter it on our form. We will perform a free name search for you with the state.


Answer A Few Questions.

Answer a few questions and enter the required information on our business formation form. If we have any questions then we will get back to you.


We Will File Your Paperwork

We will complete your paperwork and be off to the races filing your new company with the state.

Don’t Wait

Contact Us For A Free Consultation