Forming a Florida LLC as an owner outside the United States

LLC or corporation

The two common choices are the limited liability company, or LLC, and the corporation. Both separate the owners’ personal assets from the debts of the business when the entity is properly maintained. An LLC is flexible: its owners, called members, can arrange management and the sharing of profits largely as they agree, and it carries fewer formalities, such as annual meetings and minutes. It can be managed by its members directly or by one or more appointed managers.

A corporation has a fixed structure of shareholders, directors and officers. Some outside investors prefer that structure, and it can suit a company that expects to issue shares to raise capital. The choice also carries United States tax consequences that fall differently on a non-resident owner. A corporation pays federal corporate income tax at the entity level, and Florida corporate income tax may also apply; an LLC is by default taxed as a pass-through, which can bring a non-resident member into the United States tax system directly. These consequences should be understood, with a tax adviser in both countries where relevant, before the filing rather than after.

Filing and the registered agent

An LLC is formed by filing Articles of Organization with the Florida Division of Corporations; a corporation files Articles of Incorporation. The name must be distinguishable from other names on record and must carry a designator such as “LLC” or “Inc.”

Every Florida entity must continuously maintain a registered agent with a physical street address in Florida to receive service of process and official notices. A post office box does not qualify. A foreign owner without a presence in Florida typically engages a commercial registered-agent service. The entity also lists a principal address and a mailing address, neither of which has to be in Florida, though banks often ask for a United States address.

The annual report

Florida entities file an annual report with the Department of State each year, between January 1 and May 1, to remain active. It is not a financial statement: it confirms the entity’s addresses, registered agent and managers or officers. Missing the deadline leads to a late fee and, eventually, administrative dissolution, which can interrupt banking and contracts. The deadline should be calendared from the first year.

EIN, tax filings and banking

Most entities need an Employer Identification Number, or EIN, from the Internal Revenue Service to open a bank account, hire employees or file returns. A foreign owner without a Social Security number or taxpayer identification number cannot use the online application, but can apply by fax or mail using Form SS-4.

A single-member LLC wholly owned by a foreign person is generally disregarded for income tax purposes, yet it still has an annual federal information-reporting obligation for transactions with its owner, and penalties for missing it are significant. Federal rules on reporting company ownership have also changed in recent years, so current requirements should be confirmed at formation.

Opening the bank account is often the harder step. Banks apply their own identification and due-diligence requirements, may ask for the formation documents, the EIN letter, the operating agreement and each owner’s passport, and some require an in-person meeting. It is sensible to expect that process to take time.

The operating agreement

Florida does not require an LLC to file its operating agreement, but even a single-member LLC benefits from having one, and for two or more owners it is essential. It records who owns what, how capital is contributed, how decisions are made and which decisions need unanimous consent, how and when money is distributed, what happens if an owner wants to leave, becomes incapacitated or dies, and how disputes are resolved. Without one, the default rules of the Florida statute apply, and they may not reflect what the owners intended.

Where the owners sit in different countries, it is worth stating which language version controls, how formal notices are delivered across borders, how meetings may be held remotely, and which law and forum govern a disagreement.

What to bring

A first meeting is more useful with the intended owners’ full names and ownership percentages, a short description of the business and where it will operate, passports for each owner, the proposed name and a fallback, the planned management structure, and any parent-company documents or existing contracts that the new entity will work alongside. Documents in another language should come with English translations.