Last Updated on December 1, 2022 by Anda Malescu
The topic discussed in this article is can an LLC have foreign investors as partners? The simple answer is yes, foreign investors, individuals or companies, whether passively or actively involved in the management of the company, can be partners in an LLC in the United States.
Simply put, an LLC can have foreign partners. Foreigner in this context means an individual who is a foreign national and who resides outside of the United States (nonresident alien) or a non-US citizen or permanent resident (green card holder) who resides in the US (a resident alien) or a foreign company.
So, regardless of who is the foreign partner and setting aside any immigration implications, it is possible to have foreigners as partners in an LLC.
In fact, generally, foreigners can invest and be owners in an LLC alongside U.S. individuals, companies or other foreign partners without any restriction in terms of the percentage of ownership.
However, keep in mind that the formation, ownership structure and operation of an LLC is governed independently by each state, and each and every state has its own laws regarding the ownership and management of an LLC formed within the state.
Many states do allow foreigners to be partners in an LLC but it is important to check the laws of the state before moving forward and if the laws are not favorable to consider a foreigner-friendly state for the LLC.
Yes, it is possible for an LLC to have foreign investors as partners
In short, generally, the ownership structure of an LLC in the United States can consist of the following types of partners, or a combination thereof:
- U.S. citizens
- Resident aliens (green card holders or foreign individuals who meet the substantial presence test)
- Nonresident aliens (foreign individuals who are not U.S. citizens or resident aliens)
- Foreign entities
In the context of an LLC, when foreigners invest to become partners in an LLC alongside other individuals or business entities, they become owners of the LLC which are known as members.
Aside from considering the state where to form an LLC with foreign partners discussed above, when an LLC operates with a foreign partner, there are also certain tax reporting requirements that must be observed.
Briefly addressing the tax consideration here, an LLC with more than one member (owner) defaults to a partnership for tax purposes. So, for example, if John who is a U.S. citizen, and Carla who is a foreign investor from Sweden decide to join forces together and start an LLC in Florida to sell ice cream – Ice Cream, LLC – then, Ice Cream, LLC would be by default a partnership for tax purposes because it has two members (John and Carla) while for legal purposes the company will remain a limited liability company.
Because the legal LLC operates with a foreign partner, there are tax reporting requirements and other tax implications that the company and its owners must comply with.
Moreover, when foreign partners in an LLC are resident aliens other tax considerations emerge. To understand the full tax considerations and reporting requirements for an LLC operating with foreign investors as partners, it is important to consult a U.S. licensed international tax lawyer or accountant.
How can Malescu Law assist?
Our experienced business and immigration lawyers in Miami, Florida USA assist domestic and foreign individuals, business owners and investors with forming and operating an LLC with foreign partners.
Our practice regularly assists on matters relevant to international clients including business corporate and business immigration to the USA. Contact us today or book a consultation.
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