I teach you how to create an LLC in the United States from Spain at a very competitive price. As an associate of EluTax (Tax Engineering Firm), we have created a wide variety of LLCs for Spanish and International clients so we have the best tools for said process.
Before starting I recommend you take a look at the blog “Qué es una LLC” where I explain the advantages and disadvantages of having an LLC in Spain, how LLCs are taxed in Spain, among many other things.
Frequently Asked Questions
How much does it cost to create an LLC?
Creating an LLC at the hands of professionals like EluTax has a cost of 500-1500€, it will depend on the type of LLC and the state where it is created. Creating an LLC yourself has a cost of 200-500€. (We do not recommend creating LLCs without experience).
What is Fiscal Spoliation?
The fiscal spoliation refers to the perception that taxpayers are being subjected to excessive and unfair taxes by the government. This can be seen as a form of robbing citizens of their wealth and property. This perception can arise from a variety of factors, including an inequitable tax structure, a lack of transparency in the collection and use of taxes, and the perception that the government is not adequately investing in public services and other citizen needs.
Is it legal to have an LLC in Spain?
Having an LLC is 100% legal in Spain, the only obligations you will have are to inform the AEAT in model 720 if the set of assets of the LLC exceeds €50,000 and in case you generate yields, you as a member of the LLC must pay the corresponding IRPF on those profits.
You must also study if your business model is suitable to invoice it from abroad, if you have a restaurant, employees etc.. Hacienda will end up giving you a tap. However if your activity is online, e-commerce, trading, content creator, marketer, digital services etc.. In that case there is no problem.
Do I have to report to the Tax Agency (Hacienda) if I have an LLC?
No, residents in Spain must report to the Tax Agency only if the set of assets of said LLC exceeds €50,000. In that case you must report in model 720 the LLC as an asset abroad. However, as a Spanish resident you are obliged to report the income obtained abroad and declare them in the IRPF. (Sif your LLC is not yet profitable you do not have to report to Hacienda) ;)
Does the Tax Agency know if I have an LLC in the USA?
The states or the IRS do not inform foreign entities about companies incorporated in the USA. If "Hacienda" asks the IRS for information about your LLC they will surrender it without problem, but for this the LLC must incur an investigation.
What business models are suitable for an LLC?
The recommended activities to invoice from an LLC are generally those that have no physical nexus or employees. If your activity is online and you do not need an office, warehouse, employee.. to carry out your activity then invoicing from the LLC will not be a problem.
Restaurants, Real Estate, services that require physical presence, a warehouse or office with materials you need for the activity.. These are some of the examples that should not be invoiced from a company abroad.
E-Commerce as long as you subcontract everything, logistics, importation, customization etc.. Dropshipping in that case is viable to invoice with the LLC. Consulting, trading, digital services or products, freelancer, online training, content creator, affiliate marketing, media buyer. These are some businesses suitable for the LLC.
Requirements to create an LLC?
Be over 18 years old, have more than €500 to pay for the creation of the LLC and forms 1120 and 5472. A minimum of knowledge of your tax obligations, both with the IRS and with the AEAT. Passport and ID, usually they do not ask you for the data but sometimes it comes in handy for example for the Registered Agent.
Do you have to pay VAT with an LLC?
Yes and no, if your billing to Spanish clientsdoes not exceed €10,000annually you are not obliged to request a VAT number. The invoices you issue to Spanish clients will be made without VAT.
Do you have to be Self-Employed if I have an LLC?
No,if you are the owner of an LLC and you are a Spanish tax resident you are not obliged to be self-employed to declare that income, you can simply pay the corresponding VAT.
Is it legal if all my clients are Spanish?
If all yourcore activityis in Spain, the Spanish tax authority (Hacienda) could try to tell you that you should pay taxes in Spain because all your clients are here, however in the case of LLCs this does not apply.
LLCs arepass-through companiesand deep down they do not separate your physical person from your legal person therefore it is not a company and you, are the same. Therefore, having entirely Spanish clients is the same as being self-employed.
Non-resident LLC Introduction
Much to my regret in Spain there is large-scale tax plundering, every day it is more difficult to get a business off the ground. Sales VAT, Purchase VAT, Personal Income Tax, Corporate Tax, Social Security, Fees, Forms, Dividends, Indirect Taxes, Bureaucracy. There are endless difficulties when starting a business.
That is why many entrepreneurs are opting to create companies abroad, where not only taxation is much more favorable but also the administrations themselves facilitate the process, even being able to manage all the procedures of creation, management and tax filing yourself.
In the United States for example the Sole Proprietorship LLCs file taxes annually and the taxes are minimal compared to Spain, they also allow “No-Residentes Estadounidenses” crear LLCs.
Terms to understand
Organizer: The company that offers you the service of creating your LLC.
Registered Agent: Physical address of your LLC where you can receive notices and official documents from the IRS.
IRS: The United States Treasury Department
EIN (Employer Identification Number): The Tax ID of your Company in the United States.
Articles of Incorporation: The articles of incorporation are the official documents that verify that our LLC exists.
Summary of the steps to set up an LLC:
- Choose a name for your LLC.
- Get an American phone number.
- Get an address in the United States.
- Find an Organizer to create the LLC
- Obtain the EIN number – Employer Identification Number
- Open an LLC account at a bank.
1. Choose the name of your LLC
Choose an available name for your LLC and check its availability in company search engines such as the European Trademark List or the North American Trademark List before registering it to avoid problems with your organizer.
- Europe trademark list: https://euipo.europa.eu/ohimportal/en/search-availability
- USA trademark list: https://www.uspto.gov/trademarks-application-process/search-trademark-database
2. Phone in the United States
The first step to create an LLC is to get a phone number in the United States to be able to contact and be contacted, it is not 100% mandatory but very recommended. You will be able to contact the different companies that create the LLC and the physical address for you, thus the creation process will be shorter.
If you want to only be able to call you can use Skype, the only thing is they will not give you a number and when you call the receiver a private number will appear. The cost of this service on Skype is €3 per month.
Another interesting option is OnOff o Hushed. Both will give you a real United States phone number without needing to install a SIM. You will be able to make and receive calls, the cost is about €10 per month.
3. Address
Once we have a phone to contact with in the United States we need an address for our company. Specifically we need the address for 2 functions, 1 to receive official documents from the IRS (Treasury), 2 to use it as the physical address of our company.
– Physical Address of the LLC
For the postal address I recommend you northwest o ipostal1.com, they have quite competitive prices in addition to a wide variety of addresses in different states. They allow you to forward letters, packages, scan documents etc.. The only problem is that Ipostal1 does not serve as a Registered Agent as it is considered a MailCenter or PO, NorthWest yes.
Another option is Shipito, a service designed so that people who do not live in the USA can send packages to that address and then forward them to their country. Making a personal account is free and they give you a postal address that is not a PO (which are not accepted for the creation of an LLC), so you can create an account and give that address as your personal and company address.
Officially, these services cannot receive your company letters unless you give them a power of attorney for it. This power consists of filling out a form, the USPS 1583, which you will also have to sign and notarize. To make it easy, most services will give you this form filled out pending signature and notarization. Some even also offer the notarization service. If you take this option, in addition to the cost of the postal address you will have to count on the cost of notarizing this form. It costs €25 at ipostal1.
– Registered Agent
For the Registered Agent service I recommend you NorthWest. It is the fastest, best 24h support and the cheapest, $100 per year. It also allows you to use NorthWest's address as the company address which helps quite a bit so you don't have to deal with 2 addresses on 2 platforms.
4. Organizer (Create the LLC)
The Organizer (Company that provides the service of creating the LLC) that I recommend is NorthWest, IncFile . NorthWest has quite competitive options as well.
Create my LLC with Northwest →
Affiliate link: if you register through it, I earn a small commission at no extra cost to you.
– Choosing the State to create the LLC
Each State in the USA is different, the best options are Florida, Wyoming, Nevada, New Mexico and Delaware. Especially these last 4 offer privacy to the owners of the LLC, 100% anonymity.
Depending on the State there are some fees or others, in Delaware for example just the fee is more than 100€, in the case of New Mexico it is about 50€, to this we must add the service to create the LLC, Registered Agent, EIN, Licenses etc.. Not everything is necessary, the EIN for example you can get it yourself.
The most competitive option is New Mexico the Silver plan which costs you 50€, does not include EIN but if you more or less know what you are doing you can get everything done and add the EIN separately for 70€ on incfile or do it yourself.
5. Getting the EIN (CIF)
Once we have our LLC created, they will have to send us the Articles of Incorporation, usually the Organizer themselves will have them or they will send them to the address. With said document we can apply for the EIN. The EIN is essential to be able to create bank accounts.
*Getting the EIN is a somewhat complex process if you have no experience, I do not recommend that you get it yourself as it can lead to duplicates and problems. For 70€ IncFile will get you the EIN, in my experience incfile usually takes at least 3 months.
The process to get the EIN on our own is to fill out the Form SS-4, send it to the IRS via fax and have a fax number where you can receive the EIN, so you will need to have the fax contracted until you receive it. For the Fax service you can search the internet, there are quite a few companies that offer the service, make sure they allow sending and receiving Faxes, also make sure they do not change the Fax number.
I must say that this 2024 there is a lot of delay with EINs, except for NorthWest the rest of the Organizers take a minimum of 3 months. However, we work with a Manager in the USA who processes it for us in less than 7 business days, you can request information by sending us an email.
6. LLC bank accounts
Once incfile has processed our LLC and we have the EIN and the Articles of Incorporation in our name we can create bank accounts.
Mercury is a very good option since it is an Neobank American one with US IBAN that will accept our account despite not having an SSN, they also give us a card that in the first months has 1% cashback on online purchases. They will send the card to Spain without problem.
Transferwise is another very popular neobank that will give you bank accounts in several countries, the Euro one is in Belgium, and the $ obviously in United States, all in your company's name, they charge almost no commissions. I'll leave you a video of my TransferWise Review;
If you want to save yourself the whole process of creating the LLC, we create it for you! For only 550€ we give you; address for 1 year, your LLC with the Articles of Incorporation + the EIN and a manager contact who will be able to file the forms for you.
Start activity
Once the process to open an LLC in the United States from Spain is finished, we can start operating. Issue invoices, receive payments in our American bank accounts, pay with our card under an LLC account etc..
Make sure to read the Blog I have about “Qué es una LLC” since there I explain the taxation and liability that LLCs have in the United States and in Spain. I also recommend that you take a look at Jompeye's blog LLC in Spanish.
Tax obligations in the USA (Spanish residents)
In the United States you will not pay taxes unless you have sales there, if all your billing comes from other countries like Spain you do not have to pay taxes in the USA.
The only requirements are form 1120 and 5472
A US company with foreign owners must file Form 5472 every year in most cases. Given that Form 5472 is a informationalform, not a tax return, it is often overlooked. Form 5472 must be filed every year along with Form 1120 on April 15th or October 15th if an extension is requested.
The The purpose of Form 5472 is to list all Reportable Transactions for the corresponding tax year. The IRS does not clearly define what constitutes a Reportable Transaction, but basically these include most transactions between the managers and the LLC, regardless of the monetary amount. Examples of Reportable Transactions include the disbursement of funds to a personal account of the Foreign Owner(s) of the United States Company, contributions to the LLC by the Foreign Owner, the payment of an expense by the Foreign Owner on behalf of the LLC or any other transaction involving the US company and the foreign owner(s). Info from mycpa.net
FBAR from fincen.gov (New 2022)
If there is a foreign owner in the company who owns more than 25% of the property, it is mandatory to fill out a form if (the LLC) has more than $10,000 in foreign accounts in the company's name (not $10,000 for each foreign bank account but in aggregate, in total).
This is not a tax return nor does it have to do with the IRS but with FinCen. Go to the Fincen page to see conditions and updates.
If you have to file it, what you must submit is Form 114. In this form you will report the amounts of money your LLC has in foreign banks and foreign financial accounts.
How an LLC is taxed in Spain
The tax obligations that you will have in Spain are reduced to paying the personal income tax (IRPF) on the returns that your LLC has had. If you had 20,000 in billing in the LLC and only 1,000 in profit you pay the corresponding IRPF on that 1,000. You will have to look for an advisor in Spain for this submission.
On the other hand, you should check your business model and whether to apply VAT to the sales you make in Spain, as of today if sales do not exceed 10k you will be exempt from VAT and will not have the obligation to request the VAT or NIF in Spain.
Tricks for your LLC
As you will have seen, LLCs have tax obligations in Spain, however we can avoid this legally in the following ways.
To not submitting the 720 and to inform the Tax Agency of our LLC, the balance of our bank accounts must not exceed €50,000. In order not to pay personal income tax (IRPF) on the LLC's earnings, we must empty the accounts at the end of the year and indicate in form 1120 that there has been no profit, basically spend a lot so as not to have profits to declare. All this can be done legally, invoicing other companies, deductible losses etc..
Conclusion LLCs Spain
Since I created the LLC not only has my business improved drastically si no que personalmente me ha ayudado, tener a hacienda encima es un problema que causa mucha ansiedad y estres, poder “librarse” de esta carga ha marcado un antes y un después en mi vida.
That is why I want to help more entrepreneurs to create LLCs and bill with them in a legal way and without fear. All the information I have provided in the blog has taken me years of learning, consultancies (I had one with the cryptospain agency and another with ezfrontiers).
The tax avoidance doesn't end here, if your billing starts to increase, doing everything from the LLC is not the best option, study companies in Estonia, since being in Europe it has many tax advantages. I will make a video about it when I am more trained in Estonia since I just started :)
I recommend you to follow @cryptospainoficial to learn more about tax avoidance, thanks to him I have acquired a good part of my knowledge in tax avoidance.
Create your LLC with professionals
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