When in 1977, the first US LLC incorporated in Wyoming, it almost went unnoticed by the general public. It was only later that this major shift in the US business landscape finally got the attention it deserves. While before 1977, you would face personal bankruptcy and stigma this completely changed in the years to come. Every Entrepreneurs and Business people use LLCs ever since to try to get their businesses successful. Businesses are usually new ideas.
The thing about new ideas is that while very few are disruptive and eventually lead to success and technological breakthroughs most new ideas are worthless and doomed to fail. Thanks to the LLC a new generation of entrepreneurs populated the United States and the entire world. People willing to simply try without being afraid of failure. Often enough entrepreneurs succeed only after trying several times. IF every failure would destroy the financial future of an entrepreneur many could only try once or wouldn’t try at all.
Thanks to the LLC today is a disregarded entity which means that the entrepreneurs face a very nice situation: On one hand limited liability and on the other hand pass-through tax treatment. It was more than 30 years later that the last US state also opens up for the revolutionary idea of an LLC. Since then the IRS is struggling to make sure that the taxes are paid according to the law. Since every state has different rules when it comes to bookkeeping, taxes, annual fees and anonymity this is an incredibly complicated task. The main rule however is the same in every state: If you do business outside the US and you are not the only client of the entity you are doing business with, generally there is no obligation to pay taxes in the US.
This might be an interesting idea for non-Us Residents. The problem is that most other countries follow the CFC rules. This is very well explained in this informative video about LLCs and on www.churchplansonline.org. IF you are in a western country chances are high, that the tax authorities will regard your LLC as taxable in your country of residence. To avoid that the setup needs to be figured out by experts. Ask your local tax expert if he or she can help you with setting up an LLC and filling out and filling the numerous complicated IRS forms. Also you need to do some research on which US state is the best for you when it comes to incorporate your LLC. Good luck setting up your own business.