Banking for US LLC owned by BVI company?

JohnDoe1122 said:

Well the reasons are the typical ones. Easy compliance in US because US LLC is owned by a single entity, also no estate tax because the offshore entity can’t die. What is a good reason in your opinion?

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This structure is very common due to state taxes.

Most of banks are familiar with it.

You did it in the wrong order. First you create a the US LLC then apply for a bank account, say with Revolut, Airwallex etc. then you transfer the shares to a BVI company, it makes the process less painful.

JohnDoe1122 said:

I haven’t done anything yet. But technically speaking you should report that change to banks/emi’s. Thanks for the idea though!

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Technically yes, but in practice you don't need, as long as you report it to the IRS you will be protected from estate tax.

Clank said:

Technically yes, but in practice you don't need, as long as you report it to the IRS you will be protected from estate tax.

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You mean there is no need to inform the bank about the suggested changes ?

redeye said:

You did it in the wrong order. First you create a the US LLC then apply for a bank account, say with Revolut, Airwallex etc. then you transfer the shares to a BVI company, it makes the process less painful.

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Ah....hadn't considered this way of doing it.

We all know it's almost certainly against the rules of the banking provider, but how likely are they to ever know about this? And what would they do if they found out?

To me, it seems as though the worst case risk would be to simply have the account frozen/closed. At which point you could simply explain that not informing the bank of the shareholding change was simply an oversight and not an intentional thing - provide them with the information, and ask them to please re-open/unfreeze the account.

Maybe they'll re-open it, but I guess they probably won't but, hopefully, you've got 3-4 accounts set up in this way, so it doesn't halt your progress. You've just lost one account of several.

Thinking of ways to mitigate thew risk here:

- Open multiple EMI's and brick and mortar bank accounts (if possible) at the start of the process
- Keep only small amounts of cash in the accounts

Then you could start trading immediately without waiting forever for bank accounts to be opened.

Once trading you could work towards getting bank account(s) opened with the proper disclosures on the understanding that this may take some time, but in the meantime you have a workaround solution in play which allows you to trade on the understanding that it isn't a long term solution.

I'm guessing this will work better in jurisdictions where the company filings are not so public.

If you try this with a UK Limited company or LLP, I get the feeling the banks have API feeds from Companies House directly into their own systems, and if something gets filed that they don't like, their little computers will light up like a Christmas tree.

I say this because I have had letters from the bank in the past asking why confirmation statements were late to be filed and stuff like that, they definitely keep tabs on what their customers companies are doing in terms of their companies house filings

Anyway....

Eurocash said:

We all know it's almost certainly against the rules of the banking provider, but how likely are they to ever know about this? And what would they do if they found out?

To me, it seems as though the worst case risk would be to simply have the account frozen/closed. At which point you could simply explain that not informing the bank of the shareholding change was simply an oversight and not an intentional thing - provide them with the information, and ask them to please re-open/unfreeze the account.

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You're very right, I have not seen any troubles with it since I made a setup like this 3 years ago, never got asked og faced troubles, the company filing is public with the companies I did it with, they don't check it.

redeye said:

You're very right, I have not seen any troubles with it since I made a setup like this 3 years ago, never got asked og faced troubles, the company filing is public with the companies I did it with, they don't check it.

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Interesting

So here's a question for you:

You've got the "clean face" company set up and banked using the process we described.

But where are the BVI (or wherever it is) company funds being held? Do you have a bank account for your offshore company?

I'm assuming you make distributions from your UK/US/EU company to your offshore company. Just wondered how you found setting up banking for that end of things