Forming an LLC and running it from Romania questions

[AtlasShrugged]

Hello, I have a EU passport, and I'm currently based in Romania. I have a couple of questions about forming an LLC in the US and running it from Romania.

First of all, the reason why I want an LLC is because 90 percent of my customers come from the US. It wouldn’t look good to see they're buying from a Romanian SRL.

How will I be taxed exactly? I’ve read that since I’m not a US resident, I’ll just register the LLC here in Romania and then pay taxes here. Is that really the case and will there be any bureuacratic issues?

How much will a company formation in the US cost, virtual address included? Will it also be difficult to open a bank account in Romania with an LLC?

How long will the company formation take?

This will also be adult related. I write taboo erotica/romance and will sell art on the side. Will there be any legal issues depending on which state I decide to incorporate it in? From my research, Wyoming seems to be the best. Although, I know there are other businesses incorporated in the US with similar niche that I’m doing, but I decided to add this anyway.

This comes to the next point. How anonymous will this be? Will it be possible for someone to just google the name of the LLC and my legal name pops up? That's a second reason why I want this setup, since from what I know, that's pretty much impossible in the EU countries. I'm not sure if this will at least give me some form of anonymity.

 

[Marshal]

Interesting questions. Hope someone can give you a detailed response. Would be useful to know how it should be done.

 

[Marko Krassus]

"How much will a company formation in the US cost, virtual address included? Will it also be difficult to open a bank account in Romania with an LLC?"

In regards to this, it would depend on which state you intend to form the US LLC.

The cost of a virtual address can vary depending on the provider, but it generally ranges from $50 to $200+ per month. Virtual Mailbox Price Plans | VirtualPostMail - VPM - here's one i've seen recommended in the past but it doesn't cover all states.

You'll likely need to provide the certificate of incorporation or equivalent document for your US LLC for the Romanian bank account

 

[Marzio]

How will I be taxed exactly? I’ve read that since I’m not a US resident, I’ll just register the LLC here in Romania and then pay taxes here. Is that really the case and will there be any bureuacratic issues?

If you form a RO SRL that owns a US LLC you could potentially pay 1% CIT if revenue is <500K (if old rules are still valid).

Instead if you register your US LLC in Romania you'll surely pay 16% CIT since it's not a local company and only local companies can access to micro company fiscal advantages.

To be sure you have to ask to a RO lawyer.

 

[AtlasShrugged]

"How much will a company formation in the US cost, virtual address included? Will it also be difficult to open a bank account in Romania with an LLC?"

In regards to this, it would depend on which state you intend to form the US LLC.

The cost of a virtual address can vary depending on the provider, but it generally ranges from $50 to $200+ per month. Virtual Mailbox Price Plans | VirtualPostMail - VPM - here's one i've seen recommended in the past but it doesn't cover all states.

You'll likely need to provide the certificate of incorporation or equivalent document for your US LLC for the Romanian bank account

In that case, do you have any good recommendations? Let's say Wyoming or Delaware, how much should I expect to pay and how long will it take?

If you form a RO SRL that owns a US LLC you could potentially pay 1% CIT if revenue is <500K (if old rules are still valid).

Instead if you register your US LLC in Romania you'll surely pay 16% CIT since it's not a local company and only local companies can access to micro company fiscal advantages.

To be sure you have to ask to a RO lawyer.

Tax reduction isn't the most important thing for me, but not a bad thing obviously if possible. The most important thing for me is that my customers see that it is a US company they are buying from and not a Romanian one, and also that they won't be able to find my personal name through the company.

Owning a company through a company sounds like a costly setup too.

If I register the LLC in Romania, why wouldn't it be treated like a local company?

 

[12345]

Virtual address is included with registered agent, they allow you to receive documents and forward you scans of them. Cost is 50 USD yearly or so !
This is cheapest service for Delaware company formation linked below, total of 180 USD or so, beware of scam providers offering it for 1000 USD, simply reselling...

Delaware Registered Agent | $29 a Year | Free Mail Forwarding

Our Delaware registered agent services include a Delaware business address, free mail forwarding and scanning of your mail for $29/yr total.

www.delawareregisteredagent.com

For Wyoming go with this one

WYOMING REGISTERED AGENT - $25 A YEAR TOTAL

Wyoming registered agent $25 TOTAL! Don't get duped by add-ons! We include registered office, mailing, principle address, and free mail forwarding

www.wyomingagents.com

Wyoming has 62 USD annual report fee and Delaware its 300 USD yearly fee so I'd go with Wyoming

 

[Cloudbanck]

New Mexico has zero.

 

[AtlasShrugged]

Virtual address is included with registered agent, they allow you to receive documents and forward you scans of them. Cost is 50 USD yearly or so !
This is cheapest service for Delaware company formation linked below, total of 180 USD or so, beware of scam providers offering it for 1000 USD, simply reselling...

Delaware Registered Agent | $29 a Year | Free Mail Forwarding

Our Delaware registered agent services include a Delaware business address, free mail forwarding and scanning of your mail for $29/yr total.

www.delawareregisteredagent.com

For Wyoming go with this one

WYOMING REGISTERED AGENT - $25 A YEAR TOTAL

Wyoming registered agent $25 TOTAL! Don't get duped by add-ons! We include registered office, mailing, principle address, and free mail forwarding

www.wyomingagents.com

Wyoming has 62 USD annual report fee and Delaware its 300 USD yearly fee so I'd go with Wyoming

From what I've read, I've also seen Wyoming being the best solution. So, if I go with those guys, it will be 230 USD in total.

Do you or anyone else know about the anonymity question though?

 

[AtlasShrugged]

New Mexico has zero.

Zero what? Annual report fee? If so, are there any other hidden fees?

 

[Cloudbanck]

Yeah there is no state annual report required in New Mexico, so no fee.

You still have the federal requirements though, to have a registered agent, and to file forms 5472 and 1120 every year.

 

[Marzio]

If I register the LLC in Romania, why wouldn't it be treated like a local company?

Because it's not a local company, it's a foreign company managed from Romania.

Local company is SRL.

Let me rephrase, the foreign company is treated like a local company but can't obtain the same tax advantages that a company incorporated in Romania has meaning the micro company status where startup companies pay only 1% CIT up to 500K revenue can only be obtained by a Romanian SRL.

New Mexico has zero.

While this is true there are also other states that don't have annual fees and offer privacy.

Here you'll find the entire list: LLC Annual Fees by State - All 50 States [2023 Costs] | LLCU®

Of those i'd say Arizona and Ohio are the ones that are the most credibile (if credibility in the eyes of the customer is what is he looking for).

Both states don't require members informations upon formation.

For example try to do a search for a LLC in Ohio and you'll only see the registered agent.

https://businesssearch.ohiosos.gov/

 

[Cloudbanck]

In terms of privacy I think there are 4 states that allow anonymous LLCs: Wyoming, Nevada, New Mexico and Delaware.

There might be ways around it in Arizona and Ohio, but when I search for "arizona anonymous llc ", I get the following result:
"What is the best state for anonymous LLC?

New Mexico

This is the only state that does not require disclosure of the ownership of an anonymous LLC to the state, which means your business can expect the strongest privacy and confidentiality. Delaware, Nevada and Wyoming do require identification of owners to the state."

Anyway, I think the US is soon creating a UBO register for all LLCs, and one were never anonymous with regards to the IRS, not even with a New Mexico LLC.

 

[12345]

Do you or anyone else know about the anonymity question though?

There is no public register of company owners in Delaware and Wyoming state

Anyway, I think the US is soon creating a UBO register for all LLCs, and one were never anonymous with regards to the IRS, not even with a New Mexico LLC.

But the upcoming UBO register is just for the IRS right ? The information wont be public like in the UK for example ?

 

[AtlasShrugged]

Because it's not a local company, it's a foreign company managed from Romania.

Local company is SRL.

Let me rephrase, the foreign company is treated like a local company but can't obtain the same tax advantages that a company incorporated in Romania has meaning the micro company status where startup companies pay only 1% CIT up to 500K revenue can only be obtained by a Romanian SRL.



While this is true there are also other states that don't have annual fees and offer privacy.

Here you'll find the entire list: LLC Annual Fees by State - All 50 States [2023 Costs] | LLCU®

Of those i'd say Arizona and Ohio are the ones that are the most credibile (if credibility in the eyes of the customer is what is he looking for).

Both states don't require members informations upon formation.

For example try to do a search for a LLC in Ohio and you'll only see the registered agent.

https://businesssearch.ohiosos.gov/

I see. I can deal with paying 24 percent in taxes for now. Will move if it will continue to grow. I just want to minimize bureaucratic headaches. If you want to quality for 1 percent CIT, you also have to employ yourself and do regular health check-ups. Romania isn't really a good country any longer if you're looking for tax optimization.

In terms of privacy I think there are 4 states that allow anonymous LLCs: Wyoming, Nevada, New Mexico and Delaware.

There might be ways around it in Arizona and Ohio, but when I search for "arizona anonymous llc ", I get the following result:
"What is the best state for anonymous LLC?

New Mexico

This is the only state that does not require disclosure of the ownership of an anonymous LLC to the state, which means your business can expect the strongest privacy and confidentiality. Delaware, Nevada and Wyoming do require identification of owners to the state."

Anyway, I think the US is soon creating a UBO register for all LLCs, and one were never anonymous with regards to the IRS, not even with a New Mexico LLC.

I'm not so concerned if the US government knows, so long someone as a private individual cannot look it up. And also, I rephrased it badly. I meant privacy, not anonymity. If I would go for the NM solution, will it be pricier? And even if Delaware, Nevada and Wyoming require identification of owners to the state, you still can't look up the owners online, right?

There is no public register of company owners in Delaware and Wyoming state


But the upcoming UBO register is just for the IRS right ? The information wont be public like in the UK for example ?

Is there any more info about this? It's strange that EU has chosen that path but the US has not.


Should I talk with a lawyer or accountant about how the company will be taxed and how this setup will work? There hardly can be any Romanians here with an LLC since most come her to setup a SRL. And you sure I won't pay any taxes in the US?

I found this from an accountant Taxe firma SUA "The status in the company of the Romanian resident is very important because he, as an individual, has to pay tax here, in Romania, for the income obtained.

The software company will pay tax where it is based, in this case, the USA and for hosting on a server in Romania it will pay to the hosts who will pay tax here. If the servers belong to the US company, it must open its point of work here, with the consequences that arise from here."

So according to that guy, I have to pay taxes in the US as well. That's contradictory what I've read elsewhere.

 

[12345]

I see. I can deal with paying 24 percent in taxes for now. Will move if it will continue to grow. I just want to minimize bureaucratic headaches. If you want to quality for 1 percent CIT, you also have to employ yourself and do regular health check-ups. Romania isn't really a good country any longer if you're looking for tax optimization.

I'm not so concerned if the US government knows, so long someone as a private individual cannot look it up. And also, I rephrased it badly. I meant privacy, not anonymity. If I would go for the NM solution, will it be pricier? And even if Delaware, Nevada and Wyoming require identification of owners to the state, you still can't look up the owners online, right?

Is there any more info about this? It's strange that EU has chosen that path but the US has not.


Should I talk with a lawyer or accountant about how the company will be taxed and how this setup will work? There hardly can be any Romanians here with an LLC since most come her to setup a SRL. And you sure I won't pay any taxes in the US?

I found this from an accountant Taxe firma SUA "The status in the company of the Romanian resident is very important because he, as an individual, has to pay tax here, in Romania, for the income obtained.

The software company will pay tax where it is based, in this case, the USA and for hosting on a server in Romania it will pay to the hosts who will pay tax here. If the servers belong to the US company, it must open its point of work here, with the consequences that arise from here."

So according to that guy, I have to pay taxes in the US as well. That's contradictory what I've read elsewhere.

Check double taxation avoidance treaty between Romania and USA. I think as long as there is no permanent establishment in USA you would not be liable for any income tax in the US. You would need to pay income tax and CIT in Romania and your LLC would be treated as romanian company and you would need to follow romanian rules when it comes to accounting etc.
I think this is how it works but correct me if Im wrong

 

[Cloudbanck]

There is no public register of company owners in Delaware and Wyoming state


But the upcoming UBO register is just for the IRS right ? The information wont be public like in the UK for example ?

Correct, it will not be public. See New updates for requirements to register UBO in the USA | Mercator®

And New Mexico would be slightly cheaper.