The limited liability company (LLC) is a legal business entity created by statute and governed by the laws of its state of operation. This entity can issue a certificate of membership that indicates ownership of a member, who owns a share of the company's profits. Thus, each U.S. state has its own rules regarding LLCs, which may have one or more members.
A single member LLC is known as a single member LLC.
A multi-member LLC is known as a general partnership and is like a partnership. If you are the only member, the LLC will not be counted for tax purposes.
LLCs are taxed as pass-through entities by default, except in the case of the C-Corp. That is, the profits of the business are "passed through" to the members.
Profits and losses are reported on the owners' individual tax returns since it is a pass-through entity. Losses or costs of doing business can be deducted on personal tax returns, offsetting other income. In addition, profits and losses accrue directly to the owners.
Business income is equal to personal income. The owner therefore pays tax on his or her personal return and is taxed at the individual rate. There is only one level of taxation because only the members pay taxes.
1. If the LLC is a pass-through entity, the income will be taxable in the hands of the Indian resident, depending on the nature of the income earned by the entity.
2. If the LLC opts for C-Corp taxation (i.e., a non-intermediary business), the Indian resident can earn income from the U.S. in the form of salary or profit and it will be taxable under the local laws of India.
Note: Indian residents cannot elect taxation as an S-Corp.
Our tax preparers are available to complete and send the necessary tax forms for your company.
Entrust your US tax returns to us! Each error or omission on a U.S. form is punishable by the IRS with a fine of $25,000 per form per year.
You need to be vigilant for mistakes that can be made. The penalty for this is $25,000. That's a lot of money, and it can put a serious dent in your business.
In addition, if you have multiple single member LLCs owned by foreigners, these fines can add up. If you make the same mistake on multiple forms, you could be looking at tens, if not hundreds, of thousands of dollars in penalties.
ExpertLLCUSA can help you complete and file all of these complex forms, and find your EIN and a U.S. address. Our English-speaking experts are happy to help you.
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Disclaimer: This document has been prepared on the basis of information available in the public domain and is for guidance only. All necessary precautions have been taken to ensure the accuracy of the information. However, no legal liability is accepted for any consequential incident that may result from errors or omissions contained in this document.