International Creators: Should you open a US LLC or not?

If you're transacting regularly in the US as an international creator, you might start thinking about opening a US LLC.

Creators doing more than $10,000 / year of business may consider opening a US LLC to minimize foreign exchange fees and reduce friction doing business. For this to make sense, the non-US based creator should be doing a material amount of that business in the US.

For a business to open a US bank account, it generally needs to either prove residency or US incorporation. If you’re not living in the US, then an LLC’s the best way to go. That, or some folks ask a family member or friend (that they deeply trust!) in the US to set up an account on their behalf. 

The advantage of a US-based bank account is that it allows you to transact in US dollars with other creators, editors, managers, brands, and more. Domestic transactions do not incur foreign exchange or international wire fees. These fees can amount to 2.5%+ per transaction, depending on your provider. 

For example, if you leverage PayPal based in your home country, you likely incur foreign exchange fees on payments received from US brands or other collaborators. These fees add up over time. If those funds went into a US-based account, you'd save money on the foreign exchange fees. When you were ready, you could wire those funds over to your home bank account. International wire fees are generally about $30 or $40, which again really add up.

The more US-based transactions that you conduct, the more sense it may make for you to open an account.

With that said, an LLC costs about $300-$750/year to set up and maintain. Companies like startpack.io help you set up and manage your corporate status, as well as file taxes. Stripe’s Atlas can help as well. Given these ongoing costs, it’s important that you do the math to ensure that setting up the LLC saves you more money and makes it easier for you to earn more money from US brands. You should also confirm that you do not have to pay double taxes since you are not a US resident.

Setting up a US LLC can save you money and make it easier for you to get money, in particular if you are transacting frequently with US correspondents. Make sure you understand the costs and do the math to make sure it works for you.

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