A Limited Liability Company (LLC) is a very popular legal form of business in the United States because of its flexibility and the many advantages it offers to its members, including non-resident members.
It is governed by the laws of each U.S. state and can have one or more members.
The LLC is an interesting option for entrepreneurs wishing to protect their personal liability while benefiting from an advantageous tax regime.
It is important to take into account the differences between the states in terms of tax rules applicable to LLCs and to fully understand the implications of the chosen structure for the management of the business.
What is the tax treatment of an US LLC?
The creation of an U.S. LLC offers several legal and tax advantages to its members. If the LLC is formed with a single member, it is considered a tax-exempt entity. This means that the LLC does not pay taxes, and the taxation of profits is deferred to the single member in his or her country of tax residence.
On the other hand, if the LLC has multiple member, it is treated as a partnership for tax purposes. This means that each member is personally liable for taxation on his or her share of the profits.
By reporting the LLC's profits, the members can take advantage of a favorable tax treatment, and deduct the business expenses of the partnership from the reported profits.
However, LLC tax reporting can be complex, especially for non-resident members.
It is strongly recommended to call upon specialists to avoid mistakes that can lead to fines. At PrepaTaxLLC, we can help you complete and file your tax forms correctly, and obtain an EIN and a U.S. address.
How Bulgarian tax residents who are members in an U.S. LLC are subject to taxation in the United States?
A non-ETBUS LLC is considered a semi-transparent entity for tax purposes. This implies that the members are taxed individually on their share of the company's profits.
If a member of the U.S. LLC resides in Bulgaria and holds an equity interest, he or she will be taxed on his or her share of profits in accordance with the income tax rates in effect in that country. In effect, the member will be considered to have received taxable income in Bulgaria on his or her share of the company's profits.
Individuals residing in Bulgaria pay tax on their worldwide income. Taxable income includes income from employment, income from business or professional activity, capital gains, rental income, all types of interest from bank accounts, etc.
The standard tax rate for individuals is 10%. However, interest from bank accounts is taxed at 8% (10% for non-residents) and dividends at 5%.
Let our tax experts prepare and submit your company's tax returns to avoid errors and omissions. The IRS imposes a fine of $25,000 per form per year for each error or omission.
Our specialists will be able to put you in touch with Bulgarian accountants and lawyers in order to correctly file your American LLC income tax return in Bulgaria.
Our specialists are available to assist you throughout the process.
How can PrepaTax help you avoid errors in your LLC's US tax returns?
U.S. LLC tax reporting is a complex process that can easily lead to errors or omissions, which can result in very high fines. It is therefore highly recommended to use the services of tax specialists to ensure that your tax returns are compliant.
Fines for errors or omissions can be as high as $25,000 per form per year. If you have multiple LLCs, repeated errors can quickly lead to significant fines.
At PrepaTaxLLC, our tax experts can help you properly complete and file complex tax forms, as well as obtain an EIN and a U.S. address.
By entrusting us with this task, you can avoid any risk of error and focus on growing your business.
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 lability is accepted for any consequential incident that may result from errors or omissions contained in this document.