To appear as a US company to US clients, can I form a LLC in random country and use Transferwise for US bank details?

[iloveyouguys]

My objective: appear as US LLC to US clients when they pay.

- Forming a US LLC as a foreigner costs at least $10,000 for me. (Explanation: I'm required to file form 5472. That will force me to hire a professional who specializes in this sort of thing, which is expensive. If I make a mistake, IRS will punish me with a $25,000 fee). I don't want to spend that much before having enough client base. Btw I do IT/software work.
- I don't want to get paid to my name. Bad for business. My name doesn't sound American and my potential clients are kinda racist.
- I googled if there's a service that makes me look like a company, but couldn't find it.
(Explanation: Here's an example to what I mean. Via Transferwise, A sends money from US to B in another country but the sender seems as the Transferwise's local ambassador instead of A in bank records. What I'm talking about is the opposite of that. I'm talking about using a transfer service basically.
Or, If I had a friend in US, I'd say hey can I use your company name and bank account to get paid? I'll have my clients send the money to your company bank account and you'll pay for my "services" and send the money to my personal account. Since you can write that off, you don't pay extra taxes for this. I'd give them a cut for the favor. Obviously this wouldn't work with a construction company haha. Company should be technology related)

Finally, I got this idea. To appear as a US LLC to US clients, I can form a LLC in random country and use Transferwise for US bank details.

- I'm wondering if this is possible? Will Transferwise let me do that?
- Will Transferwise require me to have a company bank account in the country where the business is registered?
- Can I get paid to my personal account from Transferwise? (From what I understood, they give you something similar to a bank account, which means you can)
- What are some countries foreigners can set up a company easily? (My country is in crisis. Hence a random country)

My goal is to have a US LLC after I have enough cashflow.

I'd appreciate any help! Thank you

 

[Sols]

You are not required to hire a professional just to fill in form 5472. It's a pretty easy form: https://www.irs.gov/pub/irs-pdf/f5472.pdf The IRS even provides detailed instructions for how to fill it in: Instructions for Form 5472 (12/2019) | Internal Revenue Service At most, you might need to pay an accountant for a few hours which shouldn't cost more than a few hundred dollars total. If someone is quoting you $10,000 to form a US LLC, they are trying to rip you off.

There is no guarantee that forming a non-US LLC will lead to Transferwise offering you local US bank details. Ask them first.

If your country "is in crisis", there is a risk it might be restricted or subject to limitations by Transferwise. There may be sanctions that prevent them from offering you services.

 

[iloveyouguys]

-Incorporation fees
-If mercurity.co doesn't work, two way flight to US to visit a branch
-Filing fees. I don't trust myself to fill that out. I'll hire someone in my first year, figure out how it works, then do it myself. I have personal accounts which I don't want IRS to touch if I make a mistake.
-Manhours needed to figure out how all this works
All that totals to at least $10K.

That's what it says on their website. I was just asking people's experience here. I can't find any contact email or form of Transferwise. Do you happen to know any?

Transferwise can't know my country of citizenship if I register with corp's identity, can they? That's the point of random country.

Edit. Do you ALSO have to personally register with your passport or country related ID while creating a business account for the company??

 

[Sols]

-Incorporation fees
-If mercurity.co doesn't work, two way flight to US to visit a branch

If both Mercury and Transferwise say no, I don't think there's any bank in the US that would say yes.

That's what it says on their website. I was just asking people's experience here. I can't find any contact email or form of Transferwise. Do you happen to know any?

There is a contact email address here if you scroll down to the last question in the FAQ: TransferWise for Business — A free multi-currency business account to send, spend, and receive multiple currencies with the real exchange rate. Do business without borders

Transferwise can't know my country of citizenship if I register with corp's identity, can they? That's the point of random country.

Of course they do. They will perform full identity verification check on you, since you are the owner/controller of the company.

Edit. Do you ALSO have to personally register with your passport or country related ID while creating a business account for the company??

Yes.

 

[iloveyouguys]

So if my origin country gets sanctioned, then I'll lose the account and money? Damn. It is not sanctioned now but I worry it might.

If I own a US LLC, and if US decides to create a sanction for my country, then US basically takes the company? What does happen in that case?

How do people from sanctioned countries do business online or keep their money in other banks? I guess I need a second passport?

 

[Sols]

So if my origin country gets sanctioned, then I'll lose the account and money? Damn. It is not sanctioned now but I worry it might.

The exact implementation varies based on the sanctions. Depending on the circumstances, the funds may be sent back to where they came from or they are frozen until the sanctions are lifted.

If I own a US LLC, and if US decides to create a sanction for my country, then US basically takes the company? What does happen in that case?

The company would effectively become inoperable. I don't think it would be immediately dissolved or taken over by the US. But if you can't pay for your annual renewal (due to sanctions on financial transactions from your country), the company would eventually be automatically dissolved.

Again this depends on the exact type and wording of the sanctions.

How do people from sanctioned countries do business online or keep their money in other banks? I guess I need a second passport?

They either don't do business online, only do business online into countries where they are not sanctioned, or avoid the sanctions through second citizenships or other means (which are illegal).

 

[iloveyouguys]

Say, for Syria or Iran.
I wonder if Iranians who own US LLC or US bank accounts lost their company/money after the sanctions.

I just found this: transferwise.com/help/20/verification/2953878/verify-your-us-business
It seems they only ask country of residence, not citizenship. I also emailed them to ask thanks to your help.

 

[Clip]

- Forming a US LLC as a foreigner costs at least $10,000 for me. (Explanation: I'm required to file form 5472. That will force me to hire a professional who specializes in this sort of thing, which is expensive. If I make a mistake, IRS will punish me with a $25,000 fee). I don't want to spend that much before having enough client base. Btw I do IT/software work.

It usually costs 295e per year. Accounting is so easy that you can do it yourself. Hire a trusted agent but learn how to do it yourself in case the agent forgets.

 

[traveller79]

I guess the first part is easy, you can find a company who will invoice your customers for a fee (something like 5%). You can google for "Umbrella company", many options out there.

The second part is more expensive, that is transferring the money to you. If you want to get the money to your private account, there are additional fees, up to 50% and even more. These are called "taxes". Taking money out from a company to personal use is always expensive.

I would like to remind once again that when people compare countries for taxation, they often just look at income tax. But the whole picture is more complicated and often the highest % goes to social security contributions. For example, low income tax country Estonia has 33% social security tax which is mandatory and brings total "payroll tax" to 50% and more.

What you can do, and what some umbrella companies allow, is to setup company somewhere else, and transfer part (or all) of the money from umbrella company to your own business registered in some other country. However, if it is high risk country, they might not allow it for long time / big amounts.

 

[Sols]

I just found this: transferwise.com/help/20/verification/2953878/verify-your-us-business
It seems they only ask country of residence, not citizenship. I also emailed them to ask thanks to your help.

You will also need to go through this: https://transferwise.com/help/20/verification/2949801/how-does-transferwise-verify-my-identity

 

[iloveyouguys]

You will also need to go through this: https://transferwise.com/help/20/verification/2949801/how-does-transferwise-verify-my-identity

TW rep said that citizenship of their customers do not matter and they provide services based on country of residency.

If they aren't lying, this is great

 

[iloveyouguys]

I guess the first part is easy, you can find a company who will invoice your customers for a fee (something like 5%). You can google for "Umbrella company", many options out there.

If you know any options, can you share?
This business will be completely legal so it wouldn't associate me with bad actors, right?

 

[Milky Moon]

It usually costs 295e per year. Accounting is so easy that you can do it yourself. Hire a trusted agent but learn how to do it yourself in case the agent forgets.

There can be significant legal complexity, and there are additional tax considerations, for members of an LLC who live outside the U.S. or who are not U.S. citizens or companies. Thus, LLCs are typically not chosen by non-U.S. founders or startups thinking about raising money.

You might investigate stripe.com or US-Delaware – LLC