Can a U.S. LLC Do Business in Another Country? Your Guide to Global Expansion

For ambitious American entrepreneurs and international founders with a U.S. base, global expansion is a natural next step. The question often arises: Can a Limited Liability Company (LLC) do business in another country? The short answer is yes, a U.S. LLC can absolutely operate on an international scale.

However, moving into foreign markets involves more than just finding new customers. It requires a careful understanding of the legal, tax and operational rules of your target country.

This guide outlines the essential steps and considerations for taking your U.S. LLC international, from initial registration to managing finances across borders.

Can you move a U.S.-based LLC to another country?

Moving an LLC isn't like moving a physical office. An LLC is a legal entity created under U.S. state law. Instead, you would typically either dissolve the U.S. LLC and form a new entity in the foreign country or have your U.S. LLC establish a subsidiary or branch in that country. The latter allows the U.S. entity to continue existing while operating abroad.

Steps for Your US LLC to Operate Internationally

Expanding your business abroad requires a structured approach to ensure you remain compliant with both U.S. and foreign laws. Operating a business internationally involves a spectrum of strategies, ranging from simple border transactions to establishing permanent physical structures, each with distinct legal requirements. The most common types of companies that operate internationally include firms in import and export, licensing and franchising, foreign direct investments, and multinational corporations.

The key requirements to operating on an international level include legal registration, tax compliance, employment and labor laws, intellectual property protection and banking. Following these steps can help create a smooth transition.

1. Legal and Regulatory Foundations

The first phase involves understanding and complying with the legal framework of your new market. You will need to:

Determine the Nature of Your Business: First, clarify how your LLC will operate internationally. Will you be selling products to foreign customers, establishing a physical office, or partnering with a local entity? Your business model will dictate the specific legal steps you need to take.¹

Research Local Regulations: Every country has its own rules. Research the legal requirements for opening a business in another country, which may include registering your LLC as a foreign entity, obtaining special licenses or permits, and complying with local labor and business laws.¹

Register with Local Authorities: If you establish a physical presence, you must register your LLC with the appropriate business registration agency in that country. This step legitimizes your operations and is essential for legal and tax compliance.¹ A common example is a U.S. company doing business in Canada, which often requires registering as an extra-provincial corporation.

With the legal and regulatory groundwork established, the focus now shifts to a robust financial and operational strategy.

2. Financial and Operational Strategy

Understanding your tax obligations in the host country is critical. This includes corporate taxes and indirect taxes such as a Value-Added Tax (VAT) or Goods and Services Tax (GST). It's also important to research any double-taxation treaties between the U.S. and the foreign country to avoid paying tax twice on the same income.¹

You should also consider how best to handle international banking and currency. Opening a bank account to manage cross-border transactions is a key step. Operating internationally may require frequent transfers and cross-currency financial management. In this regard, traditional banking can be slow and expensive, with hidden fees and poor exchange rates eroding your profits.

Wise Business Could Help Your Company Save on Global Payments

3. U.S. and International Compliance

Operating a U.S. LLC internationally creates a complex dual compliance requirement, necessitating adherence to both U.S. IRS reporting and the foreign country's local laws. On the U.S. side, the LLC must maintain its default tax classification (often "disregarded entity" or "partnership") and file required informational forms, such as the FBAR (FinCEN Form 114) for foreign financial accounts and potentially Form 5472 (if foreign-owned), with failure to file carrying severe $25,000 penalties.

Simultaneously, the LLC must ensure it meets all foreign registration requirements if its activities constitute "doing business" locally, which includes complying with labor laws for local employees, remitting VAT/GST, and leveraging tax treaties to avoid double taxation on its international income.

Below are the key considerations for ensuring compliance both within the U.S and internationally:

Address U.S. Tax Implications: Your LLC must report all international income on its U.S. tax returns. You may be able to use foreign tax credits to offset taxes paid to another country. Depending on your business structure, you might need to file specific forms with the IRS, such as Form 5471 for controlled foreign corporations or Form 8865 for foreign partnerships.¹

Hire International Workers Correctly: When hiring employees or contractors abroad, you must comply with local labor laws and payroll tax obligations. Clear legal agreements that outline roles, responsibilities, and payment terms are essential for protecting your business.¹

Protect Intellectual Property: If your business relies on intellectual property, you should register your trademarks and patents internationally to protect them from infringement in new markets.¹

Adhere to Trade Laws: Your business must follow U.S. laws like the Foreign Corrupt Practices Act (FCPA), which prohibits bribery of foreign officials, as well as all export control laws and sanctions programs.¹

Save Time and Money On Overseas Payments With Wise Business

Wise Business can help you save big time on international payments.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in currencies.

Signing up to Wise Business allows access to BatchTransfer which you can use to pay up to 1000 invoices in one go. This is perfect for small businesses that are managing a global team, saving a ton of time and hassle when making payments.

Some key features of Wise Business include:

• Mid-market rate: Get the mid-market exchange rate with no hidden fees on international transfers

• Global Account: Send money to countries and hold multiple currencies, all in one place. You can also get major currency account details for a one-off fee to receive overseas payments like a local

• Access to BatchTransfer: Pay up to 1000 invoices in one click. Save time, money, and stress when you make 1000 payments in one click with BatchTransfer payments. Access to BatchTransfer is free with a Wise Business account

• Auto-conversions: Don't like the current currency exchange rate? Set your desired rate, and Wise sends the transfer the moment the rate is met

• Free invoicing tool: Generate and send professional invoices

• No minimum balance requirements or monthly fees: US-based businesses can open an account for free. Learn more about fees here

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Final Thoughts

While operating a U.S. LLC in a foreign country is possible, there are a few key elements that American businesses should consider and plan for. When the legal, tax and operational rules of your target country have been thoroughly researched, you can begin your quest to reach a much, much broader audience.

Frequently Asked Questions

Do I have to pay taxes if I have a business in another country?

Yes, you will almost certainly have tax obligations in both the U.S. and the foreign country where you operate. The U.S. taxes its citizens and domestic companies on their worldwide income. The foreign country will tax the income generated within its borders. To prevent double taxation, the U.S. has tax treaties with many countries and offers the Foreign Tax Credit, which can reduce your U.S. tax bill by the amount of taxes you paid to the foreign government.²

What are the benefits of a foreign LLC?

The term "foreign LLC" can be confusing. In the U.S., it refers to an LLC that operates in a state other than the one where it was formed. Internationally, the concept is similar: registering your U.S. LLC to do business in another country provides benefits like establishing a legal presence, limiting your personal liability in that jurisdiction, and gaining the ability to open local bank accounts, hire employees and sign contracts legally.¹

Can a U.S. LLC own a foreign company?

Yes, a U.S. LLC can own a foreign company. This is a common structure for international expansion. Your U.S. LLC can act as a parent company and form or acquire a subsidiary in another country. This structure helps separate the liabilities of the foreign operation from the U.S. entity. This subsidiary would be governed by the laws of its country of incorporation, but its profits and ownership details would have significant U.S. tax implications.³

Sources:

1. Can an LLX Do Business Internationally? | Tabcut
2. How to Start a Business in Another Country as a US Expat | Bright Tax
3. Global Intangible Low-Taxed Income (GILTI): How Calculation Works | Investopedia