Entity Choice & Structuring
What is a Delaware LLC and why do foreign founders choose it for US market entry?
A Delaware LLC is a US limited liability company formed under Delaware law that non-US residents can own and control without citizenship, residency or a Social Security Number. Foreign founders choose Delaware because its Court of Chancery has a century of predictable business case law, formation is fast and inexpensive, and US banks, investors and enterprise customers recognise the structure immediately. For most first-time entrants it is the cheapest way to obtain a contracting entity, a bank account and an employer identity in one step.
Can a non-US resident own 100% of a Delaware LLC?
Yes. Delaware places no citizenship or residency requirement on LLC members or managers, so a single foreign individual or a foreign parent company can hold 100% of the membership interests. There is no requirement to appoint a US-resident director or nominee. The only mandatory US presence is a registered agent with a physical Delaware address.
Delaware LLC vs Delaware C-Corp: which is better for a foreign-owned US subsidiary?
An LLC is usually better when the US entity is a wholly owned operating arm of a foreign parent that wants a single layer of tax and simple governance. A C-Corp is better when you plan to raise US venture capital, issue stock options to US employees, or want the foreign parent shielded from direct US filing exposure — the corporation pays 21% federal tax itself rather than passing income through. Many foreign parents choose the C-Corp precisely because pass-through income can create a personal US filing obligation for individual owners.
What's the difference between forming an LLC in Delaware versus my target operating state?
Delaware gives you a stable, well-tested legal home, but if your staff, office or inventory sit in Texas, Florida or California, you still must register there as a foreign-qualified entity and pay that state's fees. That means two sets of annual obligations rather than one. If you will only ever operate in one state and do not expect US investors, forming directly in that state is often simpler and cheaper.
Legal & Tax Requirements
Do I need a US Social Security Number or ITIN to form a Delaware LLC?
No. Formation itself requires no US tax identification number at all — you file a Certificate of Formation naming a registered agent. An ITIN only becomes relevant if you as an individual owner must personally file a US return, for example when a single-member LLC's income is treated as effectively connected to a US trade or business. Many foreign owners never need an ITIN because the entity, not the individual, carries the filing obligation.
What is a registered agent and why does Delaware require one?
A registered agent is a person or company with a physical Delaware street address authorised to receive legal service of process and state correspondence on your behalf. Delaware requires one because the state must be able to deliver lawsuits and compliance notices to an entity whose owners live abroad. Commercial agents cost roughly $50 to $300 per year and must be renewed annually or the entity falls out of good standing.
How does a US subsidiary differ from a branch office for tax purposes?
A US subsidiary is a separate legal person: it files its own return, pays US tax on its own profits, and generally shields the foreign parent from direct US exposure and liability. A branch is an extension of the foreign parent, so the parent itself becomes a US taxpayer on its effectively connected income and can face branch profits tax of up to 30% on repatriated earnings. Our breakdown of <a href="/blog/us-subsidiary-vs-branch-office-tax-guide-2026">US subsidiary versus branch office tax treatment</a> walks through the numbers in detail.
What corporate governance documents does a foreign-owned US entity need?
At minimum an operating agreement (or bylaws and board consents for a corporation), a members' or shareholders' register, an initial resolution appointing officers and authorising the bank account, and signed intercompany agreements covering any services, IP licences or loans between the US entity and its foreign parent. Banks and auditors routinely ask for these before onboarding. Transfer-pricing documentation for intercompany charges should be prepared in the first year, not retrofitted later.
Process & Timeline
What is an EIN and how does a foreign owner get one without a US Social Security Number?
An EIN is the Employer Identification Number the IRS assigns to a business — the tax ID needed to open a bank account, run payroll and file returns. Foreign owners without an SSN cannot use the instant online application; they file Form SS-4 by fax or mail, entering "foreign" in the responsible-party SSN field. Fax typically returns an EIN in one to three weeks, mail in four to eight, which is why EIN issuance is usually the critical path in a US launch plan.
How long does it take to incorporate a Delaware LLC as a foreign national?
Delaware itself is fast: standard filing is processed in one to three business days and same-day expedited service is available for an extra fee. The realistic end-to-end timeline is four to eight weeks because EIN issuance and bank onboarding sit behind formation. Running governance documents and bank application packs in parallel with the EIN request is the single biggest time saver.
Can I open a US business bank account remotely without visiting the US?
Yes, but the options narrow. Several US fintech and business-banking providers onboard foreign-owned entities fully remotely with an EIN, formation documents and beneficial-owner identification. Most traditional branch banks still want an in-person signer visit or a US-resident authorised officer. A practical route is to open remotely to start operating, then add a traditional banking relationship once you have US staff or a resident officer.
Do I need to register as a "foreign qualified" entity in the state where I actually do business?
Almost certainly yes. Any state where you hold an office, employ staff, store inventory or conduct regular in-person business generally requires foreign qualification — filing with that state's Secretary of State, appointing an agent there and paying annual fees. Operating without it can void your right to sue in local courts and trigger back fees and penalties. This is one of the most commonly missed steps in a DIY US launch.
Costs & Ongoing Compliance
What US tax filings does a foreign-owned Delaware LLC have to make each year (Form 5472, 1120)?
A foreign-owned single-member LLC that is disregarded for tax purposes must file Form 5472 attached to a pro-forma Form 1120 every year, disclosing reportable transactions with its foreign owner. The penalty for missing it is $25,000 per year, per form, and it applies even to a dormant entity with no revenue. Multi-member LLCs file Form 1065 with K-1s instead, and corporations file a full Form 1120.
What are the ongoing costs of maintaining a Delaware LLC (franchise tax, registered agent, annual reports)?
Budget roughly $300 for the Delaware LLC annual franchise tax (a flat amount, due 1 June), $50 to $300 for registered agent renewal, plus foreign-qualification fees in each operating state which commonly run $50 to $800. Add accounting and tax preparation of roughly $1,500 to $5,000 per year for a foreign-owned entity with intercompany transactions. A realistic all-in maintenance figure for a small US subsidiary is $2,500 to $7,000 annually.
What happens if a foreign-owned US entity misses its annual compliance filings?
Delaware charges a $200 penalty plus 1.5% monthly interest on unpaid franchise tax and moves the entity to "not in good standing," which blocks certificates of good standing that banks, landlords and customers request. Prolonged non-payment leads to administrative void status, after which contracts signed in the entity's name can be challenged. Federal penalties are harsher — the $25,000 Form 5472 penalty is assessed automatically.
When should a foreign company use an Employer of Record instead of forming its own entity?
Use an EOR when you need one to ten US employees quickly, are still testing demand, or cannot wait four to eight weeks for entity, EIN and payroll registration. Form your own entity when you need to sign US customer contracts in your own name, issue equity, import goods, or when EOR fees exceed the roughly $800 to $2,500 monthly cost of running your own entity. Our guide on <a href="/blog/hire-us-employee-without-us-entity-2026">hiring a US employee without a US entity</a> covers the crossover point.