A LLC (Limited Liability Company) is the American equivalent of the German GmbH — a company with limited liability. For German investors who want to start a US company, the LLC is the most commonly used legal structure: no minimum capital, no US residence, no notary.
LLC = Limited Liability Company. Limited liability, tax-transparent, available in all 50 US states — ideal for German investors and entrepreneurs.
What is an LLC? Definition and Features
The LLC is a hybrid business structure: it combines the liability protection of a corporation with the tax flexibility of a partnership. Profits flow directly to the members — without corporate tax at the company level.
Liability protection: Personal assets remain outside the company’s liability
Tax transparency: Pass-Through Taxation — profits are taxed only at the member level
US Real Estate: Bundle rental income and sales in a structured LLC
Online Business: US bank accounts, Stripe, PayPal, Amazon Seller — all require a US entity
Credibility: An LLC behind the company name opens US business doors
No Minimum Capital: Unlike a GmbH (25,000 EUR), just 1 USD is sufficient
Forming an LLC: Step-by-Step Guide
No notary, no minimum capital, no US citizenship required. The entire process runs online — from Germany.
Step 1: Choose a State
Selecting the formation state is the most important decision. Delaware, Wyoming, and Florida are the three most popular options for German non-residents. Find a detailed comparison below.
Step 2: Appoint a Registered Agent
Every LLC needs a person or company with a US address in the formation state to receive official documents. Cost: 50–150 USD/year. Many formation services offer the first year for free.
Step 3: File the Articles of Organization
Online at the Secretary of State — processing time 1–3 business days, fee 50–500 USD depending on the state. In Wyoming and Delaware, expedited filings (1 business day) are possible for about 50 USD extra.
Step 4: Create an Operating Agreement
The internal company agreement regulates profit distribution, voting rights, succession rules, and management. Legally optional in most states — practically essential, especially with multiple shareholders.
Step 5: Apply for an EIN (IRS)
The tax identification number with the US tax authority (IRS) is required for bank accounts and US tax returns. For Germans without a US social security number: Submit Form SS-4 by fax or mail to the IRS — processing time 2–4 weeks. A US CPA can often obtain the EIN by phone within a day.
Step 6: Open a US business account
Mercury, Relay, or Wise Business are the most common options for non-residents — fully online, no branch visit required. Prerequisites: EIN, Articles of Organization, Operating Agreement.
Delaware vs. Wyoming vs. Florida: Which state is right for you?
Feature
Delaware
Wyoming
Florida
Formation Fee
90 USD
100 USD
125 USD
Annual Franchise Tax
Minimum 300 USD
Minimum 60 USD
138.75 USD
State Income Tax
No
No
No
Privacy (Shareholders)
Moderate
Very high
Low
Legal System
Very established (Court of Chancery)
Solid
Solid
Ideal for
VC startups, institutional investors
Real Estate, Privacy
Florida Real Estate, Residents
For German non-residents without a U.S. residence, Wyoming is the most cost-effective choice — lowest annual costs (starting at 60 USD), strong privacy protection, no state income tax, no public shareholder registry.
Annual Costs and Ongoing Obligations
Annual Report / Franchise Tax: 60–300 USD/year depending on state
Registered Agent: 50–150 USD/year
US Accounting and Tax Filing (1120 / 5471): from 500 USD/year (US-CPA recommended)
FBAR Reporting Obligation: US accounts over 10,000 USD must be reported to the German tax office (FinCEN 114) — penalty for non-compliance up to 10,000 USD/year
Foreign Qualification: If the LLC is active in a different state than the state of formation, a registration fee applies (approx. 100–300 USD)
LLC for US Real Estate: Why It Makes Sense
Anyone buying real estate in the US should put the properties into an LLC for tax and liability reasons — this is recommended by almost all US real estate attorneys. Learn more in the guide Buy an Apartment New York and on Property Taxes USA.
Liability Protection: Damages, lawsuits, rental disputes affect the LLC — not your personal assets
Privacy Policy: LLC name instead of your own name in the land register (particularly relevant in Wyoming)
Tax Efficiency: Depreciation, repair costs, and mortgage interest are deductible directly in the LLC
Estate Planning: LLC shares are easier to transfer than directly owned real estate
Multiple Properties: Each real estate property in its own LLC — one property is not liable for another
Taxation: What Germans Need to Know
Transparency Principle (Pass-Through Taxation)
A Single-Member LLC is considered a Disregarded Entity by the IRS: profits flow directly into the owner’s U.S. tax return — no corporate tax at the LLC level. With multiple members, the LLC is treated as a Partnership (Form 1065).
Germany: Transparency or Opacity?
The German tax authority treats the U.S. LLC as either a partnership (transparent) or a corporation (opaque), depending on its structure. The tax classification depends on a type comparison and is not always clear-cut.
Tax Note: This article is general information and does not carry tax or legal binding. For binding assessments, consult a tax advisor specializing in US law and German tax law.
Tax Treaty (DBA)
The German-American DBA protects against double taxation — but only with a correct LLC structure and proper classification by both tax authorities.
LLC vs. GmbH vs. UG: Comparison for Germans
Feature
LLC (USA)
GmbH (DE)
UG (DE)
Minimum Capital
None
25,000 EUR
1 EUR
Limited Liability
Yes
Yes
Yes
Setup Costs
Low (online, 1–3 days)
High (notary, commercial register)
Moderate (sample protocol possible)
Tax Transparency
Yes (Pass-Through)
No (corporate tax)
No (corporate tax)
Profit Reserve Obligation
No
No
Yes (25 % profit)
Suitable for
US market, real estate in the US, online business
Germany, EU market
Small entrepreneurs in Germany
Annual Costs
from 200 USD
from 1,000 EUR
from 500 EUR
Common Mistakes When Setting Up an LLC
Wrong State: LLC registered in Delaware, business in New York — foreign qualification fees apply, double taxation possible
No Operating Agreement: State laws apply by default — often disadvantageous in case of inheritance or disputes
Mixing accounts: Combining personal and LLC finances in one account leads to Piercing the Corporate Veil — liability protection is void
Forgotten FBAR: Fines up to 10,000 USD per year for unreported US accounts
No US CPA: German tax advisors are rarely familiar with US tax law — a US CPA is mandatory
Registered Agent not renewed: Forgotten annual fee leads to dissolution of the LLC by the State
FAQ: Setting up an LLC as a German
Can a German set up an LLC?
Yes. Neither US citizenship nor US residency is required. The only obligation: a Registered Agent in the founding state — this can be a commercial service for about 100 USD/year.
What does it cost for a German to set up an LLC?
50–500 USD Gebühr fuer die Registrierung, abhaengig vom Bundesstaat, plus etwa 100 USD/Jahr fuer den Registered Agent. Die EIN bei der IRS ist kostenlos. Gesamtkosten im ersten Jahr: etwa 200–700 USD.
Do I need a US Lawyer?
For simple single-member LLCs, a formation service (e.g., Northwest, ZenBusiness) is sufficient. For multiple members or US real estate: US lawyer and CPA strongly recommended.
How long does LLC formation take?
Wyoming or Delaware online: 1–5 business days. With expedited filing (approx. $50 surcharge): 1 business day.
Do I need to register the LLC in Germany?
If the LLC is active in Germany or you are tax-resident in Germany: registration with the German tax office is required. In doubt, consult a tax advisor with international experience.
What is the difference between LLC and Corp (C-Corp / S-Corp)?
The LLC is more flexible and tax-transparent. A C-Corp is ideal for venture capital — it can issue shares and take on investors with classic equity structures. For German non-residents, the LLC is usually the better choice in most cases.
