Should a European Freelancer Open a US LLC?

For most European freelancers, a US LLC is not required to work with US clients or get paid in dollars. It becomes worth considering once you need a US bank account, a US business credit card, or a more credible entity to bill through, and once you understand what it actually changes for your taxes at home. Here's the honest breakdown, not the sales pitch.

What a US LLC Actually Does for a Freelancer

A US LLC is a legal entity you register in a state, usually Delaware, Wyoming, or New Mexico. On its own, it doesn't give you a tax break, a visa, or US residency. What it does give you is a US business identity: a US company name, a US EIN, and access to US business banking and card products that are hard or impossible to get as an individual freelancer billing from abroad.

For a European freelancer, the LLC is a tool, not a strategy. It solves specific problems. It doesn't solve tax planning by itself, and anyone telling you otherwise is skipping the details.

The Real Reasons Europeans Open a US LLC

• Getting paid like a US business. US clients, marketplaces, and platforms often pay faster and with fewer questions to a US entity with a US bank account than to a personal account overseas.
• Access to US business banking. A US LLC lets you open a US business bank account and qualify for US business credit cards, including Amex, which build a credit profile that follows the business, not your personal foreign credit history.
• Looking established to clients. A US LLC with a US address and US bank details reads as more credible to American clients than an invoice from a personal account in Europe.
• Separating business and personal liability. An LLC keeps your personal assets separate from business liabilities, structurally, not just on paper.
• Simplifying multi-client, multi-currency work. One US entity can consolidate invoicing instead of juggling different setups per client or platform.

The Tax Reality Nobody Explains Clearly

This is the part most articles get vague about, so here it is straight: a single-member LLC owned by a non-US person is treated by default as a 'disregarded entity' for US federal tax purposes. If the LLC has no US-source income effectively connected to a US trade or business, it generally owes no US federal income tax on foreign-earned freelance income. But the LLC still has annual filing obligations, specifically Form 5472 attached to a pro forma Form 1120, even when there's zero US tax due. Missing this filing carries a real penalty, not a slap on the wrist.

Just as important: the LLC does not erase your home country tax obligations. If you're tax resident in Germany, Spain, Portugal, or anywhere else in Europe, you're still taxed on your worldwide income there, and many countries have controlled foreign company (CFC) rules that can attribute the LLC's income back to you personally regardless of where the LLC is registered. A US LLC changes where you bank and invoice from. It does not automatically change where you're taxed. Talk to a tax advisor in your home country before assuming otherwise, this article is educational, not tax advice.

Costs and Ongoing Obligations

• State formation fee, one-time, varies by state (Wyoming and New Mexico are cheaper than Delaware to form in).
• Annual state fee: Delaware charges a flat $300 franchise tax every year; other states like Wyoming charge a much smaller annual report fee.
• Registered agent fee, required every year in the state you're registered in.
• Form 5472 and pro forma 1120 filing, annually, even at zero US income.
• Optional: ITIN application if you need one for banking or tax treaty purposes.
• Optional: home country accounting to reconcile the LLC's activity with your personal tax return.

How to Set It Up Remotely, Step by Step

1. Decide if you actually need US banking or a US business credit card, that's usually the real driver, not the LLC itself.
2. Choose a state. Wyoming and Delaware are the two most common choices for foreign-owned single-member LLCs, each with different cost and privacy tradeoffs.
3. Appoint a registered agent in that state, required by law, and usually handled by whoever forms the LLC for you.
4. File formation documents (Articles of Organization) and get your Certificate of Formation.
5. Apply for an EIN with the IRS. This can be done without an SSN, though it takes longer by fax or mail than the online process available to US persons.
6. Apply for an ITIN if you need one for banking, tax treaty benefits, or specific platforms.
7. Open a US business bank account remotely, this is the step where most DIY founders get stuck, since many banks still expect a US visit or a US address.
8. Apply for a US business credit card once banking and credit history exist for the entity.
9. File Form 5472 and the pro forma 1120 every year, on time, even with no US tax owed.

This is exactly the process Founders Credit handles end to end for European founders and freelancers: LLC formation, EIN, ITIN, US business bank account, and US business credit cards including Amex, done remotely without a US trip. We built the service because steps six and seven above are where most people get stuck for months on their own.