How to Use a US LLP and US Bank Account for Privacy and Profit
No Common Reporting Standard
Non US resident bank accounts will be considered by some to be an unusual topic for an offshore website. However there are many surprising benefits for non US residents and citizens using a non US resident bank account.
I’ve written before about the common reporting standard (CRS) and how it attempts to kill financial privacy around the world. Every traditional tax haven has signed up to the OECD’s CRS scheme. They will share your financial information with the tax authorities in your home country. If you have existing offshore accounts you must act to make sure that your private information is not disclosed to your government.
The US has its own scheme, the Financial Accounts Tax Compliance Act (FATCA) which is just as bad as CRS. However FATCA only applies to US citizens and residents. The US is not part of CRS. Therefore if you’re not a US citizen or resident you can have US bank accounts without them being reported under CRS or FATCA.
US Dollar Account
A non US resident bank account will be denominated in US dollars. There’ll likely be no other option.
It’s much harder to find muti currency bank accounts in the US. Good luck trying to open a bank account in Euros or British pounds. However, as the US dollar is used worldwide you can easily use other services to hold foreign currencies while receiving incoming payments in US dollars. To have a private bank account in US dollars is worthwhile.
Perfect for Online Trading
If you want to sell or do business in the US it’s essential to have bank accounts there. Your US customers will be able to pay you through the local banking system. This will be easier than asking them to make international wire transfers. Having a non US resident bank account solves this problem.
FDIC Protection up to $250,000
All bank accounts are insured for up to $250,000 by the FDIC, which is a US government entity. This is higher than the insurance offered by banks in the EU, UK and other jurisdictions. If you want to hold more than $250,000 in the US I’d recommend that you open accounts in multiple banks with each having no more than $250,000 on deposit.
Easy to Set up Paypal, Stripe, etc for Online Businesses
If you’re running an online business anywhere in the world you’ll need to receive payments through third party providers. Often these providers like Paypal and Stripe offer more benefits for US account holders. If you have US customers, having a US routing number can help you get paid faster. A non US resident bank account will give you the credentials you need to set up in the US with payment providers.
No Reporting of Owners or Officers
Many states in the US offer more confidentiality than offshore jurisdictions nowadays. There are no public registers of beneficial owners as we’ve seen in jurisdictions like the BVI. In states like Wyoming there’s no public reporting of company officers or owners. You’ll have to provide ownership details to the local agent and the bank but this information will not be available to the public.
No US Tax on Income – A Non US Resident Bank Account Does Not Subject you to US Taxes
An LLP is a special kind of entity that taxes the individual owners. Therefore profits made by your US LLC are not taxed in the US for those who aren’t tax resident there. The tax liability will be in your country of residence. If you’re resident in a tax haven or territorial tax country the US entity will be completely tax free.
Non US Residents not Subject to FATCA
I briefly mentioned the Foreign Account Tax Compliance Act (FATCA) earlier. FATCA applies only to US citizens and residents and to FOREIGN accounts that they own. It does not cover US domestic accounts. The US LLP account is a domestic account so it doesn’t fall under FATCA or CRS.
Easier to Open than in Traditional Offshore Jurisdictions
Offshore accounts have gradually got more difficult to open in the last few years. Many banks insist on personal visits and require more and more information to on board new clients. The banks where you’ll open your LLP bank account will open your account without any personal visit and with less due diligence than traditional offshore jurisdictions. They’ll still want proof of identity and proof of your address but it’s easier than elsewhere.
Avoid Taxes on Purchases from US Companies
In some jurisdictions purchases from US based companies like Netflix are taxed when the payment is made through a local bank. In Europe, VAT is added to online purchases if they’re paid with European cards. In some Central and South American countries the local banks are obligated to collect sales tax on purchases from overseas. Using a US account avoids these sales taxes.
A US LLP can be a useful tool in your offshore arsenal, provided you don’t live in the US and you’re not a US citizen. You will have more confidentiality with a US LLP and bank account than you will with a BVI or Caymans entity. Of course if you live in a high tax country you will want to use a tax free company above the LLP to eliminate taxes.
There are strategies to use a US LLP to ensure that no profits ever crystalize in that entity if you live in a high tax country I’ve outlined some of those strategies in BulletProof Asset Protection. . In any case, the additional layer of privacy and the easy setup make it an optimal way to avoid CRS.