Setting up US LLC and Bank Accounts

Only cost be about $300 to set up both of my LLC ($600 total), may have gone the budget version but they still do what I need to do so cannot complain.

As for US Bank Accounts I have had a lot of bad luck, I was able to get a bank account set up with BB&T Bank remotely (without even visiting the country) but they closed the account about a week later. Then when I was in the US I had an account set up with Wells Fargo over there and all seemed to go well, but they were subsequently closed about two weeks later (never even got a reason). Now we have an account opened with Capital Bank (been opened since the start of the year) and that seems to be going alright so far, but we have formed a partnership with someone who lives in the US so hopefully they can manage it if anything occurs.

Wells Fargo at one stage was the pin up boy as far banks go for opening accounts for non present overseas buyers, and like I'm sure many others, I had some very good contacts at that bank who were opening accounts for clients without any hassles.  However, the problem always seems to be that you deal with an employee at a bank, the employee sooner or later leaves, no one can or is willing to take it on, and then the bank closes the account anyway.

With many clients having had their account closed, with being a non present account holder when it was opened, it seems that most banks are now really clamping down, and many are also getting a cheque ( Check ) back for the balance, I have had clients who opened account through relatives in the US, and who looked after the account, but after a while it was still closed down.

So this became a real problem in supplying this service, sure there are still those that are able open accounts, but for how long before it does get closed, and then back to looking again.

Over the past four months, I have been working with one of my associates who is a Property Lawyer and a partner in one of my major supply companies, his family actually own a major local bank, that they also do business with and have done for many years, and after the past  many months working it out with the actual CEO, VP and Legal Council of the bank, accounts have now been opened successfully, one for an overseas client in Europe himself a lawyer, so it is now very legal and secure. <moderator: delete advertising>

But If  an account is definitely required, as many times its not, then this is probably unique in that your not dealing with an employee who leaves and your account gets closed.

As for opening the LLC etc, many sources have different rates, and what professional advice if any is included. You can get an LLC and Ein for a few hundred dollars if going direct to a source in the US,  or up to a few thousand dollars through some companies here in Australia. Many don't realize that the LLC can be taxed differently and you have to take in asset protection, in many states a single member LLC can be sued very easily, and if the wrong structure is set up, you can be in all sorts of trouble over time.

The price of the actual LLC etc, is also only part of the process, as many times have i seen someone had this all set up on the advice of some salesperson at a company, only to find that they were given the wrong advice and it was set up all wrong for their needs or circumstances, or even in the wrong State for their needs.

So getting the correct advice right at the start is so important, don't go with the herd mentality because someone says what they did and saved a lot of money, that's very dangerous. And the right structure should be in place even before looking at properties, if you know where you want to buy, or at least at the same time, certainly not after purchasing.

That's my few words, for what it's worth.

.Thanks for the comments, we havent got as far as setting up an LLC but these are all valid points to consider.

My advice to you, and everyone, considering getting an LLC is to focus on value not cost. Strive to understand why the "same LLC" can cost more or less depending on the protection it affords – or work with someone who can explain this to you in a way you understand and feel comfortable with. Saving a few hundred, or a few thousand, on the front end can cost you hundreds of thousands on the back end.

Why not call a few companies and ask the same tough questions? Everyone will be happy to talk to you

There are some important area of setting up an LLC which have been overlooked in this discussion but need to be considered.

1. What state are you going to set your LLC up in? Most states tax, except for Nevada and Delaware
2. If you have property in several different states and all within one LLC, the LLC is considered a “Foreign Entity” in all states bar the state of registration. You have to apply for and comply with “Foreign Entity” registration in all states in which you own property bar the state of registration.
3. How is your LLC going to trade, as a corporation, as a partnership etc? If as a partnership you have to have not only and EIN but also ITINs for each member, getting these takes time. We forced the IRS’s hand to get ours as they were taking so long… we sent in tax returns, then they had to issue ITINs
4. You are going to need a US mailing address. Your CPA might be a possible solution for this, particularly if they are not a big company.

No it’s not as simple as a few people have made out, my best suggestion is; get a good CPA in the state you are going to set up your LLC, you going to need one anyway, and they can advise you on the best way to go.

It took us about a year to get all the ducks lined up properly, including the bank account. Yep we also went through the Wells Fargo fiasco but still haven’t got the right bank as ours is only east coast and we need one that and cover all states with shop front banking.

If your working out of an Australian Trust, like a Family Trust, expect tings to get even more difficult!

• This reply was modified 10 years, 2 months ago by  HuMungus.

This is incorrect, all corporations have to pay income tax in Florida. I am not going to go into details but if you check this link to Florida Dept of Revenue, you will discover all the details: http://dor.myflorida.com/dor/taxes/corporate.html

Currently to my knowledge the only states that are tax free are Nevada and Delaware

I spoke with my Accountant today and he advises:

A single member LLC disregarded for Florida and federal income tax purposes is not required to file a separate Florida corporate income tax return.

For any complicated set up in any State I am sure it would be prudent to discuss your personal needs with a US Accountant first but there are lots of ways to make the whole thing work.

Thanks for posting HuMungus, food for thought!

G’day Humungus,

Thanks for your input – greatly appreciated. Who did you use to set up your LLC or did you do it yourself?

We do alot of SMSF investments in the US and the LLC is especially important for Compliance as well as US tax considerations. We have a legal firm in the states to set it up and the process for SMSF Compliance is different depending on whether the property is a cash purchase or finance as compared to Non-smsf purchases. Again, consideration of local laws and taxes is important also and finding a good CPA is a problem.

In terms of opening bank accounts, we have found this extremely easy without the client being there in person (my preference is that they are there in person), however, for SMSFs the account should be with an ADI which limits your options. Otherwise you can use a FX provider to wire your rent back if permitted which reduces the risk of non-compliance however FX fees will add up over time.

Cheers, Ivan