Can a Non-US Citizen Open an LLC in Texas?

The United States has long been recognized as one of the most attractive destinations for international entrepreneurs seeking to establish a business presence. Texas, in particular, stands out as an exceptional choice for foreign business owners due to its favorable business climate, absence of state income tax, and straightforward formation process.

According to the Internal Revenue Service (IRS), LLCs are a business structure allowed under state-level policies and regulations, and most states permit owners to include individuals, corporations, other LLCs, and even foreign entities. The good news for international entrepreneurs is simple: you do not need to be a U.S. citizen or permanent resident to form an LLC in Texas. With professional Texas LLC Formation Services, non-U.S. founders can confidently handle state filings, compliance, and legal setup while meeting all Texas requirements without unnecessary delays.

Understanding LLC Formation for Non-US Citizens

The U.S. Small Business Administration (SBA) emphasizes that choosing the right business structure is crucial as it influences everything from day-to-day operations to taxes and personal asset protection. For non-US citizens, forming an LLC provides the same benefits that American citizens enjoy, including limited liability protection, operational flexibility, and favorable tax treatment.

According to legal experts, foreigners must follow the same steps as citizens, which include choosing a name for the LLC, filing the Certificate of Formation with the Texas Secretary of State, designating a registered agent with an address in Texas, and obtaining an Employer Identification Number (EIN) from the IRS. This accessible process allows international entrepreneurs to legally establish and operate their businesses in Texas.

Key Requirements for Non-US Citizens Forming a Texas LLC

The Texas Secretary of State does not impose citizenship or residency requirements for LLC formation. An entity may impose residency or citizenship requirements in its certificate of formation or other governing documents if desired, but the state itself has no such restriction.

Basic Formation Requirements:

According to BusinessRocket research, forming an LLC in Texas is straightforward and cost-effective compared to many other states, making it particularly attractive for international entrepreneurs.

Step-by-Step Process for Non-Citizens

Step 1: Choose Your LLC Name

Select a unique business name that complies with Texas naming requirements. The name must include "Limited Liability Company," "LLC," or "L.L.C." and must be distinguishable from existing businesses registered in Texas. Use the Texas SOSDirect database to search for name availability before proceeding.

Step 2: Designate a Registered Agent

Every Texas LLC must have a registered agent—an individual or business entity authorized to receive legal documents and official correspondence. The registered agent must maintain a physical address in Texas and be available during business hours.

For non-US citizens, this requirement can be met by:

• Hiring a commercial registered agent service ($100-$300 annually)
• Designating a trusted individual residing in Texas
• Using a professional formation service that includes registered agent services

The SBA notes that many business owners prefer to use a registered agent service rather than take on this role themselves, as it provides privacy protection and ensures compliance.

Step 3: File the Certificate of Formation

Submit Form 205 (Certificate of Formation for a Limited Liability Company) to the Texas Secretary of State. The filing fee is $300, and processing typically takes 5-7 business days when filed online through SOSDirect. As of January 2025, Texas has improved processing times to approximately 2 days for standard online filings.

Step 4: Obtain an Employer Identification Number (EIN)

The IRS provides free EINs to all business entities, regardless of owner citizenship. Non-US citizens have several options for obtaining an EIN:

Option A: Online Application (with limitations) The IRS allows online EIN applications, but only if the responsible party has a valid U.S. Taxpayer Identification Number (TIN). This includes Social Security Numbers (SSN) or Individual Taxpayer Identification Numbers (ITIN).

Option B: Fax or Mail Application Non-US citizens without a U.S. TIN must apply for an EIN by completing Form SS-4 and submitting it via fax or mail. According to tax professionals, faxing the application is much faster, with EIN assignment typically within four business days.

Option C: Through a Registered Agent Many commercial registered agent services can assist with EIN applications, as they have U.S. addresses and can facilitate the process.

Step 5: Create an Operating Agreement

While Texas law does not require LLCs to have operating agreements, creating one is highly recommended. According to the SBA, operating agreements give members protection from personal liability to the LLC. Without this specific formality, your LLC can closely resemble a sole proprietorship or partnership, jeopardizing personal liability protection.

Advantages of Forming a Texas LLC for Non-US Citizens

No State Income Tax: Texas is one of only a few states with no personal or corporate income tax. This provides significant advantages for international entrepreneurs managing income across multiple jurisdictions. According to business formation experts, the State of Texas offers a favorable tax environment with no state taxes on corporate or personal income, which could be advantageous for foreigners as the LLC structure can simplify tax planning and income management.

Limited Liability Protection: One of the main advantages of an LLC is the limited liability protection it offers its members. This means that the owners' personal assets are protected if the company faces debts or lawsuits. This protection applies equally to foreign and domestic LLC owners.

Simplified Franchise Tax: Texas has a business-friendly environment with a relatively low franchise tax that only applies to LLCs with annual revenue exceeding $2,470,000. According to the Texas Comptroller, businesses below this threshold file a simple Public Information Report with no tax due, making compliance straightforward for small businesses.

Access to U.S. Banking and Credit: Operating through a U.S. LLC makes it easier for non-resident members to open U.S. bank accounts and build business credit. This facilitates transactions with U.S. customers and vendors while establishing credibility in the American marketplace.

Market Credibility: Having a U.S.-based LLC enhances your business credibility when dealing with American clients, partners, and suppliers. The LLC structure signals professionalism and commitment to the U.S. market.

Federal Tax Obligations for Foreign-Owned LLCs

While Texas has no state income tax, non-US citizens must understand their federal tax obligations. The IRS explains that depending on elections made by the LLC and the number of members, an LLC may be treated as a corporation, partnership, or as part of the owner's tax return.

Form 5472 Filing Requirement

A critical requirement that many foreign LLC owners overlook is Form 5472. According to the IRS, corporations file Form 5472 to provide information required under sections 6038A and 6038C when reportable transactions occur with a foreign or domestic related party.

Who Must File Form 5472:

Foreign-owned single-member LLCs (disregarded entities) must file Form 5472 annually along with a pro forma Form 1120, even if the LLC has no income, no U.S. clients, or remains completely dormant. According to tax experts, Form 5472 is an informational return that the IRS requires to collect details about transactions between a U.S. entity and its foreign owner or related parties.

Critical Form 5472 Facts:

• Filing deadline: April 15 annually
• Penalty for non-filing: $25,000 per year
• Cannot be e-filed (must mail or fax)
• Required even with zero income or activity
• Reports "reportable transactions" with foreign owners

According to IRS guidance, reportable transactions include capital contributions, loans, payments for services, and virtually any financial transaction between the LLC and its foreign owner. Even the initial formation costs of the LLC are considered reportable transactions.

How to File Form 5472:

The filing process requires several steps. First, obtain an ITIN (Individual Taxpayer Identification Number) by filing Form W-7 with the IRS if you don't have a U.S. SSN. Second, obtain an EIN for your LLC using Form SS-4. Third, complete Form 5472 reporting all transactions with foreign related parties. Fourth, prepare a "pro forma" Form 1120 with limited information. Finally, write "Foreign-Owned U.S. DE" across the top of Form 1120 and mail or fax both forms together to the IRS Ogden office.

According to tax professionals, failure to file Form 5472 or completing it incorrectly can have huge negative consequences—the IRS could impose a $25,000 fine per year.

Beneficial Ownership Information Reporting (BOIR)

Starting January 1, 2024, most LLCs must comply with the Corporate Transparency Act by filing Beneficial Ownership Information reports with FinCEN (Financial Crimes Enforcement Network), a bureau of the U.S. Department of the Treasury.

BOIR Requirements for Foreign Owners:

• File within 30 days of LLC formation or ownership changes
• Report identity and ownership details of all beneficial owners
• Beneficial owners include anyone owning 25% or more of the LLC
• Penalties for non-compliance: up to $500 per day
• Filing is free but required for most LLCs

The SBA emphasizes that understanding and complying with federal reporting requirements is essential for all new businesses, regardless of owner citizenship.

Visa and Immigration Considerations

While you don't need to be a U.S. citizen or resident to form a Texas LLC, your ability to physically work in the United States depends on your visa status. According to immigration experts, non-citizens should ensure they can stay in the United States before filing for an LLC if they plan to work from the U.S.

Common Visa Options:

E-2 Treaty Investor Visa: Allows nationals of treaty countries to enter the U.S. to invest a substantial amount of capital in a U.S. business. The LLC can serve as the investment vehicle for E-2 visa purposes.

L-1 Intracompany Transfer Visa: Permits foreign companies to transfer executives, managers, or specialized knowledge employees to U.S. operations. Your LLC can be the U.S. entity receiving the transfer.

H-1B Specialty Occupation Visa: Non-citizens with a bachelor's or master's degree can obtain H-1B visas for specialty occupations. Your LLC could potentially sponsor you for this visa.

Green Card Through Investment: The EB-5 investor visa program allows foreign nationals to obtain green cards by investing substantial capital ($800,000 to $1,050,000) in U.S. businesses that create jobs.

Remote Operation: Many foreign LLC owners operate their Texas LLCs entirely from their home countries, never physically entering the United States. This is perfectly legal and requires no special visa or immigration status.

The U.S. Citizenship and Immigration Services (USCIS) website provides comprehensive information about visa types and requirements. Consider consulting with an immigration attorney to determine the best visa strategy for your situation.

Opening a Business Bank Account

Most U.S. banks require LLCs to maintain a dedicated business bank account. For non-US citizens, this process can be more complex than for domestic business owners but is certainly achievable.

Documents Typically Required:

• Certificate of Formation from Texas Secretary of State
• Operating Agreement
• EIN letter from the IRS
• Valid passport or government-issued ID
• Proof of address (may be foreign address)
• Initial deposit ($100-$1,000 depending on bank)

Banking Options for Foreign LLC Owners:

According to banking experts, financial advantages of having a U.S. LLC include that it may be easier for non-resident LLC members to open U.S. bank accounts. However, some traditional banks are hesitant to open accounts for foreign-owned businesses due to compliance concerns.

Best Banking Options:

BusinessRocket research indicates that fintech banks like Mercury and Bluevine are increasingly popular with foreign entrepreneurs because they offer streamlined account opening processes and don't require U.S. residency.

Comparison: Texas vs. Other Popular States

While non-US citizens can form LLCs in any state, certain states are particularly popular among international entrepreneurs:

*Texas LLCs with revenue under $2.47M have no franchise tax due.

According to industry experts, while your target market might influence where you register your LLC, many non-residents prefer Delaware for ultimate privacy, Wyoming for similar privacy protection plus no state personal income tax, and Nevada because it has no state income tax and minimal annual reporting requirements.

For most foreign entrepreneurs focused on building an actual operating business (rather than investment holding structures), Texas offers an excellent balance of low costs, favorable tax treatment, and straightforward compliance requirements.

Common Challenges and Solutions

Challenge 1: Obtaining an EIN Without U.S. Identification

Solution: Apply for an ITIN (Individual Taxpayer Identification Number) using Form W-7, or work with a registered agent service that can facilitate EIN applications for foreign clients. According to the IRS, approximately one million ITINs expire each December 31, so maintain your ITIN if you need it for ongoing compliance.

Challenge 2: Opening a U.S. Bank Account

Solution: Research banks that specifically accommodate foreign business owners. Consider fintech options like Mercury or Bluevine that have streamlined processes for international clients. Alternatively, visit the U.S. in person to open accounts at traditional banks.

Challenge 3: Understanding Complex Tax Requirements

Solution: Work with a CPA or tax professional experienced in foreign-owned U.S. entities. The cost of professional assistance ($500-$2,000 annually) is far less than the $25,000 penalty for failing to file Form 5472.

Challenge 4: Maintaining Compliance from Abroad

Solution: Use commercial registered agent services that provide compliance reminders and document management. Many services offer online portals where you can track deadlines and access important documents from anywhere in the world.

Challenge 5: Communication and Time Zone Differences

Solution: Choose service providers that offer email support or extended hours. Many registered agent and formation services are accustomed to working with international clients across different time zones.

Documents Non-US Citizens Should Keep

Maintaining proper documentation is crucial for foreign-owned LLCs. According to the IRS, you must keep your business records available at all times for inspection. Essential documents include:

• Certificate of Formation from Texas Secretary of State
• Operating Agreement (even if not legally required)
• EIN assignment letter from IRS
• Form 5472 and pro forma Form 1120 (filed annually)
• All financial records and bank statements (7 years)
• Contracts and agreements with clients and vendors
• Proof of registered agent designation
• Annual Texas franchise tax filings (Public Information Reports)
• FinCEN Beneficial Ownership Information Report confirmation

Cost Summary for Foreign Entrepreneurs

Understanding the total investment required helps with planning:

First Year Costs:

Ongoing Annual Costs:

• Registered Agent: $100-$300
• Texas Franchise Tax Filing: $0 (if under $2.47M revenue)
• Form 5472 Preparation: $500-$1,500
• Bank Account Maintenance: $0-$360
• Total Annual | $600-$2,160

According to BusinessRocket analysis, these costs are significantly lower than forming and maintaining companies in many other countries, making the U.S. an attractive jurisdiction despite the additional compliance requirements for foreign owners.

Expert Recommendations

Based on comprehensive analysis, here are key recommendations for non-US citizens forming Texas LLCs:

Work with Professionals: The $25,000 penalty for Form 5472 non-compliance far exceeds the cost of professional tax preparation. According to tax experts, even if your LLC has no income or activity, filing requirements still apply, so working with a tax professional familiar with foreign-owned entities is essential.

Use Commercial Registered Agents: Professional registered agent services provide reliability, privacy protection, and compliance reminders that are especially valuable when operating from abroad.

Maintain Impeccable Records: The IRS emphasizes proper recordkeeping for all business transactions. Organized records protect your small business and position it to grow while defending against potential audits.

Understand Your Tax Classification: By default, single-member LLCs are "disregarded entities," while multi-member LLCs are taxed as partnerships. Consider consulting with a tax professional about whether electing corporate taxation (Form 8832) or S-Corporation status (Form 2553) might be beneficial for your situation.

Plan for Long-Term Compliance: Set up systems and reminders for annual filings before they become urgent. Missing deadlines results in penalties that can quickly erode the financial advantages of operating in Texas.

Conclusion

Non-US citizens can absolutely open and operate LLCs in Texas, enjoying the same legal protections and operational flexibility available to American citizens. The state's welcoming approach to foreign entrepreneurs, combined with no state income tax and straightforward formation requirements, makes Texas an excellent choice for international business owners.

However, foreign LLC owners must navigate additional compliance requirements, particularly federal tax reporting obligations like Form 5472 and FinCEN's Beneficial Ownership Information Reporting. According to the SBA, choosing the right business structure and maintaining proper compliance is crucial for protecting personal assets and operating legally.

By understanding these requirements, working with qualified professionals, and maintaining diligent records, non-US citizens can successfully establish and operate profitable Texas LLCs with BusinessRocket support. The combination of Texas’s business-friendly environment, robust legal infrastructure, and access to the massive U.S. market creates compelling opportunities for international entrepreneurs who choose BusinessRocket to guide them through compliance and long-term growth.