Imagine a scenario where you are a tax resident of Paraguay, but your employer or clients remain in Europe. Invoicing them under your name with your Paraguayan RUC number may be inconvenient for them. Dealing with a Paraguayan business entity can be a bureaucratic burden for many businesses outside Paraguay.
Here comes the US LLC structure, a simple and convenient solution for many expats in Paraguay.
Favorable Tax Regime
US LLCs typically operate as pass-through entities, offering tax benefits that provide expats a sense of security and confidence. Profits are not taxed at the LLC’s level but at the level of its members. If the LLC members (owners) are not US tax residents, they pay taxes in the US only on US-sourced income. Therefore, invoicing clients from Europe will be tax-free on the US part.
The member (owner) must pay taxes on this income in the country of his tax residency. If the owner is a tax resident only in Paraguay, it will be 0% because Paraguay has territorial taxation, and income from abroad is tax-free. Always make sure to discuss your specific situation with your accountant and tax advisor.
Reputable Jurisdiction
You probably saw a news article in the past about some countries being labeled tax havens and banned from international transactions: UAE (Dubai), Qatar, British Virgin Islands, Cyprus, and Panama, to name just a few. The good news is that this will never happen to the US. Having a US LLC ties your business with a country known for its rule of law, high reputation, and market-based economy.
Furthermore, it will certainly help your business’s image if you now operate through entities from former East Bloc countries, as well as African or Asian countries.
Low Cost and Regulatory Burden
Setting up and running a US LLC as a foreigner is one of the cheapest ways to run a business worldwide. The US LLC does not need a physical address but can use the address of a registrant agent. Without US-sourced income, there is no need to pay an accountant monthly, but you can use a one-time fee accountant to fill out yearly fillings.
We at NewHorizonsParaguay can connect you with the right agent to open and manage your US business. We will gladly help you choose the services that best suit your needs. Many agents will try to sell you services you don’t necessarily need. Contact us here!