Forming a US LLC from Pakistan

Why Pakistani founders form US LLCs

• Payment processing. Stripe and several other processors onboard US entities from countries where they will not onboard an individual. This is the single most common reason we are asked.
• Client onboarding. US and European companies that cannot put an overseas individual through procurement can onboard a US LLC in an afternoon.
• Getting paid in dollars, on US rails, rather than through an international wire the client has to justify internally.
• Liability separation between the business and your personal assets.

The treaty, and why it is usually not the point

Pakistan appears on the IRS list of countries with a United States income tax treaty. A treaty can reduce US withholding on certain categories of US-source income — royalties, interest, dividends — and can matter a great deal if you have that kind of income.

Most of the people who ask us do not. If you are a freelancer, an agency or a software company operating from Pakistan with no US office, no US staff and no dependent agent in the US, your service income is generally not US-source and generally not subject to US federal income tax in the first place. There is nothing for a treaty to reduce.

Where it does become relevant: you start earning royalties from a US payer, you take dividends from a US C-corporation, or you spend enough time working physically inside the US to change the analysis. Those are worth a specific answer rather than a general one.

What you still owe in Pakistan

This is the part people get wrong in both directions. A US LLC does not move your tax residence. If you are resident in Pakistan, your worldwide income is generally within the Pakistani system, and forming a company abroad does not change that.

Two questions worth putting to a Pakistani tax adviser before you form, rather than after:

• How is income from a foreign entity you control treated for your personal return, and when is it treated as arising — when the LLC earns it, or when you take it out?
• What are the current rules on receiving and remitting foreign currency for your situation, including any registration or reporting your bank expects when regular dollar receipts start arriving.

We do not answer those. Anyone who tells you a Wyoming LLC makes them go away is not describing a tax structure.

Which state, and which numbers

Wyoming for almost every Pakistani founder we work with: lowest annual upkeep, ownership out of the public record, and wide recognition at banks and processors. New Mexico if you want no annual report at all. Not Delaware unless you are raising US venture money.

On tax numbers: you need an EIN for the company. You probably do not need an ITIN — that is personal, and only required when you have a US filing obligation of your own. Plenty of people are sold one they do not need; read EIN vs ITIN before you buy.

What is the same wherever you live

None of this changes with your passport. A US LLC owned by one non-resident files a pro-forma Form 1120 with Form 5472 attached every year, at a penalty starting from $25,000, even in a year it earned nothing. A multi-member LLC files Form 1065 instead. Every reporting company files a BOI report with FinCEN. And an EIN is available to you with no SSN, by fax or post rather than the instant online application.