Glossary

The vocabulary of the U.S. LLC, without the jargon

The essential terms to know when forming and running a U.S. LLC as a non-resident. Short, factual, neutral definitions — with no tax promises and no personalized advice.

LLC (Limited Liability Company): A Limited Liability Company (LLC) is a hybrid U.S. business entity that combines the limited liability of a corporation with the operational flexibility and pass-through taxation of a partnership. It creates a legal separation between the personal assets of its owners (called "members") and the business: in the event of debt or a dispute, it is the company that is liable, not its members personally. An LLC can be owned by a non-resident, with no physical presence in the United States, and can have a single member or several (multi-member).
EIN (Employer Identification Number): The Employer Identification Number (EIN) is the federal tax identification number of a U.S. business, issued by the IRS (the tax authority). It plays the role for a company that a Social Security Number plays for a person. The EIN is required to open a business bank account, use payment platforms and file returns. A non-resident without a Social Security Number (SSN) obtains it by filing Form SS-4 with the IRS by fax or mail.
ITIN (Individual Taxpayer Identification Number): The Individual Taxpayer Identification Number (ITIN) is an individual tax identification number issued by the IRS to individuals who must file in the United States but cannot obtain a Social Security Number (SSN). Unlike the EIN, which identifies a business, the ITIN identifies an individual. An ITIN is not required to form an LLC or to obtain an EIN, but it may be needed in certain personal filing situations depending on your case.
Registered agent: A registered agent is a person or company designated to receive, in the state of formation, official mail and legal documents addressed to an LLC. Having a registered agent with a physical address in the state is a legal requirement for every LLC. For a non-resident with no local address, this service is essential: it provides a valid contact address and helps keep the company in good standing with the state throughout the year.
Articles of Organization: The Articles of Organization (sometimes "Certificate of Formation") are the founding document filed with the Secretary of State to officially create an LLC. They set out basic information such as the company name, the state of formation and the registered agent. Once the document is approved by the state, the LLC legally exists — often within a few days. It is the U.S. equivalent of registering a company.
Operating Agreement: The operating agreement is the internal document that defines how an LLC works: the split of ownership among members, management rules, profit distribution and decision-making. It is generally not filed with the state and stays private, but it is essential: banks often ask for it to open an account, and it structures the relationship between owners. A single-member LLC also has one, in a simpler form.
Annual report: The annual report is a periodic filing that most states require to keep an LLC active. It updates the company's basic information and comes with a state fee. Its amount and frequency vary by state: some require it every year, others do not — New Mexico, for example, imposes none. Failing to file it can lead to penalties, or even the administrative dissolution of the company.
Franchise tax: The franchise tax is a fee that some states charge for the privilege of existing there as a company, regardless of the profits made. It is not an income tax, but a charge tied to the entity's existence. Its calculation varies by state: Delaware, for example, applies an annual franchise tax to its companies, while other states such as Wyoming do not levy it on LLCs. Amounts and rules change regularly.
Disregarded entity / pass-through: A disregarded entity is an entity the IRS "disregards" for federal tax purposes: a single-member LLC is, by default, treated this way. Its results are not taxed at the company level but attributed to its owner — this is the pass-through principle (tax transparency). The LLC then files informational returns rather than paying tax in its own name. The actual treatment depends on the owner's situation and tax residency.
Form 5472: Form 5472 is an informational return of the IRS. A U.S. LLC owned 25% or more by a foreign person and treated as a disregarded entity generally must file it each year, together with a pro forma Form 1120, to report transactions between the company and its foreign owner. It is a reporting obligation, distinct from paying tax. Failing to file it exposes you to significant penalties, which makes it a point of vigilance for non-residents.
BOI (Beneficial Ownership Information, FinCEN): Beneficial Ownership Information (BOI) is a filing of a company's beneficial owners, introduced by the Corporate Transparency Act and administered by FinCEN (a U.S. Treasury agency). Under FinCEN's interim final rule of March 26, 2025, still in force at the time of this update (July 2026), entities formed in the United States are exempt from the federal BOI filing; only companies formed under foreign law and registered in the United States remain in scope. Because this obligation has changed a lot, check its current application with FinCEN.
W-8BEN / W-8BEN-E: Form W-8BEN (and its W-8BEN-E version for entities) is an IRS document by which a foreign person or company certifies its non-U.S. status to a payer — a bank, platform or client in the United States. It is used to determine the applicable withholding rate and, where relevant, to claim a tax treaty between two countries. It is given to the payer, not filed directly with the IRS.
Sales tax nexus: Sales tax nexus refers to the sufficient connection between a business and a U.S. state that requires that business to collect and remit sales tax in that state. This connection can arise from a physical presence (office, inventory) or, following recent changes, from a simple threshold of revenue or number of transactions (economic nexus). Each state sets its own rules and thresholds, which makes the analysis specific to each business.
Single-member vs multi-member: A single-member LLC has one owner; a multi-member LLC has several. This distinction matters mainly for federal filing purposes: by default, a single-member is treated as a disregarded entity, while a multi-member is treated as a partnership and files a Form 1065 with a K-1 for each member. The number of members therefore affects the forms to produce, without changing the limited liability the structure provides.
Dissolution: Dissolution is the procedure for officially closing an LLC. It involves ceasing activity, settling debts and obligations, then filing dissolution documents (articles of dissolution) with the state of formation. Until an LLC is formally dissolved, it remains liable for its annual obligations (registered agent, annual report, state fees) even with no activity. A clean dissolution avoids the buildup of unnecessary fees and penalties.

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Statecove is an administrative support service for company formation. We facilitate your business formation and compliance steps. Statecove is not a law firm or an accounting firm, and does not provide personalized legal or tax advice. Accounting and tax services are handled by licensed partner professionals (CPAs). For any binding legal or tax decision, we recommend consulting a qualified professional.