Every year thousands of entrepreneurs across Latin America, drawn by access to payment processors, dollar-denominated revenue, and clients who prefer contracting with a familiar corporate structure, form companies in the US. The filing itself is rarely the obstacle. What comes after it is where founders lose months.

Submitting articles of organization takes minutes on most state portals, and providers offering free company registration cover the submission, so founders pay only the state fee. That speed creates a misleading impression. A registered LLC is a legal shell, not a functioning business, and the distance between those two things is filled with paperwork most first-time founders have never heard of.

The EIN Is the Real Starting Line

An Employer Identification Number is what banks, payment processors, and the IRS use to identify your company. Without one, the LLC cannot open an account, cannot onboard with Stripe, and cannot file a tax return.

Applicants who already hold a Social Security Number or ITIN can obtain an EIN online in a single sitting. Everyone else cannot. Foreign owners without a US taxpayer number must submit Form SS-4 by fax or mail, and processing has historically ranged from a few weeks to a couple of months, depending on IRS backlogs. Founders who budget seven days for this step routinely stall.

A Small Field That Causes Long Delays

Line 7b of Form SS-4 asks for the responsible party’s identifying number. Foreign applicants who have none are instructed to write the word Foreign in that space rather than leave it empty, and getting this wrong sends the form back. Each round trip costs weeks, not days.

Picking a State Because a Blog Post Said So

Delaware, Wyoming, and New Mexico dominate the conversation, usually for reasons that have nothing to do with a two-person consultancy. Delaware built its reputation on corporate case law that matters to venture-backed companies raising institutional money, and it charges LLCs a flat annual franchise tax of $400 regardless of revenue. Wyoming requires a modest annual report. New Mexico requires no annual report at all, which is precisely why it appeals to founders who value low maintenance over prestige.

Where You Operate Still Counts

If your company maintains a physical presence, employees, or continuous operations in a state other than the one where it was formed, that state can require registration as a foreign LLC along with its own fees and annual filings. A developer in Lima selling software to customers worldwide is generally fine forming in a single state. A founder who leases warehouse space in Florida is not.

The Filing That Costs 25,000 Dollars to Miss

Since 2017, a single-member LLC owned by a non-US person has been treated as a corporation for one narrow reporting purpose. It must file Form 5472 together with a pro forma Form 1120 each year to disclose reportable transactions between the company and its foreign owner. Capital contributions and distributions count, not only sales.

The penalty for failure to file starts at $25,000, and it applies no matter if the company generated any income. Dormant entities are not excused. This is the most expensive item on the list, and it is almost always the one founders learn about last.

Forming Abroad Does Not Cancel Local Obligations

A United States entity changes where your company is registered. It does not automatically change where you are taxed as a person. Tax residency follows the individual, and most countries in the region tax residents on worldwide income, so profits distributed from a US LLC still appear on a local return.

Several jurisdictions add controlled foreign company rules or mandatory declarations of foreign holdings. Founders who treat incorporation as a tax strategy without local advice frequently end up managing exposure in two countries instead of one.

Documents Nobody Files but Everyone Requests

An operating agreement is not submitted to the state in most jurisdictions, which makes it easy to postpone indefinitely. Banks ask for it. Payment processors ask for it, investors ask for it, and courts rely on it if ownership is ever contested.

Before applying for banking, assemble the rest of the package as well: passport copies, proof of residential address, a plain description of what the business sells, and a clear account of where revenue originates. Compliance teams reject applications for vagueness far more often than for anything genuinely disqualifying.

What the Successful Founders Do Differently

Treat formation as the first day of a three-month process, not the finish line. Apply for the EIN immediately, confirm whether your state expects an annual report and on what date, calendar the Form 5472 deadline, and consult an accountant at home before distributing a single peso of profit.

The entrepreneurs who build durable US entities are seldom the ones who filed fastest. They are the ones who understood what filing actually started.

By: Diego Herrera