Should You Setup A US LLC in 2025?
Table of Contents
In today’s global economy, entrepreneurs are constantly looking for ways to minimize taxes and maximize profits. One of the most common strategies is setting up a US LLC (Limited Liability Company) while living in a tax-free country like Dubai.
A US LLC is an incredible business tool—it’s easy to set up, affordable, and offers great flexibility. However, a common misconception is that simply owning a US LLC while living abroad means you won’t pay taxes anywhere. That’s not true.
To achieve 0% taxation legally, you need to understand residency and tax residency rules, as well as determine whether a US LLC is the right choice for you.
In this article, we’ll break down:
– How the US LLC is taxed
– Why residency and tax residency matter
– How to legally pay 0% tax in Dubai
– Whether you actually need a US LLC or if a Dubai company is enough
Let’s dive in!
Understanding How a US LLC Is Taxed
A US LLC is a pass-through entity, meaning it does not pay corporate tax itself. Instead, the profits “pass through” to the owner’s personal tax return.
This means:
- If you are a US citizen or resident, your LLC’s income is taxed on your personal tax return.
- If you are a non-US resident with an LLC, the IRS may not tax you directly, unless your business has a US trade or business connection (e.g., employees, office space, or US-based clients).
However, simply owning a US LLC does not remove your tax obligations. The key question is: Where are you considered a tax resident?
Why Residency and Tax Residency Matter
Many entrepreneurs believe that setting up a US LLC and moving to Dubai will allow them to avoid taxes entirely. Unfortunately, it’s not that simple.
Residency vs. Tax Residency
Residency: Simply means living in a country. You may have a visa, but that doesn’t automatically make you a tax resident.
Tax Residency: This determines where you are legally required to pay taxes. Different countries have different rules for determining tax residency.
For example:
- If you are a Canadian, UK, or European citizen, your home country may still consider you a tax resident unless you officially cut ties.
- Even if you live in Dubai, you need to meet specific tax residency requirements to ensure you are not taxed elsewhere.
How to Legally Pay 0% Taxes in Dubai
Dubai (UAE) is known for its 0% personal income tax policy, making it a top destination for global entrepreneurs. However, to legally pay no tax, you need to follow the right steps:
Step 1: Obtain Residency in Dubai
To become a resident of Dubai, you have two main optionGolden Visa (Real Estate Investment)
- Invest $544,000 (AED 2M) in Dubai real estate to qualify for a long-term visa.
Business Setup & Visa Sponsorship
- The fastest and most affordable way is to set up a company in Dubai and sponsor yourself.
- This process takes about 3-4 weeks and grants you a UAE residence visa.
Step 2: Become a Tax Resident in Dubai
Even if you have a Dubai residency visa, you still need to prove tax residency.
To officially be considered a tax resident in Dubai, you must:
Spend at least 90 days per year in the UAE
Obtain a Tax Residency Certificate (TRC) from the UAE government
This certificate allows you to prove to other countries that you are a UAE tax resident, meaning you are not liable for taxes elsewhere.
Step 3: Properly Exit Your Home Country’s Tax System
Many entrepreneurs forget to properly cut tax ties with their home country.
For example:
- Canadians need to file for non-residency status with the CRA.
- UK citizens must show they no longer have ties (home, business, family dependence, etc.) to the UK.
- Europeans have different exit rules depending on the country.
If you don’t officially exit your home country’s tax system, they might still consider you a tax resident—meaning you could be taxed on your global income.
Do You Really Need a US LLC, or Is a Dubai Company Enough?
Now that we’ve established how to legally pay 0% taxes in Dubai, let’s discuss whether you actually need a US LLC or if a Dubai company is enough.
Reasons to Set Up a US LLC
Payment Processing & Banking
A US LLC allows you to open Stripe, PayPal, and US bank accounts—which is great for online businesses.Working with US Clients
If you sell to US customers, a US LLC can build trust and improve sales.Access to US Investment Opportunities
Some venture capitalists and investors prefer working with US-registered businesses.
Why You Might NOT Need a US LLC
Extra Costs & Complexity
Setting up and maintaining a US LLC costs money (state fees, registered agents, compliance filings, etc.).Potential Tax Complications
A US LLC could create unnecessary tax obligations if not structured correctly.A Dubai Company May Be Enough
If your business doesn’t require a US presence, then a Dubai company alone might be the best and simplest option.
Final Thoughts: The Best Setup for 0% Taxes
- If you need US payment processing and banking, a US LLC + Dubai company setup can work.
- If you don’t need a US presence, a Dubai company alone is the simplest and most tax-efficient choice.
- Always ensure you have proper residency and tax residency to avoid issues.
Need Help Setting Up Your Dubai Business?
We specialize in helping entrepreneurs set up their businesses legally and efficiently in Dubai.
Book a Free Consultation Today!
Your 0% tax journey starts now!
