We Just Opened a US LLC (Here's Why)
Table of Contents
Introduction
Alright, so we did it! GenZone officially has a US LLC!
Now, if you’ve been following along with us over the last few months, you might be wondering, “Why get a US LLC when Dubai is such a great business hub?” We totally get that!
We’ve realized that a US LLC can be super beneficial—though not for everyone. Today, We’ll break down why we made this decision, especially in relation to having a Dubai company at the same time. We’ll also dive into bank options, payment processors, and the tax implications of owning a US LLC while being based in Dubai.
By the end of this article, you’ll know everything you need to about having a US LLC, even if you’re not leaving Dubai.
Also, here’s a video on the same topic, in a simple, easy-to-understand way, with some insights from our co-founder, Kevin McKenzie.
Why Not Just Stick With a Dubai Company?
Before we get too deep into the details, let’s address the elephant in the room: Why would someone who lives and operates in Dubai need a US LLC? Why not just stick to a Dubai-based business?
The answer is simple: residency and taxes.
Setting up a US LLC doesn’t give you residency in the US. If it did, you’d be liable for paying hefty US taxes. Meanwhile, in Dubai, the tax situation is a lot friendlier, with 0% income tax and corporate taxes that range from 0% to 9%. In many cases, especially for smaller businesses, you’re paying 0% taxes. So, staying in Dubai gives us tax advantages that a US company wouldn’t. But there are still solid reasons why adding a US LLC to the mix makes sense for some people. Let’s dive into those.
Payment Processors: A Game-Changer
One of the main reasons we decided to open a US LLC is the variety of payment processors available in the US. Sure, Dubai offers options like PayPal and Stripe, which are fantastic. However, there are limitations when it comes to certain payment methods, like American Express (AMEX). For example, AMEX isn’t widely accepted in Dubai, and while I’m not a fan of accepting AMEX due to high fees, some clients simply need to use it. This issue becomes more significant when you start working with hundreds of clients. Even if just 1% of them can only pay with AMEX, that 1% adds up.
By having a US LLC, we can accept AMEX and other US payment methods easily, allowing us to cater to a wider range of clients. The ability to accept more forms of payment immediately increases our revenue, which, in turn, covers the costs of the US LLC and any associated compliance fees.
Holding Payments in USD
Another huge advantage of having a US LLC is being able to hold payments in US dollars. Here’s why that matters: When you receive payments into a Dubai company, platforms like Stripe automatically convert those payments into the local currency, the UAE Dirham (AED). While the conversion fee is minimal since the AED is pegged to the USD, there are still benefits to keeping payments in USD. With a US LLC, you can hold my payments in USD without any forex fees. This is particularly useful if most of my clients are paying in US dollars because there’s no need to convert the currency at all.
This ability to keep payments in USD without conversion fees boosts our margins, making the business more profitable.
Perception and Credibility: A US LLC Can Help
Now, let’s talk about perception. On an international level, some people still hold misconceptions about Dubai, sometimes viewing it as a “shady” or risky place to do business. This perception is far from accurate, but it’s a reality we’ve encountered. By having a US LLC, we cater to clients who may be more comfortable doing business with a US-registered company, especially those based in Western countries. For them, it feels more secure to pay an American company, even though the actual operations are happening in Dubai.
While this may not apply to everyone, having a US LLC can improve credibility in certain markets, opening the door to more opportunities.
Access to Financing Options
Another perk of having a US LLC is access to financing platforms like Klarna. Klarna allows clients to finance their purchases, which means they can pay for your services over time instead of upfront. Although we don’t offer financing options for our services at the moment (we believe if you’re moving to Dubai, you should have the liquidity to pay upfront), this can be a fantastic option for other businesses. If you’re offering low-ticket coaching, marketing services, or any product where financing makes sense, platforms like Klarna can help you close more deals.
Tax Implications: What You Need to Know
Here’s where things get a bit more complex. Owning a US LLC while living in Dubai brings tax implications that you need to be aware of. Your US LLC is subject to US tax laws, but since you’re a Dubai resident, you also need to consider UAE tax laws. If you’re making profits in your US LLC and transferring them to your Dubai company, those profits may be subject to corporate taxes in the UAE. However, if you’re a small business generating under $817,000 in annual revenue, Dubai offers a small business relief program, meaning you won’t have to pay any corporate taxes at all.
Still, you need to make sure you’re compliant with tax laws in both the US and UAE. Some people mistakenly believe that if they hold Dubai residency and set up a US LLC, they can avoid UAE corporate taxes. This is false under the permanent establishment rules, so be sure to structure your company properly.
Opening a US Bank Account from Dubai
You might be wondering, “How do I get a US bank account if I don’t live in the US?” Luckily, it’s easier than you think. We use Mercury, an online bank that allows you to open an account remotely. This is where all our payment processors are connected, and where all of our US-based payments are received. From Mercury, we transfer funds to our Dubai bank account, whether that’s Emirates NBD, RAKBANK, or any other UAE-based bank.
It’s important to get the setup right from the start to avoid any complications later on. If you do this properly, you’ll have no trouble receiving payments and managing your funds between the US and Dubai.
Final Thoughts on Structuring Your US LLC and Dubai Company
In summary, having both a US LLC and a Dubai-based company offers a ton of flexibility. You can access a wider range of payment processors, avoid unnecessary forex fees, and even tap into financing options that may help your business grow. However, it’s essential to structure everything correctly, ensuring compliance with both US and UAE tax laws. If you get this part wrong, you could end up paying more in taxes than you need to or running into compliance issues down the line.
If you’re looking for help with setting up a business in Dubai, whether that’s a US LLC, a Dubai company, or both, our team can guide you through the entire process. We’re not just consultants—we handle everything from start to finish. So, if you’re interested in building a tax-efficient structure, feel free to book a call with us using the link below.
