In brief
An Israeli can form a US company remotely, without citizenship and without a US Social Security number. There are two main types: an LLC, a flexible entity in which profit is generally attributed to the owners, and a regular corporation (C-Corp), which pays tax on profit at the company level and suits raising investors. After choosing the entity type and the state, you appoint a registered agent in the state and obtain a tax identification number for the company. In practice the most important document is the LLC's operating agreement, or the bylaws and shareholders' agreement of a corporation: it determines who decides, how profits are shared and what happens when someone wants to leave. Ongoing reporting to the tax authorities in the US and Israel is coordinated with an accountant.
Key takeaways
- 1No citizenship, residence or US Social Security number is required: an Israeli can be the sole owner and manager of a US company.
- 2An LLC suits a simple structure with few owners; a corporation (C-Corp) pays 21% federal corporate tax and suits raising investors and employee options.
- 3The operating agreement is the document that governs the relationship between the partners: decisions, profits, admitting a new partner and exit. Without it, the state's default rules apply, and they were not written for you.
- 4Incorporating in Delaware does not exempt you from registration and tax in the state where you actually operate; you usually register in both.
- 5Even a foreign-owned LLC with no income files an annual report with the US tax authority, and the penalty for not filing is high. Who files and when is agreed with an accountant at formation.
Forming a company in the US sounds like a ten-minute online form, and technically that is true. But the decisions made in those ten minutes - the entity type, the state of incorporation and who holds the shares - determine how much tax will be paid in both countries, which reports will be filed every year, and how easy it will be to raise investors or sell the business. This guide follows the order of those decisions, as the position stood in November 2026. If you are looking for a structure to hold a real estate asset, see the guide to an LLC for holding US property; an existing Israeli company weighing a branch against a subsidiary will find that in the guide for an Israeli company doing business in the US.
Can an Israeli form a US company remotely?
Yes. A company is registered with the Secretary of State of the chosen state, online in most states, and there is no requirement that the owners or managers be US citizens or residents. The fixed requirement is an address in the state for receiving legal documents, through a registered agent.
- Registered Agent: a person or company with a physical address in the state of incorporation that receives service of process and official notices on the company's behalf. Required in every state, and in every additional state where the company registers to do business.
- The constitutional document: for an LLC, a Certificate of Formation or Articles of Organization; for a corporation, a Certificate of Incorporation.
- Internal governance documents: for an LLC, an Operating Agreement; for a corporation, Bylaws and initial board resolutions, including the issuance of shares. These are not filed with the state, but the bank, investors and accountant will ask for them.
- Tax identification number (EIN): the number the US tax authority gives the company, similar to a tax file number. It is requested after incorporation; without it you cannot open a bank account or file returns.
LLC or C-Corp: which suits an Israeli?
First, the difference. An LLC (Limited Liability Company) is a flexible limited company: the owners' liability is limited, and as a rule the profit is attributed to the owners and reported by them, with no separate tax at company level. A C-Corp is a regular corporation, the form most large US companies use: the company itself pays tax on its profit, and the owners pay further tax when the profit is distributed to them as a dividend. The short answer: a corporation for a business that intends to raise investors, grant employee options or retain profits in the company; an LLC for a simple structure with few owners, once its classification in Israel has been checked in advance. A third track familiar to Americans, the S-Corp, is closed to Israelis, because such a company may not have a shareholder who is a nonresident.
| LLC | C-Corp | |
|---|---|---|
| Tax at company level | Generally none: profit is attributed to the owner (single owner) or partners (several owners). It can elect to be taxed as a corporation | 21% on profit, as of November 2026 |
| Tax on the Israeli owner | On income from a US business: US tax directly at the owner level, at graduated rates, with withholding in a partnership | Withholding on dividends: 30% under domestic law, and under the treaty up to 25%, or 12.5% for an Israeli company holding 10% or more and meeting the conditions |
| US filing | An annual report to the US tax authority even with no income, and where there is US business income, also the owner's tax return | An annual corporate tax return, and reporting of transactions with foreign owners |
| Raising investors and options | Cumbersome; venture capital funds generally prefer a corporation | The standard structure: share classes and employee options |
| Classification in Israel | Generally a body of persons (a foreign company), with an option to elect a transparent track subject to conditions | A foreign company; profits are generally taxed in Israel when distributed |
| Usually suits | Services, e-commerce, holding assets, a single owner | A startup, a business growing in the US, a subsidiary of an Israeli company |
An LLC that is transparent in the US but classified in Israel as a company may cause the US tax to be paid at the owner level, while in Israel the income is taxed only when distributed, without full matching of the credit. That is why the LLC's classification in Israel is determined before the first return, together with an Israeli accountant. The details are in the LLC guide.
What is an operating agreement, and what must it cover?
The operating agreement is the contract between the owners of the LLC and between them and the company. It is not filed with the state, so it is easy to skip it or download a generic template, but it is the document that will decide matters when there is a dispute, when an investor comes in or when one of the partners wants to leave. Without an agreement, or where it is silent, the default rules of the LLC law of the state of incorporation apply; they were not written for Israeli partners and do not always suit them. The bank and the accountant will also ask to see it. What it should cover:
- Ownership and investment: who the owners are, in what percentages, how much each invested, whether there is an obligation to invest more money and what happens to someone who does not.
- Management: whether the owners manage the company themselves (member-managed) or appoint a manager (manager-managed), and what each may do alone.
- Decisions: which decisions need a simple majority, which need unanimity, and how a deadlock between two equal partners is broken.
- Profits and distributions: when and in what order money is distributed, and whether at least the amount of tax the owners owe because of the company's profits is distributed.
- Admitting a partner and transfers: restrictions on selling to a third party, a right of first refusal, and tag-along and drag-along rights.
- Exit: a buy-sell mechanism between the partners, how the interests are valued, and what happens on death, incapacity or divorce.
- Non-compete and confidentiality: what a partner may do outside the company, and what is forbidden after leaving.
- Dispute resolution and dissolution: the governing law, arbitration or court and in which country, and how the assets are divided when the company is wound up.
In a corporation (C-Corp) the same matters are governed by the bylaws and a separate shareholders' agreement, which sets the appointment of directors, minority rights, restrictions on share transfers and exit. A similar structure in an agreement between partners in a project is described in a founders' agreement for a project abroad.
The standard templates that come with online formation services are written for a single American owner. When there are two or more partners, an investor, or an Israeli owner who also needs to align the structure with the Israel Tax Authority, it is worth drafting the agreement specifically, before the money comes in.
Which state to choose: Delaware or the state where you operate?
Choose Delaware when you plan to raise institutional capital, and your operating state when the business is local and simple. The important distinction is between the place of incorporation and the place where the company does business: a company incorporated in Delaware that runs an office, a warehouse or employees in Florida will usually also need to register in Florida as a foreign company (foreign qualification), pay annual fees there and file state tax returns there. In other words, Delaware alone does not save state tax.
| State | Why it is chosen | What to know (as of November 2026) |
|---|---|---|
| Delaware | Developed corporate law, a dedicated court for corporate matters, the structure investors know | An annual report and tax to the state, even with no activity there: by March 1 for a corporation and by June 1 for an LLC. Late filing brings a penalty and interest |
| Wyoming | Low ongoing costs, no state income tax | An annual report with a license tax derived from assets in the state. Mainly suitable when there is no business in another state; otherwise additional registration there is required |
| Florida | A common operating state for Israelis, no individual income tax | State corporate tax of 5.5% on corporations, with a $50,000 exemption; an annual report to the Secretary of State |
| New York | When the customers, employees or office are there | A new LLC must publish a notice in two newspapers, once a week for six weeks, and file a certificate of publication within 120 days; otherwise its authority to do business in the state is suspended. New York City also imposes a city tax |
A broader comparison of states from an investor's perspective is in the guide to choosing a US state, and state tax rates are set out in the guide to corporate tax and transferring profits to Israel.
What are the steps to form the company?
- Decide on the structure: who will hold the shares (individuals, an existing Israeli company or a holding company), the entity type and the state of incorporation.
- Check name availability in the Secretary of State's database.
- Appoint a registered agent in the state of incorporation.
- File the formation document and pay the filing fee.
- Prepare internal governance documents: an operating agreement for an LLC, or bylaws, appointment of directors and issuance of shares for a corporation.
- Apply for a tax identification number (EIN) for the company.
- Register as a foreign company in every other state where there will be real business.
- Open a bank account and fully separate company funds from personal funds.
- Set a reporting calendar with the accountant: the state annual report and tax, returns to the US tax authority, and the annual return in Israel.
How do you get a tax identification number (EIN) without a US Social Security number?
The EIN is the company's identification number with the US tax authority. An Israeli owner can obtain it even without a US Social Security number (SSN) or an individual taxpayer number (ITIN): the application states that the responsible party is a nonresident. Someone without an SSN cannot apply online, so the application is made by phone, fax or mail, and it is usually handled by the accountant or the service provider forming the company. By fax the number usually arrives within a few business days. On the difference between an EIN and an ITIN, and when an Israeli owner also needs an ITIN, see ITIN, EIN and a bank account for a foreign investor.
Can you open a US bank account for the company remotely?
Sometimes. US banks must identify the customer and its controlling persons, and each bank decides whether to allow this remotely. The large banks usually ask for a branch visit, while some digital banks and payment institutions allow a business account to be opened without a visit. You will usually be asked for the formation document, the tax identification number, the operating agreement or bylaws, the passports of the controlling persons, an explanation of the business and the source of funds, and a declaration that the owners are nonresidents for tax purposes. It is worth checking the bank's requirements before incorporating, because some banks prefer a particular state of incorporation or address.
An Israeli company forming a US subsidiary: what changes?
When the shareholder is an Israeli company, the subsidiary is usually a C-Corp, in many cases in Delaware. The structure limits the Israeli company's exposure, and a dividend the subsidiary distributes to the Israeli company qualifies under the treaty for a 12.5% withholding rate when it holds at least 10% of the voting shares and meets the conditions of the article.
- Reporting transactions between the companies: a foreign-owned subsidiary reports to the US tax authority its transactions with the Israeli company, such as loans, management fees and royalties.
- Transfer pricing: services, loans and use of intellectual property between the companies are set at market prices and documented in both countries.
- Control and management: a US company whose decisions are all made in Israel may be treated as an Israeli resident for tax purposes. Plan where the board meets and who runs day-to-day operations.
- Alternatives: a branch, or direct activity from Israel without a permanent establishment, are examined in the guide for an Israeli company doing business in the US.
Do you need to report beneficial owners (BOI) in 2026?
Usually not. BOI is a report on the company's controlling persons to the US anti-money-laundering authority (FinCEN). According to FinCEN's BOI page, updated on August 11, 2026, the final rule took effect on August 14, 2026, and companies formed in the US are exempt from the report. The obligation remains for entities formed outside the US that have registered to do business in a US state, unless an exemption applies. So an Israeli company registering as a foreign company in a US state, for example to open a branch, may be required to report, whereas an LLC or corporation formed in the US is not. The subject has changed several times since 2024, so check it again close to formation.
Which reports are filed in the US even with no income?
An LLC with a single foreign owner files an annual report with the US tax authority on the transactions between it and the owner, including any money the owner put in or took out, even when the company has no income and no tax to pay. The report is filed on paper, not online, and the penalty for failing to file on time is $25,000. The report is prepared by a US accountant. What matters for the owner is to document every transfer of money between them and the company, and to agree at formation who is responsible for filing and when.
Which annual taxes and fees are paid?
| Obligation | Who | Note |
|---|---|---|
| Federal corporate tax 21% | A C-Corp, or an LLC that elected to be taxed as a corporation | On taxable profit |
| State income tax | In every state where there is taxable activity | The rate and rules vary from state to state |
| Franchise tax or annual report | In the state of incorporation and every state where the company is registered | In Delaware: $400 for an LLC; for a corporation a $50 report fee and a minimum franchise tax of $175 |
| Withholding on dividends | A C-Corp distributing to a foreign owner | Under the treaty: 25%, or 12.5% for a holding Israeli company |
| Annual report on transactions with the owner | A single-member LLC with a foreign owner; a corporation 25% or more foreign-owned | Even with no income; a $25,000 penalty for failure to file |
| Sales tax | Sellers of taxable goods or services in states that have sales tax | The collection obligation is determined by sales-volume tests in each state |
How does the Israel Tax Authority view the US company?
A corporation (C-Corp) is treated in Israel as a foreign company, and its profits are generally taxed in Israel when distributed to the owners, with a credit for the tax withheld in the US. An LLC is generally treated as a body of persons, that is, a company, unless the owner elected a transparent track that the Tax Authority allows under certain conditions. In both cases, check:
- Controlled foreign company: a company with mainly passive income and low tax may be taxable in Israel even without a distribution.
- The company's residence: control and management from Israel may make it an Israeli resident.
- Reporting: reporting the holding in a foreign company and transactions with a related party in the annual return. Details in the Israel Tax Authority reporting hub and the tax guide for an Israeli investor in a foreign company.
What to check before you start, and how we accompany it
Before filing, it is worth answering a few questions in writing: who will hold the shares today and who will come in later, in which states there will be business, whether a capital raise is expected, how money will be drawn to Israel, and how the Israel Tax Authority will classify the entity. In our engagement we go through these questions with the client and their Israeli accountant, draft the operating agreement or corporate documents and the agreements between the partners, and coordinate the incorporation, the registration in additional states and the reporting calendar with licensed US lawyers and accountants.
This guide is general information as of November 2026 and is not legal or tax advice. Rates, fees and reporting rules change, and registration and representation in the US are carried out by professionals licensed there. Every case is examined on its own merits.
More on doing business in the US: An Israeli company doing business in the US · Corporate tax and transferring profits to Israel · Commercial disputes in the US · Comparison between countries · All guides for companies and businesses
Frequently asked questions
How much does it cost to form a company in the US?
The cost depends on the state and the entity type: a one-time filing fee, registered agent fees and professional fees, followed by annual fees. In Delaware, for example, an LLC pays an annual tax of $400, and a corporation pays a $50 report fee and a minimum franchise tax of $175, as of November 2026. Tax returns in the US and in Israel come on top of that.
Can you form a US company remotely?
Yes. Incorporation is done with the Secretary of State, online in most states, and the EIN is obtained by phone, fax or mail. The step that may require a visit is opening the bank account, depending on the bank's policy.
Which is better for an Israeli, an LLC or a C-Corp?
A C-Corp suits raising investors, employee options and a subsidiary of an Israeli company. An LLC suits a simple structure with few owners, but its classification in Israel must be planned in advance to avoid double taxation. An S-Corp is not possible for a nonresident owner.
What should an LLC operating agreement include?
Who the owners are and in what percentages, how much each invested, who manages and what they may do alone, which decisions need everyone's consent, how and when profits are distributed, restrictions on selling interests, an exit mechanism and what happens on death, and how disputes are resolved. Without an agreement, the state's default rules apply.
Is it worth forming a company in Delaware?
Delaware mainly suits those planning to raise capital from investors familiar with its corporate law. It does not save tax in the state where you actually operate, and you usually need to register there too, so for a small local business it is sometimes simpler to incorporate in the operating state.
How do you get a tax identification number (EIN) without a US Social Security number?
The application states that the responsible party is a nonresident, and it is filed by phone, fax or mail, because it cannot be filed online without a US Social Security number. The accountant or the service provider forming the company usually handles it, and by fax the number arrives within a few business days.
Does an Israeli-owned LLC need to file with the US tax authority if it has no income?
Yes. A single-member LLC with a foreign owner files an annual report on the transactions between it and the owner, even with no income. The penalty for not filing is $25,000, so who files and when is agreed with a US accountant at formation.
Does a new US company need to file a BOI report in 2026?
According to FinCEN, since the final rule that took effect on August 14, 2026, companies formed in the US are exempt. The obligation remains for foreign entities registered to do business in a US state. Check again before formation.
How much tax is paid on a dividend from a US company to Israel?
Under the tax treaty, US withholding is limited to 25%, or to 12.5% when the recipient is an Israeli company holding at least 10% of the voting shares and meeting the conditions. In Israel the dividend is taxed again, with a credit for the US tax.
Read next · 12 min readAn Israeli Company Operating in the US: Subsidiary or Branch, Permanent Establishment under the Treaty, Sales Tax, Employees, E-2 Visa and Bank AccountHow an Israeli company enters the US market: subsidiary vs branch, PE under the tax treaty, state registration, sales tax after Wayfair, staff, E-2 visa, bank.Read the guideSources
- FinCEN - Beneficial Ownership Information Reporting (updated 11.8.2026)
- IRS - Instructions for Form 5472
- IRS - Instructions for Form SS-4
- IRS - Instructions for Form 2553 (S corporation eligibility)
- Delaware Division of Corporations - Annual Franchise Tax (corporations)
- Delaware Division of Corporations - LLC/LP/GP annual tax instructions
- New York Limited Liability Company Law §206 - Publication
- Florida Department of Revenue - Corporate Income Tax
- PwC Worldwide Tax Summaries - United States: Withholding taxes (reviewed 4.9.2026)
- IRS - United States-Israel Income Tax Treaty
