A limited liability company (LLC) is a business structure designed to protect the personal assets and interests of the individual members of the company, while avoiding the double taxation that many corporations often incur. LLC’s offer protection from personal lawsuits while preventing double taxation on corporate and personal revenue.
LLC’s are unique to the United States and are available in the U.S. Virgin Islands. The Limited Liability Company Act of 1998 regulates LLC’s in the Territories.
In addition to the limited liability benefit individual members gain by forming an LLC, there are many other benefits that LLC’s enjoy.
To register as an LLC, the company name must be unique and not similar to another company name already registered in the U.S. Virgin Islands. It must also include the words “limited company,” or “limited liability company,” or the abbreviation “LC” or “LLC.”
The LLC must have a local registered agent and a local office address for official notices and service requests.
Turnaround time for incorporating an LLC ranges from one week to one month. This depends on how well the company completed its application and how many applications are currently being processed.
In short, LLC’s are formed by the filing of Articles of Organization with the Lieutenant Governor’s Division of Corporations. One or more persons can form a limited liability company, consisting of at least one member, and both private individuals and corporations can be members.
LLC’s are generally required to file tax returns annually. LLC’s are not required to pay corporate taxes unless the LLC has elected to be treated as a regular corporation for tax purposes. In most situations, the LLC is treated as a “pass-through” entity whereby the revenue and deductions flow from the LLC directly to its member(s), and the member(s) are responsible for incorporating those figures on their personal returns.
Maintaining an LLC
LLC’s have a low required minimum capital contribution of $1,000 by its member(s).
LLC’s are required to file annual reports with the Lieutenant Governor and pay an annual franchise fee each year. The annual fee is computed by assessing $1.50 for each thousand dollars of capital used in conducting business in the Virgin Islands, provided, however, that the minimum is $300.
For more tips about forming LLC’s in the U.S. Virgin Islands, contact a business attorney in the U.S. Virgin Islands.
J. Nash Davis is Chair of the Real Estate & Financial Services Practice Group at BoltNagi PC, a full-service business law firm on St. Thomas, U.S. Virgin Islands.