Business and income / US LLC
A US LLC from abroad: how it works and what you need to run it
A US LLC can give an international business a useful legal structure for contracts and payments. Whether it improves your position depends on who owns it, what the business earns and where the work is done. The state registration is only the beginning.
This guide separates the decisions that are often sold as one package: legal form, tax treatment, reporting, addresses, banking and ongoing administration. Start with the ownership and activity, then follow the sections relevant to your business.
The company and its tax classification are different things
An LLC is a limited liability company formed under state law. Its owners are called members. The operating agreement records matters such as ownership, management and how decisions are made. Limited liability does not remove a personal guarantee or make the owner immune from responsibility for their own conduct.
Federal income-tax treatment is a separate decision. In the usual US-formed case, an LLC with one owner is a disregarded entity: its income-tax activity is attributed to its owner. An LLC with two or more members is generally treated as a partnership. A valid election can instead make it taxable as a corporation. A disregarded LLC can still be treated separately for employment tax and certain excise taxes.
Establish the actual owners and any election already made before using a tax checklist. A corporate election changes the return and tax analysis; an S corporation cannot have a nonresident alien shareholder. Nor does “foreign passport” establish nonresident status. US citizenship, a green card and the substantial-presence rules are separate questions.
When services performed abroad can fall outside US income tax
For personal services, the IRS generally locates the income where the work is physically performed. The payer’s residence, the contract’s signing location and the bank receiving payment do not replace that rule.
Example: a nonresident owner has a single-member LLC with no corporate election. They perform consulting work entirely outside the US, have no US business operation and receive payment from US clients into a US account. The client and account alone do not turn that work into US-source service income. In that defined case, the LLC need not create US federal income tax on the foreign services. Information reporting and the tax rules where the owner lives and works remain separate.
| Situation | What to establish |
|---|---|
| Some work is done in the US | Identify the work days and allocate the service income appropriately. There is no general 183-day tax-free allowance for this work. |
| US staff, premises, an agent or stock | Examine the actual business activity, authority, sales and any treaty position. FBA or a warehouse is a reason to investigate, not a complete tax conclusion. |
| Royalties, dividends, interest or rent | Apply the rules for that income category. They are not automatically the same as consulting fees. |
| US real estate | Property income and disposals have specific US tax rules. The foreign-services example does not cover them. |
Income effectively connected with a US trade or business is commonly called ECI. US-source fixed or determinable income outside that business connection can also be taxable, commonly through withholding; the general FDAP rate is 30% of the gross amount, subject to applicable exemptions or treaty reduction. That is not a 30% charge on every payment to an LLC.
No revenue does not necessarily mean no Form 5472
A US disregarded entity wholly owned by a foreign person is treated separately for the information-reporting rules in section 6038A. Reportable dealings with related parties can require Form 5472, attached to a pro forma Form 1120. That cover return does not, by itself, turn the LLC into a corporation for ordinary income tax.
Relevant dealings can include formation funding, owner contributions and distributions, acquisitions and dissolution. If the owner pays a company expense personally, record what happened instead of treating the absence of an LLC bank transfer as proof that nothing occurred. The underlying payment and related-party relationship determine the treatment.
There is a genuine exception: no reportable transactions of the types in Parts IV and VI and, for a foreign-owned disregarded entity, none in Part V. No sales or no profit is not the same fact. Equally, Form 5472 is not automatically required every year for every LLC.
Keep the ownership records, company and owner payments, descriptions of non-cash dealings and supporting documents. The IRS instructions state a USD 25,000 penalty for relevant filing and recordkeeping failures, with further penalties possible for continued failure after notice. That makes accurate records and a named preparer more useful than relying on a “zero-tax” label.
Use the right return and the right deadline
The foreign-owned disregarded-entity procedure uses Form 5472 with a pro forma Form 1120. The IRS specifies limited entries on the cover form and the notation “Foreign-owned U.S. DE”. Its instructions give a dedicated fax or mailing route; this is not the ordinary corporate-return address or the general electronic-filing procedure.
The deadline follows the associated Form 1120, including a properly requested extension. For a calendar-year entity, the ordinary due date is the 15th day of the fourth month after year-end. Actual dates depend on the tax year, weekends, holidays and any applicable relief. Form 7004 must be submitted in time when an extension is needed, using the special procedure for this entity type.
A multi-member LLC taxed as a partnership generally files Form 1065, with a narrow exception where it has neither income nor deductible or creditable expenditure. Partner statements and any foreign-partner withholding need separate attention. Multiple owners do not alone make foreign service income taxable in the US.
A corporate election takes the LLC onto the corporate-return path. The owner may also have an individual US filing obligation, such as Form 1040-NR, depending on the facts. The LLC information return does not replace the owner’s return. A provider’s annual renewal date is a third, unrelated date.
Compare the state and the recurring bill
Begin with where the business actually operates. Forming in one state can leave a need to register in another state where it does business, often called foreign qualification. Here, “foreign” can mean another US state. State tax connections and local licensing are separate questions again.
| State | Ordinary formation | Recurring state requirement |
|---|---|---|
| Wyoming | 100 | Annual report with licence tax of at least 60, or 0.0002 of assets located and employed in Wyoming if higher. Due on the first day of the anniversary month. |
| New Mexico | 50 | The LLC Act does not impose a general annual or biennial LLC report. Registered-agent and applicable tax duties remain. |
| Delaware | 110 | Annual LLC tax of 400, due by 1 June for the preceding year; no LLC annual report. The increased tax took effect on 1 January 2026. |
| Florida | 125, including the mandatory agent-designation filing charge | Annual report of 138.75, due by 1 May; the first reporting year follows the filing or effective year. Late filing raises the charge to 538.75. |
These are state charges, not complete setup or maintenance prices. Budget separately for a commercial registered agent, mail handling, tax preparation, bookkeeping, payment-provider fees and any additional registrations. Optional certified copies and expedited processing are also separate. New Mexico’s report position does not remove taxes arising from the actual activity or a corporate election.
For an existing Delaware company, establish the period and the state’s assessed balance before calculating arrears; do not apply one current figure indiscriminately to earlier years. For a new company, compare the first year, an ordinary later year and the cost of closing. The cheapest registration may not be the cheapest workable structure.
Timing can also matter. Florida permits a specified effective date for initial articles within five business days before filing, or a delayed effective date up to the 90th day after filing. That limited formation rule does not rewrite your personal departure date or automatically transfer earlier contracts and liabilities to the LLC. Choose the date around the actual start of the business.
An EIN identifies the business, not the owner’s residence
An EIN is the business’s federal tax identification number. The IRS issues it without a fee; a provider can charge for preparing and handling the application. The number does not give the owner US immigration status, work permission or personal tax residence.
The responsible party is generally the natural person who ultimately owns or controls the entity. A registered agent or formation intermediary is not automatically that person. Under the SS-4 instructions, line 7b can use “foreign” or “N/A” where the responsible party has no SSN or ITIN and is ineligible to obtain one. International applicants have application methods distinct from the domestic online route.
An ITIN is an individual IRS number for a person who needs a US tax number but does not have and is not eligible for an SSN. An SSN has its own eligibility rules. LLC formation does not automatically deliver either personal number. Keep the EIN confirmation with the company records and establish the existing number before requesting a replacement document or changing providers.
Keep four address roles separate
| Role | What it establishes |
|---|---|
| Registered agent | The state-specific person or business appointed to receive service of process and designated legal correspondence. |
| Mail handling | Where ordinary mail arrives, who scans or forwards it and how urgent notices reach you. |
| Operating or trading address | Where the business is genuinely run day to day, supported by acceptable evidence. |
| Owner’s residential address | Where the person lives, as required for their own verification. |
A registered-agent subscription does not establish a real operating address. It also does not automatically cover ordinary mail, bank correspondence or a place to work. Confirm those services before paying for an extra address.
A home office or genuine coworking arrangement can be suitable evidence under some providers’ rules. The actual activity and the provider’s accepted documents matter, not simply which address appears most convenient on the application. Keep the legal address, management location and operating facts consistent across documents without pretending that they are identical.
Banking and payment providers make their own decisions
Prepare the formation papers, EIN evidence, owners and authorised representative, business description, source of funds, truthful addresses and expected payments. A provider may ask for contracts, invoices or other evidence of customers and activity. Acceptance is a separate decision from formation, and access can later be reviewed.
Mercury accepts applications from eligible US companies with international founders. Its rules require existing or planned US operations and an actual principal place of business. The operating address can be international; a registered-agent address is not an operating address. The legal, operating and owner-address requirements must all be met. Mercury’s definition of eligible US operations is a provider condition, not an IRS ruling that the business has a US trade or business.
Wise asks for the genuine trading address. It rejects virtual offices and mail-forwarding services for that role, permits suitable home or coworking locations, and accepts certain personal documents for qualifying owners or directors. The trading country must support Wise Business. US registration alone does not override that country requirement.
Relay publishes guidance allowing a genuine international home operating address, while other required-document guidance points to a US physical business address. Obtain confirmation for the actual application before buying a setup on the assumption that one article settles it.
Stripe lists several requirements for opening an account in a different country: an eligible entity, tax ID, physical location, phone, identification, website and a suitable bank account. Its guidance for a non-US representative without an SSN or ITIN allows a local non-US tax ID with supporting documentation. That is different from promising every foreign-owned LLC immediate processing.
For PayPal US, distinguish the business’s eligibility from personal-account residence rules and the representative’s verification. Keep reserves, disputes, payout timing and possible restrictions in the cash-flow plan. A fintech interface, the bank providing the underlying account and a merchant-payment service perform different roles.
Once accepted, check the account name, currencies, limits, authorised users, recovery access and an actual payment path. The banking and payments guide develops the continuity side; banking and liquidity preparation is the corresponding practical service.
W-8 or W-9: document the correct taxpayer
A US customer may ask for tax documentation before paying. A US EIN alone does not make the owner a US person. For a foreign-owned disregarded single-member LLC, the ordinary withholding-documentation starting point is the foreign owner: typically Form W-8BEN for an individual or W-8BEN-E for an entity, where that form fits the payment.
The W-9 instructions specifically direct a disregarded entity with a foreign owner to the appropriate W-8 rather than W-9. A domestic partnership or corporation has a different position. ECI, hybrid entities and treaty claims also need the relevant form and conditions. Amazon’s programme-specific tax interview does not replace those facts.
Use the real tax residence, permanent residence address, tax identifiers and signing capacity required by the applicable form. A form accepted by a platform is not proof that its tax certification is true. Resolve a mismatch with the payer rather than selecting an inaccurate status to unlock payment.
Your home and working countries still matter
US tax classification does not dictate how another country treats the company or its income. Personal tax residence, the company’s actual management, the physical work and the treatment of distributions need to fit together. Moving money out of the LLC is not the only event that can matter.
Keeping travel days below a familiar threshold does not, on its own, establish that you are resident nowhere. Homes, personal connections, domestic residence rules and treaty conditions can all be relevant. Banking evidence must reflect the facts even when your lifestyle is mobile.
Consider the UAE: managing a foreign company from there and conducting business personally are distinct corporate-tax questions. The UAE’s Small Business Relief period has been extended to qualifying tax periods ending on or before 31 December 2029. Eligibility, turnover conditions, exclusions, election and registration still matter. This is a different regime from Qualifying Free Zone Person treatment, and a US LLC registration does not itself grant either benefit.
In Paraguay, territorial taxation does not mean that every payment from a foreign client is foreign-source income. Where the activity is performed matters. A residence document and a tax-residence certificate also serve different purposes.
Use the departure, tax and business obligations guide for your personal move and existing connections. If you also run a UK company, read about its continuing director duties in the business and income hub.
Sales tax and VAT follow the sale, not the LLC label
A federal income-tax result does not settle US state sales tax, EU VAT or other consumption taxes. Product, customer status, customer location, sales channels and the business’s physical or economic connection with a jurisdiction can create separate obligations.
Automated digital services and live, substantially human-delivered consulting are not interchangeable VAT categories. EU consumer sales can require a different treatment from a qualifying business-to-business service. Reverse charge and the non-Union OSS have specific purposes and conditions; neither is a blanket exemption for a US seller.
For ecommerce, identify where stock is held, who fulfils orders and what a marketplace collects on your behalf. For courses or coaching, also establish the actual service and the customer’s contractual rights. Changing the company on the invoice does not change the underlying product.
BOI, FBAR and bank ownership checks are separate
FinCEN’s final rule effective 14 August 2026 confirms the BOI reporting exemption for entities created in the United States. Foreign ownership does not turn a US-formed LLC into a foreign-formed reporting company. A company formed under foreign law and registered to do business in the US is a different case.
A non-US person’s personal FinCEN ID can still carry update duties. Living outside the US does not alone determine that status. Bank ownership checks and IRS reporting also remain distinct from the company’s BOI exemption.
FBAR concerns foreign financial accounts. A US-formed LLC can be a US person for FBAR even when it is disregarded for income tax. If its foreign accounts exceed USD 10,000 in aggregate at any point in the calendar year and the relevant financial-interest or signature-authority conditions apply, assess the filing requirement. The account’s actual location matters; an account at a US branch is not foreign merely because the banking group is foreign.
Public register visibility, confidential ownership checks, tax reporting and international information exchange are different layers. Reduced public disclosure does not mean invisibility, and an LLC does not make inaccurate residence declarations acceptable. Keep ownership, account and tax records consistent with the real arrangement.
Keep control through operation, change and closure
Keep a company file you can use without the original formation provider: formation evidence, the operating agreement, ownership and management changes, EIN confirmation, tax elections, submitted returns, filing receipts, account statements, notices and responsible contacts. A provider dashboard is not a substitute for your records.
When taking over an existing LLC, establish the state status, ownership, EIN and filing history first. Changing providers does not itself require a new company or EIN. For an IRS notice, identify the issue, period and response date before commissioning remediation. Reasonable-cause relief is fact-dependent; a missed filing does not come with an assured penalty cancellation.
During operation, record customer income, expenses, owner funding and withdrawals distinctly. Agree who handles mail, who monitors deadlines and who can authorise submissions. If you change your address, owners, management or business model, identify the affected state, IRS and provider records. Use accepted mandates and named access rather than sharing a personal login.
Closing an LLC means winding up its business and completing both state dissolution and the tax/reporting close-out. Settle the outstanding work, preserve evidence, coordinate account closures and retain the records needed for later correspondence. Cancelling a registered-agent subscription is not dissolution.
Succession needs the same precision. Economic ownership and authority to manage are not identical; see representation and succession abroad. If you want help applying this guide, the US LLC service offers a personal expert plan, written questions, a prepared consultation or a defined practical assignment.