If you run a digital products business through a U.S. company while living abroad, you may be wondering whether you need to file Form 5472 with the IRS. The answer doesn’t depend on whether you sell templates, e-books, software add-ons, or stock photography. It depends on the type of entity you formed.
If your digital products company is a foreign-owned single-member LLC or a corporation with at least 25% foreign ownership, then yes, you must file Form 5472. If it is a multi-member LLC taxed as a partnership, Form 5472 usually does not apply.
This guide explains what Form 5472 is, how to know your company’s entity type, what transactions are reportable, and why even companies without any sales must still file. We’ll also provide an example specific to digital product businesses and explain how Bookmate can help.
What is Form 5472?
Form 5472 is an IRS information return. It doesn’t calculate or pay income tax, but it requires disclosure of certain transactions between a U.S. company and its foreign owner. The IRS uses it to track how money moves across borders. If your company is foreign-owned and structured as a single-member LLC or corporation, you almost certainly must file.
For digital products businesses, reportable transactions typically include wiring funds from abroad to cover hosting, advertising, or platform fees, as well as reimbursements from the company back to you. Even without customer purchases, these transactions require filing.
Who must file Form 5472?
The requirement depends entirely on entity type:
- A foreign-owned single-member LLC must file Form 5472 with a pro forma Form 1120.
- A U.S. corporation with 25% or more foreign shareholders must file Form 5472 with the full Form 1120.
- A multi-member LLC taxed as a partnership files Form 1065 instead, not Form 5472.
How to know what type of company you have
If you worked with a formation service, you may not know your classification. Here’s how to check:
- If you formed an LLC with one owner and never filed a special election, you likely have a single-member LLC. Your EIN confirmation letter may list your name with “Sole Mbr” or describe it as a “disregarded entity.”
- If you formed an LLC with more than one owner, you probably have a multi-member LLC. The EIN letter may list the applicant’s name with “Mbr,” signaling multiple owners. Multi-member LLCs file Form 1065.
- If you formed a corporation (for example, a Delaware C-Corp), you must file Form 1120 annually. If foreign shareholders own at least 25%, you also file Form 5472.
- If you or your accountant filed an election with Form 8832 or 2553, that election controls the classification.
What information goes on Form 5472?
The form asks for your company’s details (name, address, EIN, state of formation), the foreign owner’s details (name, country, ownership percentage), and a record of transactions.
For digital products companies, these transactions often include contributions to cover domain names, hosting platforms, or ad spend, and any reimbursements made back to the owner. Even with no sales, these must be reported.
When is Form 5472 due?
The deadline is the same as corporate returns. For calendar-year companies, the due date is April 15, with an extension until October 15 available by filing Form 7004. Form 5472 must always be attached to a return—either a pro forma Form 1120 (for single-member LLCs) or a full Form 1120 (for corporations).
The IRS penalty for missing or late Form 5472 is $25,000 per year. Additional $25,000 penalties may apply if you ignore IRS notices. These penalties apply even if your business had no customer sales.
Common questions from digital product founders
Does it matter what kind of digital products I sell? No. Whether you sell templates, ebooks, or stock photos, the IRS only cares about entity type and ownership.
Do I need to file if no products sold? Yes. If you contributed money to the business or reimbursed yourself, those are reportable transactions.
What if I already missed a year? Bookmate does not typically prepare past filings, but we can guide you on how to approach resolving them.
Staying ahead of filing
Keep records of all money moved between you and the business. For digital product companies, this often includes payments for platform subscriptions, domains, and ad campaigns. Tracking these ensures you can prepare Form 5472 accurately. Filing early prevents last-minute issues and penalties.
Example for a digital products business
A founder in Brazil forms a Wyoming single-member LLC to sell design templates online. In the first year, no customers purchase, but she wires $4,000 from her personal account to cover hosting and marketing. Even without revenue, these are reportable transactions. She must file Form 5472 with a pro forma 1120 to stay compliant.
How Bookmate helps digital product businesses
Bookmate focuses on U.S. federal filings for foreign-owned companies. For digital products businesses, we:
- Prepare and file Form 5472 with the pro forma 1120 for single-member LLCs.
- Prepare and file Form 1120 with Form 5472 attached for corporations.
- File from within the U.S. so the IRS accepts them.
- Provide guidance on how to approach past filings if you missed them.
We don’t apply for EINs or ITINs directly, but we partner with theitin.com for ITINs and recommend formation companies for EIN support. Our role is making sure your IRS filings are accurate and penalty-free.
Final thoughts
Running a digital products business through a U.S. company as a foreign founder is common, but IRS compliance is key. The type of products you sell doesn’t matter—what matters is entity structure. If you own a foreign-owned single-member LLC or a corporation, Form 5472 is almost always required. Even without customer sales, you must file if there were owner-related transactions.
Bookmate helps digital entrepreneurs worldwide file correctly and avoid IRS penalties, so you can focus on growing your business instead of dealing with tax paperwork.
Learn more at trybookmate.co or book a consultation today.
