If you run a dropshipping 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 clothing, gadgets, or niche products through Shopify or WooCommerce.
What matters is the type of entity you formed. If your dropshipping business 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 structure, why even companies without sales must file, and some special considerations for dropshipping businesses—like physical presence and sales tax.
What is Form 5472?
Form 5472 is an IRS information return that discloses transactions between your U.S. company and its foreign owner. It doesn’t calculate or pay taxes itself, but it allows the IRS to monitor capital contributions, loans, reimbursements, and payments. If you own a foreign-owned single-member LLC or a corporation, you are almost certainly required to file.
For dropshipping companies, common reportable transactions include wiring money from abroad to pay suppliers, covering advertising spend, or reimbursing yourself for expenses. Even if you didn’t make any sales yet, these funding transactions mean Form 5472 still applies.
Who must file Form 5472?
The filing requirement depends only 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 ownership must file Form 5472 with its 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 used a formation company, you may not be sure how your entity is classified. Here’s how you can usually tell:
- If you formed an LLC with only one owner, you almost certainly have a single-member LLC. Check your EIN confirmation letter. If it lists your name with “Sole Mbr” or calls the entity a “disregarded entity,” you are single-member.
- If you formed an LLC with more than one owner, you likely have a multi-member LLC. In this case, the EIN letter may list the applicant’s name with “Mbr,” which indicates multiple owners. Multi-member LLCs file Form 1065.
- If you formed a corporation (such as a Delaware C-Corp), you must file Form 1120 annually. If foreign shareholders own at least 25%, you also must file Form 5472.
- If you or your accountant filed an election with Form 8832 or 2553, that election may override the default treatment.
What information goes on Form 5472?
The IRS asks for your company’s details (name, address, EIN, state of formation), owner information (name, country, ownership percentage), and a record of reportable transactions. For dropshipping businesses, this often includes capital contributions from the owner, payments for advertising, supplier costs, or reimbursements. Even without customer sales, these transactions must still be reported.
When is Form 5472 due?
Form 5472 is due at the same time as corporate tax returns. For calendar-year companies, the deadline is April 15, with an extension available until October 15 if you file Form 7004. Importantly, Form 5472 is never filed on its own—it must be attached to either a pro forma Form 1120 (for single-member LLCs) or a full Form 1120 (for corporations).
The penalty for late or missing filings is $25,000 per year. Additional $25,000 penalties can be added if you ignore IRS notices. These penalties apply even if your business had no revenue.
Special considerations for dropshipping businesses
Many dropshipping companies end up with a physical presence in the U.S. For example, if you use U.S. warehouses, hire employees, or keep inventory stateside, you may create what the IRS calls a “U.S. trade or business.” This could require the foreign owner to file a Form 1040-NR as a non-resident with U.S. income.
Filing 1040-NR requires an ITIN (Individual Taxpayer Identification Number). Bookmate does not apply for ITINs directly, but we partner with theitin.com to help clients get one.
Dropshipping can also create sales tax obligations. For example, if you hold stock in a U.S. warehouse, you may need to register for sales tax in that state. Bookmate does not manage sales tax filings, but you can use compliance providers such as Avalara or TaxJar for that. Our focus is on your federal IRS filings.
Common questions from dropshipping founders
Does it matter what products I sell? No. Whether you sell fashion items, home goods, or tech accessories, the requirement depends on ownership and entity type, not the products.
Do I need to file if I had no sales? Yes. If you wired money into the company or reimbursed yourself, those are reportable transactions. The IRS does not care whether you made a profit.
What if I already missed a filing? Bookmate does not usually prepare past filings, but we can guide you on how to handle them properly.
Staying ahead of filing
Track every movement of money between you and your company. For dropshipping, this may include funds for ads, supplier costs, or fulfillment fees. Keeping records ensures accurate reporting. Filing early avoids last-minute stress and gives time to respond to any IRS questions.
Example for a dropshipping business
A founder in Pakistan forms a Wyoming single-member LLC to run a Shopify dropshipping store. In the first year, no customers purchase, but he wires $12,000 into the company’s account to pay for Facebook ads and supplier orders. Even without revenue, these are reportable transactions. He must file Form 5472 with a pro forma 1120 to avoid the $25,000 penalty.
How Bookmate helps dropshipping businesses
Bookmate specializes in U.S. federal filings for foreign-owned companies. For dropshipping 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 with foreign shareholders.
- Ensure filings are submitted from within the U.S. so they are accepted by the IRS.
- Provide guidance on how to approach past filings if you’ve missed them.
We don’t apply for EINs or ITINs directly, but we work with theitin.com for ITINs and recommend formation companies for EIN support. Our role is making sure your federal filings are complete, accurate, and on time.
Final thoughts
Running a dropshipping business through a U.S. entity as a foreign founder is common, but it comes with compliance responsibilities. The IRS doesn’t care what products you sell. What matters is your entity type and ownership.
If you own a foreign-owned single-member LLC or a corporation, Form 5472 is almost always required. Even without sales, you must file if there were owner-related transactions.
Bookmate helps dropshipping founders worldwide stay compliant, so you can focus on scaling your store instead of worrying about IRS penalties.
Learn more at trybookmate.co or book a consultation today.
