If you're a non-U.S. resident running an ecommerce store through a U.S.-registered company, the short answer is: yes, you likely need to file U.S. taxes. Even if you don't live in the United States, owning and operating a U.S.-based company comes with federal and state tax obligations. Here's what you need to know.
What Kind of U.S. Company Do You Have?
Before you can understand your tax obligations, you need to identify your U.S. business structure. Check your company formation documents or incorporation filings with your state of registration. Common types include:
- Single-Member LLC (Disregarded Entity): One owner, typically treated as a disregarded entity for tax purposes if owned by a foreign person.
- Multi-Member LLC (Partnership): Two or more owners, generally treated as a partnership unless you elect corporate tax treatment.
- C Corporation: A separate legal entity taxed independently from its shareholders.
If you're unsure, look at your EIN confirmation letter or speak with your incorporation provider or accountant. The entity type will influence your tax filing obligations.
Federal Tax Requirements
- Single-Member LLC (Owned by a Non-U.S. Person):
- Form 5472: Reports transactions between the U.S. entity and its foreign owner.
- Pro forma Form 1120: A corporate tax return that accompanies Form 5472 and includes basic financial information such as income, deductions, and balance sheet items.
- Taxation: The LLC does not pay taxes directly, but it must disclose reportable transactions. The owner may have tax obligations depending on U.S. source income.
- Multi-Member LLC (Partnership):
- Form 1065: Reports the partnership’s income, expenses, and profit or loss.
- Schedule K-1: Distributed to each partner showing their share of the income.
- Form 8805: Required for foreign partners receiving U.S.-source income, and taxes must be withheld.
- Taxation: Income flows through to the partners, who report and pay tax individually.
- C Corporation:
- Form 1120: Annual income tax return for corporations showing gross income, deductions, and taxable income.
- Form 5472: Required for foreign-owned corporations with related-party transactions.
- Taxation: The corporation pays a 21% flat federal tax on profits. Dividends paid to foreign owners may be subject to withholding tax.
State Tax Requirements
Delaware and Wyoming are the most common states for non-resident ecommerce founders due to their low compliance costs and no income-based state tax for out-of-state businesses.
In Delaware, C Corporations must file an Annual Report and pay a Franchise Tax by March 1. The Franchise Tax ranges from $225 to $200,000, depending on the share structure. LLCs owe a flat $300 Franchise Tax, due by June 1. No Annual Report is required for LLCs.
In Wyoming, all entities must file an Annual Report by the first day of the anniversary month of formation. There’s also a License Tax, which is $60 minimum or $0.0002 per dollar of in-state assets.
Delaware and Wyoming are preferred because unless you have physical operations in the state, they don’t tax you based on income earned elsewhere. Even if you're not "doing business" in a specific state, having your LLC or corporation registered there brings annual obligations.
Cash vs. Accrual Accounting for Ecommerce Companies
Ecommerce businesses must choose between cash and accrual accounting:
- Cash Accounting means you recognize income when you receive payment and record expenses when you actually pay them. For example, if you sell a product in January but don’t get paid until February, you report it in February.
- Accrual Accounting means you record income when it's earned (even if payment hasn’t been received) and expenses when incurred (even if you haven’t paid yet). This method is more accurate for tracking profitability, especially if you carry inventory or offer payment terms.
If your average annual revenue is under $25 million, you can generally use cash accounting, which is simpler and preferred by the IRS. Many small ecommerce businesses choose cash accounting for its ease and clear view of actual cash flow.
What Information Do You Need to File U.S. Taxes?
To properly file your U.S. tax returns, you'll need:
- Employer Identification Number (EIN)
- U.S. business address or registered agent address
- Company formation documents
- Operating Agreement or Shareholder Agreement
- Ownership structure (cap table)
- Income and expense records
- Bank and payment processor statements (e.g., Stripe, PayPal, Wise)
- Contractor and employee payment records
- Inventory purchases and cost tracking
- Software and platform subscriptions
Keeping organized financial records throughout the year will save you time, money, and stress during tax season.
What Counts as Income and Expenses for Ecommerce Businesses?
Income generally includes all product sales, affiliate commissions, and any service revenue. This includes:
- Direct sales via your website
- Sales through marketplaces (Amazon, Etsy, eBay)
- Affiliate earnings
- Upsells, subscriptions, or digital downloads
Common business expenses include:
- Cost of Goods Sold (COGS): Product sourcing, manufacturing, packaging, and shipping
- Marketing and Advertising: Paid ads, influencer deals, social media campaigns
- Platform Fees: Shopify, Amazon, Stripe, PayPal, Etsy fees
- Software: Inventory tracking, bookkeeping tools, CRM systems, email marketing tools
- Contractors and Freelancers: Developers, designers, customer support agents
- Utilities and Office Costs: Internet, workspace rent, office supplies
- Home Office Deduction: A portion of your rent, utilities, and internet if you qualify
- Travel: Business trips, trade shows, supplier visits
- Professional Services: Legal, tax, and accounting fees
- Education and Subscriptions: Business training, books, courses
Track all expenses with supporting receipts or invoices and maintain up-to-date records to make tax time easier.
Common Questions from Ecommerce Founders
- "I'm not a U.S. citizen. Why do I owe U.S. taxes?"Because your company is registered in the U.S., it's considered a U.S. person for tax purposes.
- "I made no sales yet—do I still need to file?"Yes. Even if your company earned $0, you must still file the required forms to avoid penalties.
- "Can I write off inventory I haven't sold?"Under cash accounting, if you purchase inventory in bulk, the entire cost is typically expensed when you pay for it. Under accrual accounting, inventory is only expensed as it is sold, and any remaining unsold inventory remains on the balance sheet as an asset.
- "Do I need to collect sales tax?"Possibly. Sales tax obligations depend on where your customers are located. Tools like TaxJar or Avalara can help manage this.
Sales Tax Basics for Ecommerce
Sales tax is a state-imposed tax on retail sales, collected from customers and remitted to the state. Ecommerce sellers must collect sales tax in states where they have nexus, which can arise from:
- Having a warehouse, office, or employee in the state
- Exceeding sales thresholds (e.g., $100,000 or 200 transactions in a state)
Sales tax rules differ by state and change frequently. It's one of the most complex compliance areas for ecommerce businesses. Use tools like TaxJar or Avalara to simplify your compliance.
Do I Need an ITIN?
An Individual Taxpayer Identification Number (ITIN) is used by individuals who need to file a U.S. tax return but are not eligible for a Social Security Number.
As a non-resident business owner, you likely do not need an ITIN unless you're required to file a personal U.S. tax return (Form 1040-NR). This may happen if:
- You're a foreign partner in a multi-member LLC with U.S.-source income
- You're receiving dividends or other income subject to U.S. tax
If you do need an ITIN, you must apply using Form W-7. Once you have one, and you're filing a 1040-NR, make sure to include your ITIN on that form.
More info: Get your ITIN here
Next Steps: Get Help From a U.S. Tax Expert
U.S. tax law is complex, especially for non-resident ecommerce founders. Filing the wrong forms—or failing to file at all—can result in serious fines.
That's where Bookmate comes in. We specialize in helping international founders stay compliant and optimize their U.S. tax filings.
Book a consultation with a Bookmate advisor today and get peace of mind.
Every tax situation is unique, so make sure you're working with a professional who understands the nuances of ecommerce and international ownership.
Want More Guides Like This? Visit trybookmate.co for more resources on U.S. tax filing, entity compliance, and ecommerce finance tips.
