If you're a non-U.S. person who owns a single-member LLC (SMLLC) in the United States, you have some unique tax filing responsibilities—even if your business hasn’t made any money yet. Whether you’re running a tech startup, e-commerce shop, or consulting business, it’s important to stay compliant with the IRS.
What Is a Foreign-Owned Single-Member LLC?
A foreign-owned SMLLC is a U.S. limited liability company that has only one owner, and that owner is a non-U.S. person (either an individual or a foreign company). For tax purposes, the IRS treats these LLCs as "disregarded entities," which means the business income and activity are reported on the owner's return—but there are still specific forms the LLC must file.
Key Federal Filing Requirements
1. Form 5472
Form 5472 is used to report certain transactions between the LLC and its foreign owner or other related foreign parties. These transactions can include:
- Capital contributions
- Loans
- Payments for services or goods
Even if the business didn’t earn income, the IRS still requires this form if there were any reportable transactions. Failing to file it correctly or on time can result in a $25,000 penalty.
2. Pro Forma Form 1120
Although your LLC is not a corporation, the IRS requires you to submit Form 5472 attached to a simplified version of Form 1120—called a "pro forma" 1120. This version includes only the essential information about the LLC (like name, address, and EIN) and acts as a cover sheet for Form 5472. Both forms must be filed together.
Form 1040-NR (If the Owner Has U.S. Income)
If you're a foreign individual and your LLC earns income that is considered "effectively connected income" (ECI) with a U.S. trade or business, you may also need to file Form 1040-NR to report that income personally.
What is ECI? It's income that comes from doing business in the U.S. regularly and substantially. Examples include:
- Selling goods or services to U.S. customers
- Providing services while physically in the U.S.
- Renting out U.S. property
If you're actively involved in business within the U.S., the income is most likely considered ECI.
Common Mistakes to Avoid
- Assuming no filing is needed because there’s no income
- Missing the pro forma 1120/Form 5472 filing requirement
- Incorrectly classifying U.S. income or ignoring personal filing obligations
When Are These Forms Due?
The filing deadline is April 15 (or the 15th day of the fourth month after your tax year ends). Extensions are available if requested in time.
If you try to file on your own, you’ll likely need to print and mail the forms, which can lead to mistakes or delays.
Why You Should Work With an Expert
U.S. tax rules can be overwhelming—especially for foreign business owners. At Bookmate, we specialize in helping international entrepreneurs meet all their IRS requirements.
Book a consultation today: Schedule Here
Every tax situation is different, so be sure to speak with a Bookmate expert to make sure your SMLLC is compliant with federal tax rules.
