If you’ve formed a foreign-owned single-member LLC in the United States but haven’t started making sales yet, it’s tempting to think you can skip filing taxes. Unfortunately, the IRS doesn’t agree.
Even with no income, you may still have to file a pro forma Form 1120 to show the IRS your company exists and to report certain transactions.
What Is a Pro Forma 1120?
Form 1120 is the U.S. Corporate Income Tax Return. A pro forma 1120 is a shortened version used when there is no taxable income but the entity must still file. Its primary purpose is to transmit other required forms—most notably Form 5472 for foreign-owned LLCs.
Missing either the pro forma 1120 or Form 5472 can lead to penalties starting at $25,000.
Even though the pro forma 1120 reports zero income, it’s still considered an official tax return that confirms your company’s compliance.
Why Pre-Revenue Companies Must File
The IRS requires every U.S. corporation and LLC taxed as a corporation to file annually, regardless of earnings. For foreign-owned LLCs, the requirement is stricter—any transaction between the LLC and its foreign owner counts as a “reportable transaction.”
That includes capital contributions, loans, reimbursements, and payment of expenses. These rules apply even for a single small transfer.
Common Situations That Require Filing
You may need to file if your LLC was formed this year and you deposited capital, paid business expenses, moved funds between accounts, or reimbursed the owner for costs. Even a dormant year with one transaction can require a filing.
Real-World Example
A foreign entrepreneur forms a single-member LLC in Wyoming to sell handmade goods online. The first year is spent sourcing suppliers and building an e-commerce site.
No sales occur, but the owner deposits $50,000 into the LLC’s U.S. bank account, pays a designer, and purchases samples. All of these are reportable transactions that require filing Form 5472 with a pro forma 1120.
How to File a Pro Forma 1120
First, gather your LLC’s basic information—legal name, EIN, address, and date of formation. Prepare an income statement, even if it shows zero sales but lists expenses such as legal fees or software subscriptions. Next, prepare a balance sheet with assets, liabilities, and equity.
Then complete Form 5472, reporting ownership details and listing all transactions with the foreign owner or related parties. Attach Form 5472 to the pro forma 1120 and submit the complete package to the IRS.
If you need more time, request an extension by filing Form 7004 before the original due date. For calendar-year filers, the due date is generally April 15.
Additional Forms You May Need
While Form 5472 is the most common companion form to the pro forma 1120 for foreign-owned LLCs, other filings might be needed depending on your activities:
- Form 1040-NR if the LLC is engaged in a U.S. trade or business and you have U.S.-source income.
- State annual reports or franchise tax forms, which vary by state.
These forms have separate deadlines and penalties, so it’s important to track each requirement.
When to File
For most calendar-year LLCs, the pro forma 1120 with Form 5472 is due April 15 of the following year. If you request an extension, you’ll generally have until October 15 to file.
Missing the deadline automatically triggers the $25,000 penalty, and the IRS may continue to add penalties for continued noncompliance.
Extra Tips for Accuracy
Maintain accurate bookkeeping throughout the year. Keep detailed records of each transfer between the LLC and its owner, including dates, amounts, and descriptions. Save bank statements, invoices, and receipts to support your filings.
If your state has its own filing requirements, complete those as well—federal compliance does not cover state obligations.
Mistakes to Avoid
Don’t assume no revenue means no filing. Avoid underreporting transactions because they seem minor. And never wait until the last minute—foreign-owned LLCs that miss deadlines face automatic penalties.
Why Early Compliance Matters
Filing correctly from the start helps you avoid fines and keeps your business in good standing. It also creates a clear financial history that can help when applying for funding, loans, or selling the business.
How Bookmate Can Help
Bookmate works with foreign-owned companies, online small businesses, and venture-funded startups to ensure pro forma 1120 filings are accurate and on time. We identify all reportable transactions, prepare your statements, complete the forms, and file them with the IRS.
Learn more at trybookmate.co or book a free consultation for tailored advice.
FAQ: Pro Forma 1120 and Related Filings
Do I need to file if my LLC made no money? Yes—transactions with owners still require filing.
What happens if I miss the deadline? The IRS can impose a $25,000 penalty per form, per year, plus additional monthly penalties.
Is Form 5472 the same as Form 1120? No—Form 5472 is an informational report, and the pro forma 1120 is the return that transmits it to the IRS.
Can I file myself? Yes, but the rules can be complex, and mistakes are costly. Many choose professional help.
Final Thoughts
Being pre-revenue doesn’t remove your tax responsibilities. Filing a correct pro forma 1120 with any required companion forms like Form 5472 ensures your LLC stays compliant and avoids expensive penalties. Start early, keep good records, and make compliance part of your business foundation.
