Forming a U.S. company has become incredibly simple. With online services and quick state registration systems, a founder anywhere in the world can establish a Delaware LLC or C-Corp in just a few days. For global entrepreneurs, it is the gateway to new markets, U.S. banking, and international credibility.
But while incorporation is easy, compliance is where many non-resident founders fall short. They often assume that filing once at the state level or paying a franchise tax is enough. Others believe that if their U.S. company had no income, there is nothing to report to the IRS. Both assumptions are costly mistakes.
The truth is that the most overlooked step in U.S. compliance is the annual filing requirement for foreign-owned LLCs and corporations. This requirement applies even when the company has zero revenue. It is not optional, it is not dependent on profits, and it carries some of the highest penalties in the tax code if ignored.
At Bookmate, we built our entire process to ensure that this step is never missed. In this article, we will explain what this overlooked step is, why so many founders miss it, the risks of ignoring it, and how Bookmate guarantees it gets done correctly every year.
The Overlooked Step: Annual IRS Filings for Foreign-Owned Entities
The United States requires every company to file annual returns with the IRS. For foreign-owned businesses, the rules are even stricter. The key requirement is Form 5472, which is an information return that must be filed along with Form 1120.
- Single-member LLCs owned by a foreign person or company must file Form 5472 + Form 1120.
- Corporations with foreign ownership of 25% or more must also file Form 5472.
- Multi-member LLCs may need to file Form 1065 if treated as a partnership.
What catches founders off guard is that Form 5472 is required even when there is no income. The obligation is triggered by the ownership structure, not by financial activity.
This is why we call it the most overlooked step. Many founders believe they can ignore the IRS until they start generating revenue, only to find themselves facing penalties later.
Why Founders Miss This Step
There are three main reasons international entrepreneurs overlook this requirement.
1. Misleading Assumptions About “No Income”
In most countries, if a company has no transactions, there is no filing obligation. Founders apply that same logic to their U.S. entity and assume they are in the clear. The IRS does not work this way.
2. Incorporation Services Do Not Explain It
Formation companies that set up Delaware or Wyoming LLCs rarely mention Form 5472. Their job ends once the company is registered. As a result, founders believe compliance is complete once they pay the state fee or maintain a registered agent.
3. Complexity of IRS Instructions
Even if a founder discovers Form 5472, the instructions are long, technical, and filled with references to U.S. tax code. For someone outside the United States, the language is nearly impossible to interpret correctly. Many simply give up or hope they will not be noticed.
The Risks of Ignoring It
The IRS imposes some of the harshest penalties for failing to file Form 5472. The minimum fine is $25,000 for each year the form is missing. If the company still does not file after receiving an IRS notice, the penalty can increase further.
Beyond the monetary fines, failing to file can create other issues:
- Loss of good standing: If the IRS flags your company, it can complicate banking or investment opportunities.
- Investor red flags: During fundraising or due diligence, missed filings stand out immediately.
- Administrative stress: Responding to IRS notices is time-consuming and stressful, especially for non-residents.
For a company that has not even started making money, a $25,000 penalty can be devastating.
How Bookmate Never Misses This Step
Bookmate was created specifically to prevent non-resident founders from falling into this trap. We designed our systems, processes, and communication to guarantee that annual IRS filings are never overlooked.
Step 1: Diagnostic Intro Call
From the very first conversation, we ask about the ownership structure of the company. This tells us immediately whether Form 5472 applies. Founders leave the call with clarity about their obligations, something they rarely get from incorporation services.
Step 2: Transparent Engagement
Our engagement letters and invoices always specify which forms we will prepare and why. Clients do not have to wonder if compliance includes federal filings. Everything is laid out clearly from the start.
Step 3: Streamlined Data Collection
We use secure web forms to collect the information needed for filings. This includes ownership details, financial activity (if any), and basic company information. Even when there is no revenue, our forms ensure that the required data is captured and ready for our CPAs.
Step 4: CPA-Led Preparation
Every return is prepared by a licensed CPA who specializes in non-resident cases. We do not rely solely on software, which reduces the risk of errors. Clients review draft copies, and we explain what is being filed in plain language.
Step 5: Confirmation and Proof
Once the forms are filed, we provide clients with copies and the IRS tracking number. This gives them official proof that compliance was completed correctly.
By building these steps into our process, we make sure the most overlooked requirement is always handled.
Why This Matters for Global Founders
For non-resident founders, U.S. compliance can feel like a black box. The IRS uses technical language, deadlines are strict, and penalties are high. Missing even a single filing can create lasting problems.
By focusing on the most overlooked step, Bookmate provides more than just compliance. We provide peace of mind. Clients know that their U.S. company is in good standing, that they will not receive surprise penalties, and that they can confidently present their filings to banks, investors, or partners.
Bookmate’s Philosophy: Prevention Over Cure
One important distinction is that Bookmate does not handle late filings. Our mission is prevention. We focus on keeping clients compliant year after year so they never find themselves facing penalties in the first place.
This prevention-first philosophy is built into everything we do. From early reminders sent to our entire client base, to CPAs double-checking filings before submission, we make sure compliance is handled before it becomes a problem.
Conclusion
One of the most overlooked steps in U.S. compliance is the annual federal filing requirement for foreign-owned companies. Too many founders assume that “no income” means “no filing,” or they never learn about Form 5472 until it’s too late. The result? Stress, confusion, and penalties that can cost tens of thousands of dollars.
At Bookmate, we never miss this step. Our process—led by experienced CPAs and powered by simple, smart technology—ensures every client files the right forms on time, every year. For non-resident founders, that means compliance is no longer a guessing game. It’s a reliable, transparent system that protects your business and gives you the confidence to grow.
If you’re a non-resident founder with a U.S. company, don’t let this critical step catch you by surprise. Book your free consultation with Bookmate today and see how we keep your company compliant, penalty-free, and ready for what’s next.
