A single-member US LLC owned by a non-US resident is one of the cleanest structures in the world for an online business. But the IRS has very specific filing requirements you must follow, even if you owe zero tax. Missing them costs $25,000 per year in penalties.
How the IRS treats your LLC
By default, a single-member LLC is a 'disregarded entity' for US tax purposes. The IRS looks through the LLC and treats you, the owner, as the taxpayer.
Since you are not a US resident, you only owe US federal income tax on income that is 'effectively connected' to a US trade or business (ECI) or that is US-source FDAP income (dividends, royalties, etc.).
Most non-resident-owned LLCs that sell digital services or products to non-US customers, with no US employees and no US office, have zero ECI and owe zero US federal income tax.
Form 5472 + pro-forma 1120 (mandatory every year)
Even if you owe $0 tax, you must file Form 5472 attached to a pro-forma Form 1120 every year by April 15 (or extension to October 15).
Form 5472 reports any 'reportable transactions' between you and the LLC — money you put in, money you took out, or any other movement of value.
Penalty for failing to file: $25,000 per year, per missed filing. The IRS enforces this.
What's not required
If you have no ECI and no US employees, you do not need to file Form 1040-NR personally.
You do not need an ITIN unless your state requires one for state filings.
You do not need to file state tax returns in Wyoming, Delaware, Nevada or New Mexico if the LLC has no operations there.
Sales tax
If you sell physical goods to US customers, you may have sales tax nexus in some states. This is separate from federal income tax. Stripe Tax, TaxJar or Avalara can automate this.
If you sell only digital services (SaaS, consulting, courses), most states do not require sales tax collection from non-resident sellers.
Multi-member LLCs are different
If your LLC has 2+ members, it's treated as a partnership and must file Form 1065 every year, plus issue Schedule K-1s to each member. The complexity (and cost) jumps significantly.
Single-member is the simplest structure and what we recommend for solo founders.
Frequently asked questions
Do I owe US tax on income from non-US customers?+
Generally no, if you have no US physical presence (no office, no employees, no warehouse) and no agent acting on your behalf in the US. Income from non-US customers is foreign-source and not effectively connected to a US trade or business.
What is the penalty for not filing Form 5472?+
$25,000 per year, per missed filing. The IRS does enforce this against non-resident-owned LLCs. Always file even if you owe nothing.
Can I file Form 5472 myself?+
Technically yes, but it's a complex form and the penalties for errors are high. Most non-resident LLC owners use a US CPA who specializes in non-resident filings ($300-$800 per year).
Do I need to pay self-employment tax?+
No. Non-US residents are not subject to US self-employment tax (Social Security and Medicare) on LLC income.
What if I want to elect S-Corp or C-Corp taxation?+
Non-US residents cannot own S-Corps. You can elect C-Corp taxation but it usually creates double taxation (corporate tax + dividend tax). Stay with the default disregarded entity treatment unless you have a specific reason.
Open your US LLC the easy way
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