Once you’ve formed your U.S. LLC, obtained your EIN, and opened a U.S. business bank account, you’re ready to start operating.
However, what many LLC formation services don’t explain, and many foreign founders don’t realize, is that your LLC has ongoing state and federal compliance requirements.
Missing these requirements can lead to penalties, or even the dissolution of your LLC.
The good news is that U.S. LLC compliance for non-residents isn’t particularly complicated once you understand what’s required and when it needs to be done.
However, what many LLC formation services don’t explain, and many foreign founders don’t realize, is that your LLC has ongoing state and federal compliance requirements.
Missing these requirements can lead to penalties, or even the dissolution of your LLC.
The good news is that U.S. LLC compliance for non-residents isn’t particularly complicated once you understand what’s required and when it needs to be done.
Why Does U.S. LLC Compliance Matter?
Operating your LLC remotely from outside the U.S. does not eliminate its state or federal compliance requirements.
Ensuring your LLC stays compliant is required to:
Ensuring your LLC stays compliant is required to:
- Keep your LLC in good standing
- Avoid unnecessary penalties
- Maintain access to banking and payment processors
- Meet your federal tax and reporting obligations
- Avoid problems as your U.S. business grows
The key is understanding which requirements actually apply to your LLC.
What Are the U.S. LLC Compliance Requirements for Non-Residents?
For most foreign-owned LLCs, compliance falls into two categories: state and federal compliance requirements.
State Compliance:
Registered Agent:
Your LLC must maintain a registered agent in the state where it was formed. Your registered agent is responsible for receiving and forwarding all important correspondence to you.
A registered agent is an ongoing requirement for as long as your LLC is active.
A registered agent is an ongoing requirement for as long as your LLC is active.
U.S. Address:
A U.S. mailing address is required to receive business and government correspondence and is often provided by your registered agent.
Annual Report + State Fees:
Most states require an annual report with updated business information, along with payment of a state fee or tax, to keep your LLC in good standing.
The due date and fee depend on the state where your LLC is formed.
For Wyoming: your annual report is due on the first day of your LLC’s anniversary month. For example, if you formed your LLC on November 17, your annual report is due on November 1.
You will also be required to pay Wyoming’s $60 annual licensing tax along with the report.
For Delaware: There is no annual report required, however you will need to pay Delaware’s $400 annual licensing tax on June 1st of each year.
The due date and fee depend on the state where your LLC is formed.
For Wyoming: your annual report is due on the first day of your LLC’s anniversary month. For example, if you formed your LLC on November 17, your annual report is due on November 1.
You will also be required to pay Wyoming’s $60 annual licensing tax along with the report.
For Delaware: There is no annual report required, however you will need to pay Delaware’s $400 annual licensing tax on June 1st of each year.
Federal Compliance:
Your federal requirements depend on whether your LLC is single-member or multi-member, and whether it has U.S. taxable income (ECI).
Single-Member LLCs
For a foreign-owned single-member LLC with only one member the following federal compliance requirements apply.
Form 5472 + Pro Forma Form 1120:
Form 5472 is an information return documenting transactions between your LLC and a foreign person or entity, such as money you personally contribute to or withdraw from the LLC.
The form can be filed as early as January 1 and is due by April 15 for calendar-year taxpayers.
The filing is required even if your LLC has no revenue, and failing to file correctly and on time can result in penalties of up to $25,000.
The form can be filed as early as January 1 and is due by April 15 for calendar-year taxpayers.
The filing is required even if your LLC has no revenue, and failing to file correctly and on time can result in penalties of up to $25,000.
Form 1040-NR + ITIN:
If the LLC has effectively connected income (ECI), you as the foreign owner will need to file a U.S. individual income tax return (Form 1040-NR) and apply for an ITIN.
For calendar-year taxpayers, Form 1040-NR can be filed as early as January 1 and is due by April 15. If you’re LLC does not have effectively connected income this filing is not required.
For calendar-year taxpayers, Form 1040-NR can be filed as early as January 1 and is due by April 15. If you’re LLC does not have effectively connected income this filing is not required.
What Triggers Effectively Connected Income (ECI)?
ECI generally becomes a consideration when your business has a meaningful presence or ongoing business activity in the U.S. This can include:
- A U.S. office or long-term lease
- Employees working in the U.S.
- Inventory held in the U.S.
- Travelling to and working in the U.S.
- U.S. contractors, particularly when they have authority to act on behalf of your business
If you’re LLC does not have effectively connected income, you’re not required to file a 1040NR.
This is not tax advice. You should consult a licensed tax professional to determine whether your business has ECI.
This is not tax advice. You should consult a licensed tax professional to determine whether your business has ECI.
Multi-Member LLCs
Multi-member LLCs with multiple members have different federal filing requirements.
Form 1065:
A multi-member LLC is taxed as a partnership and is required to file Form 1065 by the 15th day of the third month after the end of its tax year.
For calendar-year LLCs, this is March 15. Form 1065 reports the LLC’s income, deductions, and other financial information to the IRS.
For calendar-year LLCs, this is March 15. Form 1065 reports the LLC’s income, deductions, and other financial information to the IRS.
Schedule K-1
The LLC also provides each member with a Schedule K-1, which shows their share of the LLC’s income or losses for their personal tax return.
How Do You Stay Compliant?
The first step is understanding which requirements apply to your LLC.
If you’re unsure, speak with a qualified professional who can explain your obligations and help you determine what applies to your situation.
A good formation and advisory partner should be able to help you understand this from the beginning.
It’s also worth finding a trustworthy CPA or tax professional who can manage your ongoing compliance and explain how requirements may change as your business grows.
U.S. LLC compliance for non residents doesn’t have to be complicated when you have the right information, the right deadlines, and the right people helping you manage it.
If you’re unsure, speak with a qualified professional who can explain your obligations and help you determine what applies to your situation.
A good formation and advisory partner should be able to help you understand this from the beginning.
It’s also worth finding a trustworthy CPA or tax professional who can manage your ongoing compliance and explain how requirements may change as your business grows.
U.S. LLC compliance for non residents doesn’t have to be complicated when you have the right information, the right deadlines, and the right people helping you manage it.
U.S. LLC Compliance for Non-Residents: TL;DR
- Maintain your registered agent and U.S. address
- File your annual report and pay the required state fees
- Single-member LLCs file Form 5472 + Pro Forma Form 1120
- Multi-member LLCs file Form 1065
- ECI: If applicable, members must file Form 1040-NR and obtain an ITIN
- Review your requirements annually to make sure your LLC remains compliant
Jamie Reed
Founder & Principal
Blackshore Advisory
Founder & Principal
Blackshore Advisory