Starting a business in the United States as an international founder comes with legal and tax responsibilities. Whether you’re operating as a single foreign owner or with multiple foreign partners, understanding US Tax Filing is essential to avoid penalties, IRS audits, and compliance issues.
This guide provides updated US Tax Filing procedures for 2024, covering single-owner and multi-owner foreign businesses, tax filing requirements for those without U.S. income, and solutions for tax treaty benefits.
1. Who Needs to File US Taxes?
If you are a non-U.S. resident but own a U.S.-based business, you may need to file taxes, regardless of whether you earned income in the U.S.
You must file U.S. taxes if you:
- Own a foreign-owned U.S. LLC (even with no income)
- Have a U.S. EIN (Employer Identification Number)
- Receive payments in U.S. dollars from U.S. clients
- Have a U.S. bank account linked to your business
- Operate an e-commerce store selling to U.S. customers
Important Note: Even if you don’t have U.S. income, the IRS still requires tax filings for foreign-owned entities!
2. Tax Filing Requirements Based on Business Ownership
A. Single Foreign Owner (Single-Member LLC or Sole Proprietor)
If you are a non-U.S. resident running a U.S. business alone, your tax filing depends on whether your business has income.
No U.S. Income – Tax Filing Requirements
- If your U.S. LLC has no income, you still need to file:
Form 5472 + Pro Forma 1120 (Mandatory for foreign-owned LLCs) - Zero-income report to IRS
Penalty for Non-Filing: $25,000+ per missing return!
If You Have U.S. Income – Tax Filing Process
If you earned income in the U.S., you need to file:
- Form 1040-NR (Non-Resident Income Tax Return)
- Form 5472 + Pro Forma 1120 (Foreign-owned LLCs)
- Form W-8BEN (To claim tax treaty benefits, if applicable)
Tax Rates for Single Foreign Owners:
- U.S.-source income is taxed at 30% withholding (unless reduced by a tax treaty).
- Self-employment tax doesn’t apply to non-resident aliens.
B. Multi-Owner Foreign Business (Partnership or Multi-Member LLC)
If a foreign-owned U.S. business has multiple owners, the IRS considers it a foreign partnership for tax purposes.
No U.S. Income – Tax Filing Requirements
Even if your business has no income, you must file:
- Form 1065 (U.S. Partnership Tax Return)
- Form 5472 for each foreign partner
Failure to file penalties: $25,000 per missing form per foreign partner.
If Your Business Earns U.S. Income
Each foreign partner is responsible for their share of taxes. Filing requirements include:
- Form 1065 (U.S. Partnership Tax Return)
- Form 8804 & 8805 (For foreign partners to report income)\
- Form W-8BEN-E (To claim tax treaty benefits)
Tax Withholding for Multi-Owner Foreign Businesses:
- Foreign partners are subject to U.S. tax on their share of U.S. income at 37% for individuals or 21% for corporations.
- A partnership must withhold 37% of foreign partner income (unless a tax treaty applies).
3. Recent US Tax Filing Updates (2023-2024)
IRS Now Requires More Reporting for Foreign-Owned LLCs
- Form 5472 penalties increased from $10,000 to $25,000 per violation.
- IRS now enforces stricter business transaction reporting for foreign owners.
Stronger IRS Scrutiny on Foreign Business Bank Accounts
- If you receive U.S. payments in a foreign bank, you may still need to file U.S. taxes.
- FBAR (Foreign Bank Account Report) required for accounts over $10,000.
Digital Payments from U.S. Customers Now Taxable
- Payments from PayPal, Stripe, or U.S. marketplaces (Amazon, eBay, etc.) are now subject to Form 1099-K reporting if over $600 annually.
4. How to File U.S. Taxes as an International Founder
Deadlines for 2024:
- March 15, 2024 – Multi-member LLCs (Form 1065 & 5472)
- April 15, 2024 – Single-member LLCs & Non-Residents (Form 1040-NR, 1120)
Step-by-Step Filing Process:
- Get an EIN (Employer Identification Number) from the IRS.
- Prepare financial records (U.S. bank statements, invoices, expenses).
- File Form 5472 (for foreign-owned LLCs).
- If earning income, file Form 1040-NR or 1065 (for partnerships).
- Submit forms before IRS deadlines to avoid penalties.
Need help? House of Neurals provides expert US Tax Filing services for foreign founders!
5. What If You Have No U.S. Income?
Many international founders believe that if they don’t earn U.S. income, they don’t have to file taxes. This is FALSE.
Even if your U.S. LLC has no income, you must still file:
- Form 5472 (For foreign-owned U.S. businesses)
- Pro Forma 1120 (Zero-income report)
Tip: Filing on time avoids IRS penalties and helps maintain compliance for banking & future business activities.
6. Tax Treaties – How to Reduce Your U.S. Taxes
If your home country has a tax treaty with the U.S., you may be eligible for reduced tax rates or exemptions.
How to Claim a Tax Treaty Benefit?
- File Form W-8BEN or W-8BEN-E with your tax return.
- Attach a tax treaty exemption request to IRS Form 1040-NR.
7. Mistakes International Founders Make
- Not Filing Taxes at All (IRS Penalty: $25,000+ Per Year!)
- Ignoring Form 5472 (Mandatory for Foreign-Owned LLCs)
- Missing IRS Deadlines (Can Lead to Account Freezes & Business Closures)
Solution: Always file on time and work with a U.S. tax expert to avoid mistakes!
| Remember, March 15th (Partnerships/S Corps) and April 15th (C Corps/Individuals) deadlines are approaching. Contact House of Neurals for expert tax filing services. |
FAQs
Q1: Can I File Taxes Without an SSN or ITIN?
Yes! You can use an EIN to file business taxes, or apply for an ITIN using Form W-7.
Q2: Do I Need to Pay U.S. Taxes if I Live Outside the U.S.?
Yes! If you own a U.S. LLC, you must file required forms – even if you operate from abroad.
Q3: How Can House of Neurals Help?
Our Services Include:
- EIN & ITIN Registration
- US Tax Filing for Foreign-Owned Businesses
- IRS Compliance & Penalty Avoidance
Get a Free Consultation Today!
