U.S. tax requirements for a foreign-owned single-member LLC

A US single-member LLC owned 100% by a non-US person files a pro forma Form 1120 with Form 5472 for any year it has a reportable transaction, such as money the owner puts in or takes out, even if it had no US income. This article covers those basic requirements and the extra ones that may apply depending on where your business operates.

Note: This is a high-level summary only. It may not cover every form that applies to you, which can depend on your business's size and type, your tax filing status, the country where you live and US tax treaties. Check with a tax professional to fully meet your IRS obligations.

A US single-member LLC is treated as a disregarded entity for US tax purposes, unless it elects to be treated as a corporation. As a disregarded entity, all of its income, deductions and tax liabilities flow directly to the owner.

For reporting purposes only, the IRS treats foreign-owned single-member LLCs that are disregarded entities as if they were C corporations. So even if the business had no US activity or income, at a minimum you need to:

Form 1120 is the tax return US C corporations use. For a foreign-owned single-member LLC, the IRS only requires the LLC's name and address and items B and E on the first page.

Form 5472 reports transactions between the LLC and a foreign or domestic "related party." Per the IRS, a related party includes:

Money you put into or take out of the LLC counts as a reportable transaction, including contributions, distributions and loans. That's why most foreign-owned LLCs need to file. You need a separate Form 5472 for each related party you had reportable transactions with.

Failing to file Form 5472 carries a $25,000 penalty per form, per year. Filing a substantially incomplete form counts as not filing, and the penalty also applies if you don't keep the required records.

Your Finaloop books record these transactions, as long as transfers between you and the LLC are categorized as owner transactions rather than income or expenses. On the Transactions page, categorize the transfer as Transfer from owner (transfer in) or Transfer to owner (transfer out), then answer the follow-up question about its type, for example Capital contribution or other equity investment, Owner's loan or Owner's draw (Distribution).

When a non-US person owns a US LLC and the business operates outside the US, the first step is to find out whether the business's income is taxed in the US.

As a non-US person, you're subject to US tax on business income if you're engaged in a trade or business in the US, for example when you perform services or sell products in the United States.

If you live in a treaty country, you may be able to apply the treaty's permanent establishment rules instead of the US rules on being engaged in a trade or business. Check this with a tax professional.

If you're engaged in a US trade or business, you then need to find out whether you have income connected to that business, known as Effectively Connected Income (ECI).

Your business income is taxed in the US only if you're both engaged in a US trade or business and it's ECI. Some other US-source income, like certain interest, dividends or royalties, can be taxed through withholding even without a US trade or business. If you have ECI, you report it by filing Form 1040-NR (U.S. Nonresident Alien Income Tax Return), and you need an Individual Taxpayer Identification Number (ITIN).

Note: As a US-formed company, a foreign-owned US LLC doesn't need to file a beneficial ownership information (BOI) report with FinCEN. US companies are exempt under FinCEN's final rule, effective August 14, 2026.