Single member LLC taxation

[DKM]

"It is a foreign corporation that does not have a permanent establishment in the United States under an applicable income tax treaty"

I talked to a US accountant from JustAnswer as Monzani recommended, and he said I don't fall into that exemption.

You do not.

An LLC is a disregarded entity for US tax purposes, not a corporation.

As I mentioned, the requirement for a sole member LLC owned by a NONRESIDENT is to file Form 5472 and Form 1120 for INFORMATIONAL PURPOSES.

The requirement went into effect on January 1, 2017.

The penalty for non-filing is $25,000.

 

[muscleteen]

You're right, mate.
In the case of the thread's author it is not necessary because there are no reportable transactions, thanks for correcting.



I paid $295 for the formation of the company + EIN, I already have 3 companies in Delaware, I always bought through delawareinc (harvard business), I do not know cheaper and more efficient options...

I don't have an American bank account, this is really difficult, you need to travel to the United States to have one, maybe a digital/remote solution like Payoneer or Mercury can help you

I have a bank account in other countries, in the United States, a real bank account can only be made by traveling there or through the Stripe Atlas, but I do not find it advantageous from a tax perspective.

Thank you so much! So 300 bucks for the formation. How much do you pay for "yearly maintenance" of the LLC? I mean, for registered agents and all. And do you use the same service for that?

I had mine formed in Wyoming. I paid $150 in total to form an LLC through wyomingagents.

Like @Monzani said, it is hard to get a bank account without visiting the US. Payoneer and TransferWise will work as an alternative if you only need to receive/send wire, etc.

I was even denied approval from Stripe because according to them, I should have a physical office in the US and at least one employee.

Yeah, my issue is Stripe as well. Transferwise doesn't work with them

I finally decided on a service that would set up an LLC right up to where I get my bank account opened without having to visit the US (I'm a non-US resident and citizen). And I found firstbase.io to be pretty decent and legit. They're not the cheapest at $399 (I found some for around $300-350), but their bundled offer made the most sense for me. And they have some perks too.
Although my application is still under process, I think they're one of the best value for money services.

Note: They've collaborated with the likes of Mercury Bank. Firstbase (like all others) doesn't guarantee opening an account, and leave it to the bank's discretion.

Oh thanks. That's completely new information (being able to open a US bank acc without being physically there). I hope you get your account soon man!

 

[Impressor]

Oh thanks. That's completely new information (being able to open a US bank acc without being physically there). I hope you get your account soon man!

Thanks, bro! I'm not gonna jinx it by talking more about it.

Anyway. so this is what you get at firstbase for $399, and after a lot of searching, that's probably the best deal there in the market (for verified and legit sellers)-

LLC
$399

• US LLC Formation
• US EIN (Tax ID Number)
• US Business Bank Account (Probably from Mercury)
• Operating Agreement
• Full Year of Registered Agent Fees (for the 1st year)
• US Address Setup
• Free Tax Consultation
• Secure Dashboard (they really got emotional here)
• Legal Guide
• > $20k in Exclusive Startup Rewards (looks tempting; yet to find out)
• Access to Private Community (Beta) (Gonna spread the word there about BHW)
• Lifetime Expert Support

Click on Firstbase to know more...

This sounds like some paid promotion, but I promise, it isn't.

 

[JetBlack101]

I am going to look Firstbase up

Thanks,

 

[bodyanyash]

I talked to a US accountant from JustAnswer as Monzani recommended, and he said I don't fall into that exemption.

You do not.

An LLC is a disregarded entity for US tax purposes, not a corporation.

As I mentioned, the requirement for a sole member LLC owned by a NONRESIDENT is to file Form 5472 and Form 1120 for INFORMATIONAL PURPOSES.

The requirement went into effect on January 1, 2017.

The penalty for non-filing is $25,000.

Don't listen to people who just want to get your money. That site is essentially for draining your cash. Contact Deloitte give them $200 and you will have everything you need.

 

[DKM]

Thanks, bro! I'm not gonna jinx it by talking more about it.

Anyway. so this is what you get at firstbase for $399, and after a lot of searching, that's probably the best deal there in the market (for verified and legit sellers)-

LLC
$399

• US LLC Formation
• US EIN (Tax ID Number)
• US Business Bank Account (Probably from Mercury)
• Operating Agreement
• Full Year of Registered Agent Fees (for the 1st year)
• US Address Setup
• Free Tax Consultation
• Secure Dashboard (they really got emotional here)
• Legal Guide
• > $20k in Exclusive Startup Rewards (looks tempting; yet to find out)
• Access to Private Community (Beta) (Gonna spread the word there about BHW)
• Lifetime Expert Support

Click on Firstbase to know more...

This sounds like some paid promotion, but I promise, it isn't.

Honestly, $399 is such a good deal especially that it is an all-in service including the free tax consultation. Nice choice.

Meanwhile for me, although I only paid half of the price, I had to struggle to find providers to get an EIN. And now, some tax advice. Lol.

Mercury, however, looks open for public sign-ups now: https://mercury.com/

 

[Impressor]

Honestly, $399 is such a good deal especially that it is an all-in service including the free tax consultation. Nice choice.

Meanwhile for me, although I only paid half of the price, I had to struggle to find providers to get an EIN. And now, some tax advice. Lol.

Mercury, however, looks open for public sign-ups now: https://mercury.com/

Yeah. I searched a lot and felt they gave the best bang for my buck and take care of all the initial hassles of opening an LLC or Corporation.

As soon as everything's sorted, I'll highly recommend the service to everyone.

If someone wants individual services they've missed out on (like the EIN in your case), MyUSACorporation is a decent name too, I guess.

But let me warn you, they can get easily pissed off. Let me share my experience-

I have a friendly casual chat with support staff on their site and I gather relevant information from him which he readily provides. All's well as I leave the chat after a while, and he sends me a follow-up mail.

Dear Sam,

Hope all is well. I'm just following up on our chat to see if there's any way I can assist you in achieving your goal of forming your company.

I recommend you to form your LLC in Wyoming as less expensive and most friendly State. You may get a price quote and to form your Wyoming LLC using this link:

https://www.myusacorporation.com/eu/form-llc/state/WY

Please redeem ******** coupon code during the Checkout to get $20 discount.

Remember, I am here to help, so don't be shy to ask any questions you may have!


Best regards,

**********

I mail back...


Hi Alexander.

Thank you for following up.

I've already begun the registration process with another company who is 20% cheaper and gives some freebies too (discount coupons etc). It was basically the 20% reduced pricing that made me go there. They seemed to have decent customer reviews too. They're known as firstbase.io.

I thank you for your time and will hopefully need you some time in the future.

Regards.


**********

In comes his response...

Hi Sami,

got it. Welcome back when you will face problems with these cheap companymakers.

Best regards,

*********

I think there's definitely a better way of putting his thoughts in front of a prospective client.

Note: You can go to MyUSACorporation's site and seek some free advice through their chat support. However, I'd still recommend a professional CPA.

 

[muscleteen]

Yeah. I searched a lot and felt they gave the best bang for my buck and take care of all the initial hassles of opening an LLC or Corporation.

As soon as everything's sorted, I'll highly recommend the service to everyone.

If someone wants individual services they've missed out on (like the EIN in your case), MyUSACorporation is a decent name too, I guess.

But let me warn you, they can get easily pissed off. Let me share my experience-

I have a friendly casual chat with support staff on their site and I gather relevant information from him which he readily provides. All's well as I leave the chat after a while, and he sends me a follow-up mail.

Dear Sam,

Hope all is well. I'm just following up on our chat to see if there's any way I can assist you in achieving your goal of forming your company.

I recommend you to form your LLC in Wyoming as less expensive and most friendly State. You may get a price quote and to form your Wyoming LLC using this link:

https://www.myusacorporation.com/eu/form-llc/state/WY

Please redeem ******** coupon code during the Checkout to get $20 discount.

Remember, I am here to help, so don't be shy to ask any questions you may have!


Best regards,

**********

I mail back...


Hi Alexander.

Thank you for following up.

I've already begun the registration process with another company who is 20% cheaper and gives some freebies too (discount coupons etc). It was basically the 20% reduced pricing that made me go there. They seemed to have decent customer reviews too. They're known as firstbase.io.

I thank you for your time and will hopefully need you some time in the future.

Regards.


**********

In comes his response...

Hi Sami,

got it. Welcome back when you will face problems with these cheap companymakers.

Best regards,

*********

I think there's definitely a better way of putting his thoughts in front of a prospective client.

Note: You can go to MyUSACorporation's site and seek some free advice through their chat support. However, I'd still recommend a professional CPA.

Jesus Christ. How is that decent?

Maybe it's one of those cases where they are SO GOOD that they don't care about how they talk and people will come to them anyway. That's how I pick my car mechanics lol.

 

[Impressor]

Yeah, they definitely must be good. Check out their website and you'll see a plethora of content they've hosted.

But as I said, they are 25% expensive than what I chose.

 

[muscleteen]

Yeah, they definitely must be good. Check out their website and you'll see a plethora of content they've hosted.

But as I said, they are 25% expensive than what I chose.

You might not be an affiliate of theirs but you sure are in love with them haha. I really hope you get everything you applied for. I don't know if I'm more worried about your money or your broken heart

 

[Impressor]

You might not be an affiliate of theirs but you sure are in love with them haha. I really hope you get everything you applied for. I don't know if I'm more worried about your money or your broken heart

HAHA...

You begin to sound like that employee representing MyUSACorp. How good are you at whatever you do?

 

[muscleteen]

HAHA...

You begin to sound like that employee representing MyUSACorp. How good are you at whatever you do?

I'm pretty good at most things I do (Not because I'm a demi-God or something, but because things I'm not good at, I just don't do xD )

 

[DKM]

Thanks for sharing your insights, @Sami Mirza. I hope you'll create a thread later about your end-to-end experience with firstbase. We'll love to know how it'll turn out after they have delivered everything they promised. And also, we wish you the best for your new LLC!

Just to give out some updates on my filing... so it is indeed required to file Pro-forma form 1120, and form 5472 regardless you made a sale or not.

The purpose of filing the form 5472 is to inform the IRS of any transactions that happened between you (as a foreign individual) and your LLC (formed in the US). If you just formed it and did not actually do any business at all (just like my case), you need to include in your report the money you paid to form it (eg: Registered Agent fees, consulting fees, domain names, etc)

Actually, IRS is not interested to know the sales of a single-member, foreign-owned LLC (disregarded entity) because it is not subject to any income tax. Because single-member LLC is considered a sole proprietorship, tax returns are filed with your individual tax report and you are required to comply with that according to your country of citizenship.

Pro-forma form 1120, and form 5472 is filed for informational purposes only (in my case). Even if the business bank account is empty, or you are at a negative balance, you still have to report that. By the way, you must keep records of all your transactions. A really great and FREE accounting app I use is Wave: https://www.waveapps.com/pricing

Filing with the IRS is also free. You only have to fill the forms as per the IRS requirement correctly and on time. Otherwise, you risk getting a steep $25,000 penalty. For foreign-owned LLCs, you cannot file electronically or use e-filing methods, you have to mail the documents or send them by fax. If you need to mail, take note of the special mailing address that IRS publishes every year in their instructions here: https://www.irs.gov/pub/irs-pdf/i5472.pdf

Be sure to check before you mail as it may change.

I am quite lucky that the filing due date was moved to July 15, 2020, so I still have time. Normally the deadline is April 15 of the calendar year.

As recommended by some people on this thread, better to consult a CPA as it gets really tricky depending on your case. These are general knowledge I've learned by contacting CPAs for inquiries. I shared it here just to give a very high overview.

Because this is my first-time filing, I paid someone on Fiverr to assist me with filing these kinds of forms.

I hope this helps!

 

[Impressor]

Thanks for sharing your insights, @Sami Mirza. I hope you'll create a thread later about your end-to-end experience with firstbase. We'll love to know how it'll turn out after they have delivered everything they promised. And also, we wish you the best for your new LLC!

Just to give out some updates on my filing... so it is indeed required to file Pro-forma form 1120, and form 5472 regardless you made a sale or not.

The purpose of filing the form 5472 is to inform the IRS of any transactions that happened between you (as a foreign individual) and your LLC (formed in the US). If you just formed it and did not actually do any business at all (just like my case), you need to include in your report the money you paid to form it (eg: Registered Agent fees, consulting fees, domain names, etc)

Actually, IRS is not interested to know the sales of a single-member, foreign-owned LLC (disregarded entity) because it is not subject to any income tax. Because single-member LLC is considered a sole proprietorship, tax returns are filed with your individual tax report and you are required to comply with that according to your country of citizenship.

Pro-forma form 1120, and form 5472 is filed for informational purposes only (in my case). Even if the business bank account is empty, or you are at a negative balance, you still have to report that. By the way, you must keep records of all your transactions. A really great and FREE accounting app I use is Wave: https://www.waveapps.com/pricing

Filing with the IRS is also free. You only have to fill the forms as per the IRS requirement correctly and on time. Otherwise, you risk getting a steep $25,000 penalty. For foreign-owned LLCs, you cannot file electronically or use e-filing methods, you have to mail the documents or send them by fax. If you need to mail, take note of the special mailing address that IRS publishes every year in their instructions here: https://www.irs.gov/pub/irs-pdf/i5472.pdf

Be sure to check before you mail as it may change.

I am quite lucky that the filing due date was moved to July 15, 2020, so I still have time. Normally the deadline is April 15 of the calendar year.

As recommended by some people on this thread, better to consult a CPA as it gets really tricky depending on your case. These are general knowledge I've learned by contacting CPAs for inquiries. I shared it here just to give a very high overview.

Because this is my first-time filing, I paid someone on Fiverr to assist me with filing these kinds of forms.

I hope this helps!

That's quite insightful. Thanks.

Yes, I'll definitely share my experience once it's all done.

 

[muscleteen]

Thanks for sharing your insights, @Sami Mirza. I hope you'll create a thread later about your end-to-end experience with firstbase. We'll love to know how it'll turn out after they have delivered everything they promised. And also, we wish you the best for your new LLC!

Just to give out some updates on my filing... so it is indeed required to file Pro-forma form 1120, and form 5472 regardless you made a sale or not.

The purpose of filing the form 5472 is to inform the IRS of any transactions that happened between you (as a foreign individual) and your LLC (formed in the US). If you just formed it and did not actually do any business at all (just like my case), you need to include in your report the money you paid to form it (eg: Registered Agent fees, consulting fees, domain names, etc)

Actually, IRS is not interested to know the sales of a single-member, foreign-owned LLC (disregarded entity) because it is not subject to any income tax. Because single-member LLC is considered a sole proprietorship, tax returns are filed with your individual tax report and you are required to comply with that according to your country of citizenship.

Pro-forma form 1120, and form 5472 is filed for informational purposes only (in my case). Even if the business bank account is empty, or you are at a negative balance, you still have to report that. By the way, you must keep records of all your transactions. A really great and FREE accounting app I use is Wave: https://www.waveapps.com/pricing

Filing with the IRS is also free. You only have to fill the forms as per the IRS requirement correctly and on time. Otherwise, you risk getting a steep $25,000 penalty. For foreign-owned LLCs, you cannot file electronically or use e-filing methods, you have to mail the documents or send them by fax. If you need to mail, take note of the special mailing address that IRS publishes every year in their instructions here: https://www.irs.gov/pub/irs-pdf/i5472.pdf

Be sure to check before you mail as it may change.

I am quite lucky that the filing due date was moved to July 15, 2020, so I still have time. Normally the deadline is April 15 of the calendar year.

As recommended by some people on this thread, better to consult a CPA as it gets really tricky depending on your case. These are general knowledge I've learned by contacting CPAs for inquiries. I shared it here just to give a very high overview.

Because this is my first-time filing, I paid someone on Fiverr to assist me with filing these kinds of forms.

I hope this helps!

Thanks a lot for the updates. Damn it looks like a HUGE hassle to have an LLC in the US. Sure, there are formation solutions. But for maintenance...

 

[nik14b]

I have a few questions on LLC formation for a non resident, will appreciate any advise:
1. If I form a LLC in Feb or March 2021, then when is the first time i need to fill any forms like Pro-forma form 1120, and form 5472 ? is it by April 2022 or this year itself?
2. Do we need to inform IRS of a newly formed LLC? Planning to use services of firstbase.io or wyomingagents for opening.
3. If one forgets or unintentionally put incorrect info in IRS return forms, then the penalty is $ 10-25K. If a person don't have that money then IRS can charge criminal penalties. Irrespective if a non resident don't pay this money, then what can be the implications for a non resident?
4. Is it better to have a Single LLC member managed or manager managed? Any specific advantage?
5. Finally, which bank is better for kickstarter or indiegogo for stripe compatibility? SVB? Heard Mercury closes account without reasons or delays wire transfer.
6. How to get corporate credit card and have it shipped in home country, does bank itself mail outside US?

 

[tidelow]

Just been browsing around on New Posts and really glad to see all the information regarding LLC in US and opening bank accounts for foreigners. I will be looking into this now. Thanks

 

[code API]

I had mine formed in Wyoming. I paid $150 in total to form an LLC through wyomingagents.

Like @Monzani said, it is hard to get a bank account without visiting the US. Payoneer and TransferWise will work as an alternative if you only need to receive/send wire, etc.

I was even denied approval from Stripe because according to them, I should have a physical office in the US and at least one employee.

For physical office in the US, I have a registered agents office I pay only $50 annually just for address purpose and administrative works like physical delivery of important documents etc (although not necessary as I always get the soft copy pdf file emailed to me whenever there is a correspondence regarding my formed entity, LLC).

 

[code API]

OP, to mention also, I formed my single member LLC in Missouri, no annual reporting/filing is required in Missouri. It is a disregarded entity for me as well. I am a non-US resident, registered my LLC with Inc file as they have a good advisory and pretty much responsive to emails and chat. Hey, a little disclaimer please: I'm not affiliated with them.

As our business is usually completely digital here, the best way to solve the bank account stuff is to go completely stealth with your offshore digital company. Get a reliable Virtual Bank Account (VBA) with Virtual Credit Card (VCC). I believe some sellers in the market place would be happy to help you with that. Make sure it is a checking account as usual.

Hope that helps.

 

[nik14b]

OP, to mention also, I formed my single member LLC in Missouri, no annual reporting/filing is required in Missouri. It is a disregarded entity for me as well. I am a non-US resident, registered my LLC with Inc file as they have a good advisory and pretty much responsive to emails and chat. Hey, a little disclaimer please: I'm not affiliated with them.

As our business is usually completely digital here, the best way to solve the bank account stuff is to go completely stealth with your offshore digital company. Get a reliable Virtual Bank Account (VBA) with Virtual Credit Card (VCC). I believe some sellers in the market place would be happy to help you with that. Make sure it is a checking account as usual.

Hope that helps.

Do yo u need to file any tax forms like Pro-forma form 1120, and form 5472 ?