Opening a US LLC for Non-US Residents: What You Need to Know

A non-resident can own a US limited liability company, and the reporting that follows is heavier than most people expect for a structure often described as simple.

The entity itself may owe no tax and still have filings that must be made, with consequences for missing them that are disproportionate to the activity involved. That surprises owners of dormant or very small companies.

This covers whether it is permitted, how such a company is taxed, the filings that apply regardless, the formation steps, the sales tax position, and the obligations that follow in your home country.

Can a Non-US Resident Own a US LLC?

Yes. US federal and state laws permit foreign nationals to own US LLCs without any residency or citizenship requirement. This applies to individuals from any country, including India, UK, Canada, Australia, and others, as well as foreign corporations.

How a Non-US Resident Owned LLC Is Taxed

This is where it gets nuanced. A single-member LLC (SMLLC) is a disregarded entity by default, it does not exist as a taxpayer separate from its owner for US federal tax purposes.

Scenario 1: Foreign SMLLC Owner with No US Business Activity

If your US LLC operates entirely outside the US (or is just a holding entity with no US trade or business):

• No US income tax on foreign-source income
• No US corporate tax on the LLC itself (disregarded)
• Still must file Form 5472 + pro-forma Form 1120, this is mandatory regardless of income
• 30% withholding on US-source fixed, determinable, annual, or periodical (FDAP) income (dividends, interest, rents), unless reduced by a tax treaty

Scenario 2: Foreign SMLLC Owner Engaged in US Trade or Business

If your LLC has effectively connected income (ECI), income from a trade or business actively conducted in the US:

• ECI is taxed at the same graduated rates as US persons (10%-37% for individuals)
• Must file Form 1040-NR (Nonresident Alien Income Tax Return)
• Self-employment taxes may apply if you are actively working in the business

Multi-Member LLC (Foreign Owners)

A multi-member LLC with foreign owners is treated as a foreign partnership for tax purposes if all members are non-US persons. This creates additional complexity:

• Must file Form 1065 (Partnership Return) if engaged in US business
• Each foreign partner receives Schedule K-1
• US-source income subject to withholding on foreign partners

The Non-Negotiable: Form 5472 + Form 1120

Since 2017 (TCJA), any US LLC with a single non-US owner must file:

• Form 5472: Reports all reportable transactions between the LLC and its foreign owner or foreign related parties
• Form 1120: A pro-forma (abbreviated) corporate return filed solely to attach Form 5472
• Filing deadline: May 15 (April 15 with 1 additional month for foreign persons, extended to November 15 with Form 7004).
• Failure to file penalty: $25,000 per Form 5472, per year. Even if the LLC had no revenue, no expenses, and no transactions, you must file.

Formation Steps for Non-US Residents

Choose a State

• Delaware: Best for business flexibility, lowest annual cost ($300 franchise tax), most recognized internationally
• Wyoming: Strong privacy protections, low cost, no state income tax
• New Mexico: Permits anonymous LLCs, no annual report
• Your operating state: Only choose if you have a physical presence there

File Formation Documents

Can be done entirely online. Delaware: corp.delaware.gov. Many non-residents use formation services (Stripe Atlas, Northwest Registered Agent, Incfile) that handle everything.

Get an EIN Without a SSN

The most common pain point for non-US residents. Options:

• Form SS-4 by fax: Fax to IRS (+1-855-215-1627 from outside US). IRS calls back within 4 business days.
• Third-party service: Formation services often include EIN assistance as part of their package.
• In-person at US embassy or consulate: Rare option, not widely available.

Open a US Bank Account

Options that work remotely for non-US residents:

• Mercury: Best option for non-US founders. Free, online application, accepts passport + US entity docs.
• Relay: Similar to Mercury, free business banking
• Wise Business: Not a bank but allows USD holding and payments

Business Licenses and Permits

A US LLC itself requires no federal business license. However:

• Certain industries require federal licensing: firearms, alcohol, broadcasting, investment advisors
• State business licenses: Some states (California, Nevada, others) require a state business license
• Local/city permits: May be required depending on business type and location
• Professional licenses: If your LLC provides licensed professional services (law, medicine, engineering)

Sales Tax for Non-Resident LLC Owners

If your LLC sells taxable goods or services to US customers, you may have sales tax obligations:

• Post-South Dakota v. Wayfair (2018): Economic nexus thresholds apply. Typically $100,000 in sales or 200 transactions in a state triggers sales tax registration.
• 45 states + DC have sales tax (5 states have no sales tax: Oregon, Montana, New Hampshire, Delaware, Alaska)
• SaaS and digital products: Many states now tax digital products, varies by state
• Marketplace facilitator rules: If you sell on Amazon/Etsy/eBay, the platform may collect and remit on your behalf

Home Country Compliance

Owning a US LLC creates obligations in your home country:

• India: FEMA/ODI filing, annual performance report, worldwide income taxation
• UK: HMRC requires disclosure of foreign assets and income; US LLC may be 'opaque' for UK tax
• Canada: T1135 Foreign Income Verification Statement if total cost of foreign assets exceeds CAD $100,000
• Most countries: Report foreign accounts under FATCA/CRS requirements

Frequently Asked Questions

Written by

Abhinav Gupta, CPA, CA, MBA

Abhinav works with business owners across the US on industry-specific bookkeeping, from dental practices and restaurants to construction and e-commerce. He writes about what each trade's books actually need. Connect on LinkedIn