A Guide to Running a Non-Resident Business in the US: Staying Compliant and Avoiding Legal Issues

Last Updated on 25 December 2024

Running a business in the United States as a non-resident can seem daunting, especially when it comes to staying compliant.

For foreign owners of single-member LLCs, meeting the yearly state and IRS filing requirements is essential but can also be confusing.

This guide aims to demystify the process so you can avoid legal issues and keep your LLC in good standing.

Appointing a Registered Agent

Most states require LLCs to maintain an in-state physical address, which is difficult for non-residents to provide.

Appointing a registered agent solves this.

Agents can be individuals living in-state or professionals providing services for a fee of $100–250 per year.

Give yourself 4 weeks before your company’s anniversary to change agents if needed.

Submitting an Annual Report

While specifics vary, most states mandate an annual report to update company details.

Check your state’s requirements to see if you need to file, when it’s due (either a fixed date or your LLC’s anniversary), and how to submit the report online.

Information verified includes members, contact information, registered agents, etc.

Paying State Taxes

Along with income tax, many states levy additional taxes from LLCs that must be paid yearly.

Franchise Tax: Charged in select states like Delaware ($300) and California ($800) to operate there.
Sales Tax: Most states require collecting sales tax from customers and remitting it. Consult an accountant to calculate rates accurately.

person holding paper near pen and calculator

IRS Filings

Avoid penalties by remembering three key annual IRS filings for foreign-owned single-member LLCs:

Form 5472 and 1120 – Reports taxable transactions between your foreign LLC and the United States. This is now required along with your annual tax return.
FBAR – If your LLC held over $10,000 in non-US bank accounts at any point in the tax year, you must disclose it.
Form 1040-NR – Only required if your LLC has US-sourced income without sufficient withholding or engages in US trade or business.

The deadline for the above filings is April 15, following the tax year. An accountant can ensure you meet the requirements.

Navigating LLC Taxes: Filing, Paying, and Maximizing Tax Tips for LLC Owners

In Summary

Staying compliant with state and federal guidelines as a foreign LLC owner means:

Maintaining a registered agent
Submitting annual reports
Paying franchise tax if required
Collecting and remitting sales tax
Filing IRS forms 5472, 1120, FBAR and 1040-NR, if applicable

Leverage online resources for due dates and requirements specific to your state.

With preparation and help as needed, you can keep your foreign-owned US LLC in full compliance.

FAQs

Do I need to file taxes for my single member LLC if I don’t live in the US?

Yes, even if you don’t live in the US, if your single member LLC is registered in the US, you still need to file taxes. As a foreign owner, you’ll need to file IRS forms 1120, 5472, and possibly FBAR and 1040-NR depending on your situation. Work with an accountant to ensure proper filing.

What are the requirements for appointing a registered agent?

A registered agent must be a person living in the same state where your LLC was formed or a registered agent service. They provide a physical address to receive official/legal correspondence on behalf of your LLC. Shop around to find an affordable registered agent before your LLC’s anniversary when changeovers tend to happen.

Do I need to collect sales tax if I sell products/services to US customers?

If your foreign-owned, single member LLC sells products or services to customers based in the US, you most likely need to collect applicable state and local sales tax at the point of sale and remit collected amounts to tax authorities. An accountant can advise you on the appropriate sales tax rates.