The Non-Resident Single-Member LLC Handbook
You live outside the United States, you have no Social Security number, and you want a U.S. LLC that you will own alone. The formation itself takes an afternoon. What follows over the next twenty-four months is a sequence with real dependencies in it, where doing step four before step two produces months of delay. This is that sequence, in order.
Week zero: two decisions that are hard to reverse
Before any filing, settle two things.
How many members. A single-member LLC is disregarded as separate from its owner under Treas. Reg. §301.7701-3(b)(1)(ii). Add one more member and it becomes a partnership, which triggers IRC §1446(a) withholding on effectively connected taxable income allocable to a foreign partner at the highest rate under IRC §1 for a noncorporate partner and the IRC §11(b) rate of 21 percent for a corporate one, with Forms 8804, 8805, and 8813 attached to the year. Bringing in a co-founder six months later is not an administrative amendment. It changes which regime you are in.
Which state, meaning which annual calendar. Delaware LLCs owe a flat $300 annual tax by June 1, file no annual report, and face a $200 penalty plus 1.5 percent monthly interest if late. Wyoming charges the greater of $60 or two-tenths of one mill per dollar of assets located and employed in Wyoming, due on the first day of the anniversary month, under Wyo. Stat. §17-29-209. Neither state's tax law will govern your business if you have no activity there. What you are actually choosing is a recurring date and a fee.
You will also appoint a registered agent, because every state requires one. That is a statutory address for service of process. It is not an office, and treating it as evidence of a U.S. place of business is a mistake in both directions.
Weeks one to eight: the EIN, and where the ITIN actually fits
This is the step most commonly done in the wrong order, at a cost of several months.
You do not need an ITIN to obtain an EIN. The Form SS-4 instructions provide that where the responsible party is a foreign person who has not got and is not eligible for an SSN or ITIN, line 7b is completed with "foreign" or "N/A." The responsible party is defined as the person who ultimately owns or controls the entity or exercises ultimate effective control over it.
What you cannot use is the online application, which is built around a responsible party with a U.S. taxpayer identification number. International applicants have three channels:
- Telephone, at 267-941-1099, Monday through Friday, 6:00 a.m. to 11:00 p.m. Eastern time. The instructions note that the IRS no longer issues EINs by telephone for domestic taxpayers, so this route exists specifically for you. Typical issuance is about four business days.
- Fax, at 855-215-1627 from within the United States or 304-707-9471 from outside it, also around four business days.
- Mail, to Internal Revenue Service, Attn: EIN International Operation, Cincinnati, OH 45999, which runs closer to four weeks.
Only one EIN is issued per responsible party per day, by any channel.
The ITIN belongs later, and only conditionally. It exists so that an individual with no SSN can be identified on a U.S. tax return. You need one when you must actually file Form 1040-NR, which happens if the LLC's income turns out to be effectively connected. It is applied for on Form W-7, and the general rule is that a completed federal return accompanies the application, with defined exceptions. Processing runs about seven weeks, extending to nine or eleven weeks for applications made between January 15 and April 30 or from abroad. Documents can be authenticated through a Certifying Acceptance Agent, an IRS Taxpayer Assistance Center, or a participating VITA site, which avoids mailing your passport.
So the real sequence is: EIN now, ITIN when and if a personal return is required, usually filed together with that first return.
Weeks four to sixteen: banking, and what the bank is required to ask
Account opening is not an obstacle course invented to annoy you. Under 31 CFR §1010.230, a covered financial institution must identify each individual who directly or indirectly owns 25 percent or more of the equity interests of a legal entity customer, plus a single individual with significant responsibility to control, manage, or direct it. For a wholly owned foreign-member LLC, that is you twice over.
Assemble the package before you apply: the EIN confirmation letter, the filed formation document, the operating agreement showing ownership, a passport, proof of your residential address abroad, and a plain description of what the business does and where its customers are. Inconsistency between the operating agreement and the account application is the usual cause of a stalled file.
Payment processors run their own onboarding on top of this, and they are withholding agents. Absent valid documentation from you, a withholding agent may apply 30 percent under chapter 3, backup withholding, or the IRC §1446 rate. Complete the tax documentation section of every payer account when you open it, not months later.
The question underneath everything: is the income U.S. source at all?
Founders assume that a U.S. entity produces U.S. income. The Code does not work that way. Where the entity is formed is not a sourcing rule.
Compensation for labor or personal services is sourced to the place the services are performed, under IRC §861(a)(3) for services performed in the United States and IRC §862(a)(3) for services performed outside it. Gain on the sale of personal property is generally sourced to the residence of the seller under IRC §865(a), with separate rules for inventory. Whether you are engaged in a U.S. trade or business is governed by IRC §864(b), which includes performing personal services in the United States and contains safe harbors at IRC §864(b)(2) for trading in stocks, securities, and commodities. Whether income is effectively connected is tested under IRC §864(c), including the asset-use and business-activities tests of IRC §864(c)(2), and IRC §864(c)(3) treats other U.S. source income of a taxpayer already engaged in a U.S. trade or business as effectively connected.
Two separate outcomes follow. Effectively connected income is taxed on a net basis at graduated rates under IRC §871(b) and reported on Form 1040-NR. U.S. source fixed or determinable annual or periodical income that is not effectively connected is taxed at a flat 30 percent under IRC §871(a) with no deductions, generally collected by withholding under IRC §1441 and reported by the payer on Forms 1042 and 1042-S, which are due March 15.
Residence itself can also change through presence. The substantial presence test requires 31 days in the current year and 183 days across a three-year weighted period counting all current-year days, one-third of the prior year's, and one-sixth of the year before that. Extended U.S. visits are a tax fact, not just travel.
Write your conclusion down in a one-page file memorandum in year one, identifying where the work is performed, who performs it, and which provisions you are relying on. That document is what makes a position defensible later.
The reporting obligation that exists regardless of the answer
Here is the part that does not depend on any of the above. Treas. Reg. §301.7701-2(c)(2)(vi) treats a domestic entity that is otherwise disregarded, but wholly owned by a single foreign person, as a separate entity classified as a domestic corporation for purposes of IRC §6038A. It applies to taxable years beginning after December 31, 2016 and ending on or after December 13, 2017.
The filing is a pro forma Form 1120 with a Form 5472 attached. The Form 5472 instructions state that only the name and address of the entity and items B and E on the first page of the Form 1120 are completed. It goes by fax to 855-887-7737 or by mail to the IRS at 1973 Rulon White Blvd., M/S 6112, Attn: PIN Unit, Ogden, UT 84201, not through ordinary corporate e-file. Form 7004 extends the due date.
Reportable transactions are broader than commerce. Part V captures transactions within the meaning of Treas. Reg. §1.482-1(i)(7), and the instructions specify that these include amounts paid or received in connection with the formation, dissolution, acquisition, and disposition of the entity, including contributions to and distributions from it. Your initial capitalization is reportable. So is a fee you paid personally on the entity's behalf. So is money you moved out.
The penalty is $25,000 for each taxable year under IRC §6038A(d)(1), with an additional $25,000 for each 30-day period or fraction of one continuing more than 90 days after the IRS mails notice, under IRC §6038A(d)(2). And under IRC §6501(c)(8), where the required information is not furnished, the assessment period does not expire before three years after it is furnished. An unfiled year does not quietly age out.
State exposure runs on its own track
Your state of formation and your state of exposure are different questions. Income tax nexus generally follows people, property, and activity. Sales and use tax registration thresholds follow customers, because South Dakota v. Wayfair, Inc. (2018) removed physical presence as the constitutional requirement and states adopted economic thresholds of their own. Hiring anyone in a state, holding inventory in one, or crossing a receipts threshold there are all separate triggers from anything discussed above, and none of them is answered by the federal analysis.
The annual calendar
| Date | Item | Applies when |
|---|---|---|
| January 31 | Information returns to U.S. payees | You paid U.S. contractors or vendors requiring reporting |
| March 15 | Forms 1042 and 1042-S | The LLC paid U.S. source FDAP income to a foreign person |
| April 15 | Pro forma Form 1120 with Form 5472 | Always, for a calendar-year foreign-owned single-member LLC |
| April 15 | Form 1040-NR | You had wages subject to withholding or a U.S. office or place of business |
| June 1 | Delaware LLC annual tax, $300 | Delaware entities |
| June 15 | Form 1040-NR | Otherwise, where a return is required |
| First day of anniversary month | Wyoming annual report license tax | Wyoming entities |
| Extended date under Form 7004 | Pro forma Form 1120 with Form 5472 | Where the extension was filed by the original due date |
Year two, and where to start
Year two adds three things that year one did not have. There is now a prior year, which means a comparison the IRS can make and a pattern in your banking. There is a Form W-8BEN-E aging on file with every payer, generally valid from the date signed through the last day of the third succeeding calendar year, with changes in circumstances reportable within 30 days. And there is drift: a responsible party record that no longer matches reality, reportable on Form 8822-B within 60 days of the change, and state filings that lapse silently.
If you are at week zero, the order is: decide member count, form, obtain the EIN by phone or fax, open banking, complete payer documentation, write the sourcing memorandum, and calendar the April 15 filing. If you are already two years in and have never filed a Form 5472, that is the item to address first, ahead of everything else on this page, because it is the only one with a per-year penalty and a limitations period that has not started running. A structural review of what you have against what the business actually does is where the firm's diagnostic begins. Broader background sits on the international tax matters pillar. This article is general information about how the cited provisions operate, not advice on your circumstances.