Many international entrepreneurs set up a US LLC for global credibility and smoother payment processing.
But here’s the catch: even if your business has no office, no employees, and no US-source income, you still have annual IRS reporting duties.
If your LLC is 100% foreign-owned and single-member, the IRS treats it as a foreign-owned disregarded entity (USDE).
That means you must file:
Pro Forma Form 1120 (acts as a cover return)
Form 5472 (discloses transactions between the LLC and its foreign owner)
Why this matters:
Filing is mandatory, regardless of profit.
The IRS penalty for missing the deadline is $25,000.
Deadline: April 15 (extensions available via Form 7004).
Must be submitted by fax or mail (no e-filing).
Example:
A Bangladeshi freelancer registers a web design LLC in New Mexico. All payments flow through Stripe/PayPal to his Bangladeshi bank account.
Even without a US office, he must still file 1120 & 5472 to report contributions (setup fees, expenses) and distributions (transfers to himself).
Key tip:
Write “Foreign-Owned USDE” on the top of Form 1120 and make sure to use the correct IRS country codes.
Skipping this compliance step can be costly.
Form 1120 itself is not fully completed → It’s just a “cover page” (pro forma return) when filed with Form 5472.
Only basic details (name, EIN, address, incorporation date, etc.) are filled, not full corporate tax details.
Owner signature → The form should be signed by the authorized person (usually the single member or representative).
Writing “Owner” is acceptable, but better to use “Member” or “Managing Member.”
As someone experienced in US tax compliance for foreign-owned LLCs, I help business owners avoid penalties and stay worry-free when dealing with the IRS.
If you own a US LLC but aren’t sure how to handle Form 1120 & 5472, feel free to reach out.