LLC Tax Guide for Non-Resident U.S. Business Owners

The Basics of Taxation for Non-Resident LLC Owners

Tax Guide for Non-Resident U.S. Business Owner LLCs - This whitepaper is intended to give a high-level basic overview of tax filing requirements for foreign owned, single member and multi-member LLCs (Limited Liability Companies).

Limited Liability Companies

A limited liability company (LLC) is a popular choice of entity for conducting business or holding rental real estate in the United States. It is a business structure you can form in any one of the fifty states.

A U.S. registered limited liability company can be one of the best legal structures for non-US entrepreneurs to run their business. They allow access to all the benefits of a first world jurisdiction (such as banking, payment processing, and good reputation) while maintaining a low tax rate and very manageable levels of bureaucracy and bookkeeping. They also offer an excellent first step structure to branch your business into the U.S. market.

Single-Member LLCs

If you have a single-member LLC, the LLC is treated as a disregarded entity for tax purposes unless a corporate election is made. That means if you are a nonresident alien individual, you report the business or rental activity of the LLC on Form 1040NR (U.S. Nonresident Alien Income Tax Return). There is only a single level of taxation.

Multi-Member LLCs

If your LLC is owned by you and one or more partners, the default classification for tax purposes is a partnership. A partnership under U.S. tax law is treated as an entity separate from its partners, but it is a pass-through entity and it generally does not pay tax at the partnership level.

You must file Form 1065 (U.S. Return of Partnership Income) to report the income and expenses of the partnership, then report your share of partnership income and expenses on your Form 1040NR.

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Download our tax guide for non-resident owned LLCs - A step by step overview taxation requirements for limited liability companies