Does a US LLC pay zero tax?

We hear this question in every language: “Do I owe US taxes on my Wyoming LLC?”, “Will forming a US LLC create a US tax bill for me?”, “An LLC with 0% tax in the US to use Stripe: what do I pay at home?”. Here is the precise answer, with the IRS pages it comes from. It is general information, not personalised tax advice.

Why a single-member LLC is “disregarded”

For federal income tax, the IRS treats an LLC with one member as disregarded as separate from its owner, unless it elects to be taxed as a corporation with Form 8832. The LLC does not pay income tax itself: its income is treated as its owner’s income.

When a non-resident owner generally owes no US federal income tax

A non-US person pays US income tax on income effectively connected with a US trade or business, at the graduated rates, and on some US-source passive income. Whether there is a US trade or business depends on the facts: where the work is done, whether people, an office or stock are in the United States, and how regular that activity is (Publication 519).

A founder who lives abroad and does all the work from there is generally not engaged in a US trade or business. In that case, the LLC’s business profits generally owe no US federal income tax.

Cases that change the answer

• Work done in the United States: services you perform while in the US, or people working for the LLC there.
• An office, a warehouse or stock in the United States, or an agent there who signs contracts for you.
• Some US-source passive income, such as dividends from US investments, is subject to withholding tax even without a US trade or business.
• An election to be taxed as a corporation (Form 8832): the LLC then pays US corporate income tax.
• Sales tax: selling goods or some digital products to US customers can create sales tax obligations in the states where those customers live.

US clients and platforms may also ask the owner for a Form W-8BEN, which certifies foreign status.

What the LLC files every year, even with no tax due

A single-member LLC wholly owned by a non-US person files Form 5472 attached to a pro forma Form 1120 every year, including years without sales. For a calendar-year company it is due April 15, sent by fax to 855-887-7737 or by mail, and the penalty is $25,000 per missing or incomplete form. No tax due does not mean no filing.

Your country of residence taxes you under its own rules

The US answer is only half of the picture. Your country of residence decides how it treats a foreign single-member LLC: it can look through the LLC and tax its profits as yours each year, or treat it as a separate company and tax what you take out. You may also have to declare the company and its foreign bank account. These rules depend on your country and your situation, so confirm them with a tax professional where you live.

A US LLC is not an offshore company either: it is registered and reported in the United States, as explained in Is a US LLC an offshore company?.

What we take care of

We form the LLC, request its EIN and file your first Form 5472 + pro forma 1120, all included in the $489 formation. From the second year, the annual plan at $300 files them every year with the registered agent and the Wyoming annual report. Details on our pricing page.