US. LLC, why if I made few sales in within USA?

[catslover]

I haven't created my LLC yet, I'm still in the process, but I have a question that you can help me with.

The general advice on the forum for non-US residents incorporating their LLC is not to sell within the US to avoid paying taxes.
My question is the following: if I have a single sale in the USA, do I have to pay taxes for that sale, or does this completely change the status of my LLC?

 

[fshore]

A single member LLC is disregarded for taxes. It's the same situation as if you, or any other foreigner/foreign company make a sale within the US. This is generally not taxed in the US.

 

[JackAlabama]

I haven't created my LLC yet, I'm still in the process, but I have a question that you can help me with.

The general advice on the forum for non-US residents incorporating their LLC is not to sell within the US to avoid paying taxes.
My question is the following: if I have a single sale in the USA, do I have to pay taxes for that sale, or does this completely change the status of my LLC?

Nah, you can do some sales in US. Just be careful where you store your goods.
Even better if you sell your own service or digital product.

 

[Eldorado]

I haven't created my LLC yet, I'm still in the process, but I have a question that you can help me with.

The general advice on the forum for non-US residents incorporating their LLC is not to sell within the US to avoid paying taxes.
My question is the following: if I have a single sale in the USA, do I have to pay taxes for that sale, or does this completely change the status of my LLC?

Most likely it's going to be counted as "reportable transaction" and then you need to fill tax return to report his sale and pay tax. Tip from @JackAlabama is also worthy

 

[OffshorePhantom]

Most likely it's going to be counted as "reportable transaction" and then you need to fill tax return to report his sale and pay tax. Tip from @JackAlabama is also worthy

Having sales in US is not a "reportable transaction", a reportable transaction is by definition a transaction between the members of the LLC (or related parties) and the LLC (or vice-versa). If you make a sale to a client which is not your related party but an independent agent this is not a reportable transaction.

Clearly sooner or later you will transfer funds from your LLC to yourself or some related parties, i.e. another company you own (in order to distribute profits) so then you will have to file form 5472 (with the reportable transactions) and the header of form 1120 (in this case only a few fields since you do not have to file a complete tax return since the LLC is non-resident for tax purposes).

 

[JackAlabama]

Having sales in US is not a "reportable transaction", a reportable transaction is by definition a transaction between the members of the LLC (or related parties) and the LLC (or vice-versa). If you make a sale to a client which is not your related party but an independent agent this is not a reportable transaction.

Clearly sooner or later you will transfer funds from your LLC to yourself or some related parties, i.e. another company you own (in order to distribute profits) so then you will have to file form 5472 (with the reportable transactions) and the header of form 1120 (in this case only a few fields since you do not have to file a complete tax return since the LLC is non-resident for tax purposes).

Well stated. That is my understanding as well.

 

[Marzio]

If you keep all the profits in the LLC will you still have to file form 5472?

 

[OffshorePhantom]

If you keep all the profits in the LLC will you still have to file form 5472?

No as for my understanding.
The creation and dissolution of the LLC is a reportable transaction though so you have to report it in the form, but that is only a small amount (around $200). You have to report only the money you transfer from the LLC to yourself or a related party.

So let's say you have $3M in your LLC but you distribute yourself only $10k you have to report only the $10k you transfer to yourself since that is the only reportable transaction that needs to be reported.

 

[Marzio]

I get that but i'm not sure if you still have to file form 5472 if there are no reportable transaction.

Basically a form with nil reportable transactions.

 

[OffshorePhantom]

According to IRS website if there are no reportable transactions there is no need to file the form.

Source: Instructions for Form 5472 (12/2021) | Internal Revenue Service

 

[JohnLocke]

So let's say you have $3M in your LLC but you distribute yourself only $10k you have to report only the $10k you transfer to yourself since that is the only reportable transaction that needs to be reported.

What happens with the rest, don't you need to report it anywhere ?

 

[OffshorePhantom]

What happens with the rest, don't you need to report it anywhere ?

No, according to the current laws, at least on the US side.

On the other side you have to report that income as personal income in your home country or as company income if the sole member of your LLC is a company instead of an individual.

 

[catslover]

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According to IRS website if there are no reportable transactions there is no need to file the form.

Source: Instructions for Form 5472 (12/2021) | Internal Revenue Service

I am confused about this form, based on what I research in internet, after 2017 IRS ask for non-US resident LLCs to file this form.

In this form you report the incoming you have outside USA, they can't tax this incoming actually, but you need to report it anyway.

Based in what you share here, you don't have to file this form if you have no sales or incoming, but in most cases you will (i think, because the propose of having the company is to make some profit).

In the other hand, people is worry about this form, because maybe IRS will share this info with your residence country, what is a little creepy for some people who want to keep everything "invisible".