When should I fill out the tax forms in the USA if my LLC is incorporated in January 2023?

[catslover]

Based on the information I have collected, once my LLC is created in the USA I must submit the tax forms.

As a non-US resident I must fill out and submit:
-Form 5472 + 1120
-FBAR
-Form 1040-NR

But I'm very confused about it.

As I researched, these forms should be submitted each year, before April 1st. But if I incorporate my LLC in January 2023, do I need to submit these forms before April 2023, or April 2024??

 

[miketrnd]

Are you creating a separate entity or is this a single member disregarded entity (sole proprietorship) ?

 

[Eldorado]

In your case till April 1st 2024 of course. It works like that in most of the civilized countries

 

[miketrnd]

If you make more than 1000$ and your LLC is a disregarded entity , you will have to do the estimated taxes quarterly
https://www.irs.gov/pub/irs-prior/f1040esn--2022.pdf

As a non-US resident I must fill out and submit:
-Form 5472 + 1120
-FBAR
-Form 1040-NR

those are only due by April 2024.

 

[OffshorePhantom]

Based on the information I have collected, once my LLC is created in the USA I must submit the tax forms.

As a non-US resident I must fill out and submit:
-Form 5472 + 1120
-FBAR
-Form 1040-NR

But I'm very confused about it.

As I researched, these forms should be submitted each year, before April 1st. But if I incorporate my LLC in January 2023, do I need to submit these forms before April 2023, or April 2024??

You need to file FBAR only if your LLC has a foreign bank account, typically you will open a bank account in USA for your LLC so no need to file FBAR.

Form 1040-NR is for individual aliens so not for the LLC.

If you are, as a person, not resident and do not own any taxes personally to USA (i.e. you do not receive any compensation which is subject to tax in USA, for example FDAP, and there is not ECI i.e. if you provide services abroad without any US-based agent or activities you do not have ECI) no need to file this form, you will need to file only form 5472 + 1120 for your LLC.

But better consulting a CPA to be sure and clarify your position based on the nature of your income.

 

[catslover]

Thank you guys for all your replies.

Are you creating a separate entity or is this a single member disregarded entity (sole proprietorship) ?

I am creating a single member LLC being non-US resident. I live in a Southamerican country. My plans is to sell services in Asia where I have some network.

In your case till April 1st 2024 of course. It works like that in most of the civilized countries

Thank you for your feedback. Sadly I don't live in a "civilized" country, well, it is pretty civilized actually, but it isn't business friendly. Here taxes reports are month by month starting from the month you open your company. Every thing here is so different than USA, and that's why I am so confused with US system, even when it is so far more rational.

If you make more than 1000$ and your LLC is a disregarded entity , you will have to do the estimated taxes quarterly

Thank you for your reply, I will read carefully the info in the link. By estimate taxes quarterly, you mean to send reports each three months?

You need to file FBAR only if your LLC has a foreign bank account, typically you will open a bank account in USA for your LLC so no need to file FBAR.

Form 1040-NR is for individual aliens so not for the LLC.

If you are, as a person, not resident and do not own any taxes personally to USA (i.e. you do not receive any compensation which is subject to tax in USA, for example FDAP, and there is not ECI i.e. if you provide services abroad without any US-based agent or activities you do not have ECI) no need to file this form, you will need to file only form 5472 + 1120 for your LLC.

But better consulting a CPA to be sure and clarify your position based on the nature of your income.

Thank you for your feedback. Yes, I am also confused about FBAR thing. I already have Payoneer account, and I think I can use it. Someone told me about not using payoneer because don't accepts Strip payments, but at beginning I don't care because at least for the first year I will only sell services B2B. But that means that I will get my payments in Asian banks, so even when I have an USA account, I think I will need to fill the FBAR if a get my payments outside USA (??).

 

[OffshorePhantom]

Thank you guys for all your replies.


I am creating a single member LLC being non-US resident. I live in a Southamerican country. My plans is to sell services in Asia where I have some network.


Thank you for your feedback. Sadly I don't live in a "civilized" country, well, it is pretty civilized actually, but it isn't business friendly. Here taxes reports are month by month starting from the month you open your company. Every thing here is so different than USA, and that's why I am so confused with US system, even when it is so far more rational.


Thank you for your reply, I will read carefully the info in the link. By estimate taxes quarterly, you mean to send reports each three months?



Thank you for your feedback. Yes, I am also confused about FBAR thing. I already have Payoneer account, and I think I can use it. Someone told me about not using payoneer because don't accepts Strip payments, but at beginning I don't care because at least for the first year I will only sell services B2B. But that means that I will get my payments in Asian banks, so even when I have an USA account, I think I will need to fill the FBAR if a get my payments outside USA (??).

My suggestion is to open a Wise or Mercury or Brex account for your US LLC and stick with it, then when you want to distribute profit you can distribute them to your local bank account.
You can get payments from wherever you want in the world, even Zimbabwe, the important thing is that your LLC account where you receive payments is located in USA; in that case no need to file FBAR.

 

[miketrnd]

I am creating a single member LLC being non-US resident. I live in a Southamerican country. My plans is to sell services in Asia where I have some network.

Ah ok well if you don't sell any products to US residents and it's a single member disregarded entity then you don't owe any taxes to the IRS (you still have to file form 1020 and 5472 by April 2024 for the 2023 year.) . You just pay taxes in your country.

 

[OffshorePhantom]

Ah ok well if you don't sell any products to US residents and it's a single member disregarded entity then you don't owe any taxes to the IRS (you still have to file form 1020 and 5472 by April 2024 for the 2023 year.) . You just pay taxes in your country.

He can even sell products to US residents, this is not a problem. The important thing is that he doesn’t not have any US activities, facilities or dependent agent in USA and the services he provides are not connected with a physical business in USA.

If he provides personal services or labour outiside USA and has 100% USA clients he does not owe any taxes to USA.

 

[Marzio]

If he provides personal services or labour outiside USA and has 100% USA clients he does not owe any taxes to USA.

Even sales taxes?

 

[myhand]

If he provides personal services or labour outiside USA and has 100% USA clients he does not owe any taxes to USA.

And some people say the USA has no fair tax regulations, I find it more than fair!

 

[RealDude]

He can even sell products to US residents, this is not a problem. The important thing is that he doesn’t not have any US activities, facilities or dependent agent in USA and the services he provides are not connected with a physical business in USA.

If he provides personal services or labour outiside USA and has 100% USA clients he does not owe any taxes to USA.

What about servers that run in the USA? E.g. with Shopify or if you use cloud providers like AWS or Cloudflare CDN?

 

[OffshorePhantom]

Even sales taxes?

It depends if you have a sales tax nexus or not (What is Sales Tax Nexus - Learn all about Nexus), like I said if you do not have an office, dependant agents or storing facilities in a state it typically doesn't not trigger any sales tax nexus.

There was a recent article though that shows that now only for sales taxes you can have also an economic nexus to pay taxes (Sales Tax by State: Economic Nexus Laws - TaxJar) that is why I Suggest speaking with a CPA to check if this is the case.

And some people say the USA has no fair tax regulations, I find it more than fair!

The system is better than in most European countries, but double check everything based on the nature of your business since IRS is very aggressive and now has lot of more resources than in the past to catch unpaid taxes.

If the nature of your business is providing personal services or labour outside the USA (from LATAM for example) and in USA you do not have any physical presence, office etc and sell only your personal services there, you do not own any taxes to USA based on Internal Revenue Code, section 862 (A) (3) (26 U.S.C. § 862 - U.S. Code Title 26. Internal Revenue Code § 862 | FindLaw)

What about servers that run in the USA? E.g. with Shopify or if you use cloud providers like AWS?

Those are independent providers and not your dependant agent so it is not considered a physical presence in USA.

 

[miketrnd]

It's been a few years since I delt with US LLC's but I remember the service provider who setup the LLC telling me that as long as I only trade stocks the LLC won't be liable for income tax.

Took me a while to find it on the IRS website :

If you are a nonresident alien engaged in a trade or business in the United States, you must pay U.S. tax on the amount of your effectively connected income, after allowable deductions, at the same rates that apply to U.S. citizens and residents.

https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens

Note: If your only U.S. business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U.S. resident broker or other agent, you are NOT engaged in a trade or business in the United States.

https://www.irs.gov/individuals/international-taxpayers/effectively-connected-income-eci

 

[OffshorePhantom]

It's been a few years since I delt with US LLC's but I remember the service provider who setup the LLC telling me that as long as I only trade stocks the LLC won't be liable for income tax.

Generally yes, but also take a look that your income is not FDAP (Fixed, Determinable, Annual, Periodical (FDAP) Income | Internal Revenue Service) which may be subject to WTH tax.

 

[miketrnd]

Right but wouldn't selling services/products to US residents constitute effectively connected income?

 

[OffshorePhantom]

Right but wouldn't selling services/products to US residents constitute effectively connected income?

Not necessary, please read my previous posts.
It depends if you have a permanent establishment or a fixed place or dependent agent in USA.

 

[Deepbarrels]

If someone is a resident of a LATAM country that do not tax foreign source income, would that make the LLC money distribution to the partners tax free?

 

[OffshorePhantom]

It depends on how the LATAM country sees the company. If the company is managed from a country in LATAM that country can see it as a resident company and thus tax it. It really depends on the country you are in and how things are enforced there.

 

[Deepbarrels]

It depends on how the LATAM country sees the company. If the company is managed from a country in LATAM that country can see it as a resident company and thus tax it. It really depends on the country you are in and how things are enforced there.

Thanks, I asked accountants in 2 countries in which Foreign income isn't taxed and they didn't even know what a LLC was, but said it would be perceived as a cash distribution..