Three layers of obligation sit on an American company — federal, state and, for anything that sells goods, sales tax. Foreign ownership adds a fourth. We run all of them from one set of books.
The four layers
Corporate returns for C-Corporations, partnership returns where there are multiple members, and branch returns for foreign corporations with U.S. income.
Every state in which the entity has nexus, not only the state of formation. We run a nexus review before we file, not after a notice arrives.
Economic nexus rules mean an out-of-state seller can trigger a registration obligation on volume alone, with no physical presence at all.
The layer most providers miss. These are information returns, and the penalties attach to the failure to file rather than to any tax owed.
The one to know about
A single-member LLC owned by a non-U.S. person is disregarded for income tax purposes. Many owners take that to mean there is nothing to file. There is.
Since the 2017 regulations, such an entity is treated as a domestic corporation for reporting purposes and must file a pro-forma Form 1120 with a Form 5472 attached, disclosing reportable transactions with its foreign owner and related parties — including contributions, distributions and intercompany charges. It must also keep records supporting those transactions.
The penalty for failing to file, or filing incompletely, starts at USD 25,000 per year, per entity, and it applies whether or not the LLC made any money. We see it most often on dormant holding LLCs that everyone assumed were out of scope.
The compliance calendar
For a calendar-year entity. Fiscal-year entities shift accordingly, and state dates vary. This is an orientation, not a filing instruction — we confirm every date against your facts.
| When | What | Applies to |
|---|---|---|
| 31 January | Forms W-2 and 1099-NEC issued to recipients and filed | Entities with U.S. employees or contractors |
| 1 March | Delaware corporation annual report and franchise tax | Delaware corporations |
| 15 March | Forms 1065 and K-1 (partnerships); Forms 1042 and 1042-S (withholding) | Multi-member LLCs, partnerships, withholding agents |
| 15 April | Form 1120 (calendar-year corporations); pro-forma 1120 with Form 5472; FinCEN Form 114 (FBAR), automatically extended | Corporations, foreign-owned single-member LLCs |
| 15 April | Form 1120-F where the foreign corporation maintains a U.S. office; otherwise 15 June | Foreign corporations with U.S. income |
| 1 June | Delaware LLC and LP annual tax | Delaware LLCs and LPs |
| 15 September | Extended partnership returns | Partnerships that extended |
| 15 October | Extended corporate returns and Form 5472 filings; extended FBAR | Corporations and LLCs that extended |
| Monthly / quarterly | Sales and use tax returns; payroll deposits and returns; estimated tax instalments | By state, by registration and by volume |
Accounting
Set up so that intercompany balances, related-party charges and owner contributions are visible from the start — because those are exactly the lines Form 5472, transfer pricing and an eventual buyer will ask about.
Bank, card and merchant-account reconciliation, accounts payable and receivable, fixed assets and accruals, in Xero or QuickBooks with access shared to your team.
A monthly or quarterly pack — profit and loss, balance sheet, cash and a short commentary — delivered in English or Chinese, in the format your group reporting needs.
Year-end schedules, reporting packs for the parent company and direct liaison with your auditors and with whoever keeps the books in the other jurisdictions.
Payroll registration, filings and deposits where you have U.S. employees; Form W-9 and 1099 handling where you use contractors.
Questions
Almost certainly yes. A foreign-owned single-member LLC files a pro-forma Form 1120 with Form 5472 regardless of income, and most states require an annual report and minimum tax from an entity that exists at all. ‘Dormant’ is an operational description, not a filing exemption.
California, among others. Inventory, staff or an office in a state generally creates nexus there, which obliges you to register as a foreign entity in that state and file and pay its taxes on the income apportioned to it. The state of formation does not override this.
Economic nexus. Since South Dakota v. Wayfair, states may require registration and collection based on sales volume into the state alone. Thresholds differ by state, and marketplace facilitator rules may shift the obligation to the platform for marketplace sales but not for your own website. Both need reviewing together.
Possibly, under an applicable income tax treaty, if the recipient qualifies under the limitation-on-benefits article and files a valid Form W-8BEN-E. Whether a Hong Kong, BVI or Cayman parent qualifies is the crux — several common holding jurisdictions have no U.S. treaty at all, which is a structuring point best resolved before profits arise.
Quantify first, then remediate. We reconstruct the books, prepare the outstanding federal and state returns and information returns, and file them with reasonable-cause statements where the facts support one. Voluntary correction is treated very differently from correction after an IRS or state notice.
No, and deliberately. We prepare accounts and returns and liaise with your auditor; independence rules mean the same firm should not do both. Where an audit is required we can introduce U.S. firms and manage the process on your side.
Send us last year’s returns and a list of your entities. We will tell you what is missing, what is exposed and what it costs to put right.