Everything You Need to Know About Foreign-Owned LLCs

In this article, we deep dive and discuss foreign-owned LLCs. Whether you're a business owner or simply curious about international business, you've come to the right place.

We'll explore what a foreign-owned LLC is, how foreign ownership of LLCs works, and whether a foreign company can own a US LLC. We'll also touch on the taxation aspects of foreign-owned LLCs and discuss whether a US LLC can own a foreign company.

TL;DR: Foreign‑Owned LLCs 

• Non‑US founders can form an LLC in any state; Delaware, Wyoming, Nevada, and New Mexico are investor‑friendly and low‑cost.
• Every LLC must designate a registered agent with a physical in‑state address to receive legal notices.
• File the Articles of  Organization and pay the fee; approval typically arrives within 1–14 days.
• After formation, request an EIN from the IRS via Form SS‑4 if no member has an SSN (phone/fax only).
• Single‑member, foreign‑owned LLCs must file Form 5472 + pro‑forma 1120 for related‑party transactions each year.
• March 2025 interim rule narrows BOI reporting: only foreign “reporting companies” must file within 30 days of formation.
• Pass‑through taxation applies federally; state franchise taxes and local levies still apply as usual.
• A US LLC can own foreign subsidiaries—and vice versa—provided each entity follows local laws and tax rules.

What is a Foreign-Owned LLC?

So, you've heard about LLCs, but have you ever wondered what a foreign-owned LLC is? Well, let's break it down for you in simple terms.

A foreign-owned LLC is a limited liability company that is owned by individuals or companies from outside the United States. In other words, it's an LLC that has foreign ownership.

Now, you might be wondering why someone would want to form a foreign-owned LLC.

For starters, it can provide certain legal protections and tax advantages. Additionally, it can allow foreign investors to do business in the United States without having to establish a separate corporation or partnership.

But here's the thing – forming a foreign-owned LLC is not as simple as it may seem. There are certain legal requirements and regulations that need to be followed. For example, you'll need to comply with both US federal laws and the laws of the state where your LLC is formed.

It's also important to note that foreign-owned LLCs are subject to different rules and regulations compared to domestic LLCs. This means you'll need to stay informed and ensure you're meeting all the necessary requirements to maintain your LLC's status.

Can a Foreign Company Own a US LLC?

Yes, a foreign company can own a US LLC. In fact, it is becoming increasingly common for foreign businesses to establish LLCs in the United States.

However, it is important to note that foreign-owned LLCs are subject to certain regulations and requirements. For example, they must register with the IRS and obtain an Employer Identification Number (EIN), even if they do not have any employees.

Additionally, they may be required to file certain tax forms and comply with other legal obligations.

Foreign companies should also be aware of any restrictions on foreign ownership in their chosen state of formation. Some states have limitations on the percentage of ownership that can be held by non-US citizens or non-US entities.

Overall, while there are some additional considerations for foreign-owned LLCs, it is certainly possible for a foreign company to own and operate an LLC in the United States.

How Does a Foreign Company Establish a US LLC?

Here are all the steps you need to take to successfully establish a US LLC as a foreign founder.

Step 1: Pick the Right State

Begin by choosing the jurisdiction that gives you the optimal mix of low ongoing costs, clear case law, and investor credibility. 

Delaware, Wyoming, Nevada, and New Mexico remain perennial favorites for foreign founders because of their business‑friendly statutes and low friction to operate across borders. If you plan to have a physical office or staff in a particular state, form the LLC to avoid paying for a second ‘foreign qualification’ later.

Step 2: Name Your LLC

Most secretaries of state prohibit duplicate or deceptively similar names, so run a free name check (and, if you like, a 120‑day reservation) with the state’s corporations division before you file. Delaware, for example, offers an online search and reservation for $75. Make sure the name ends with “LLC,” “L.L.C.,” or the local statutory equivalent.

Step 3: Appoint a Registered Agent with a US Street Address

Every state requires a domestic point of contact who can receive lawsuits and government notices during business hours; for non‑resident owners, this is almost always a commercial registered‑agent service located in the formation state. Without a compliant agent, your filing will be rejected and, later, your company can be administratively dissolved.

Step 4: File the Articles of Organization (a.k.a. Certificate of Formation)

Prepare the state‑specific formation form listing your LLC’s name, registered agent, business purpose (often “any lawful purpose”), and management structure, then submit it with the statutory fee (Delaware: $90; Wyoming: $100) to the Secretary of State or equivalent office. Approval typically arrives in 24 hours to two weeks, depending on whether you pay for expedited handling.

Step 5: Secure an EIN When No Member has an SSN

The IRS issues Employer Identification Numbers to international applicants by phone at +1 267‑941‑1099 or by fax/mail using Form SS‑4; online filing is not available when the responsible party lacks a US tax ID. Wait to request the EIN until the LLC is officially formed; the agency will ask for your new file date and state document number.

Step 6: Draft an Operating Agreement 

This internal contract spells out ownership percentages, capital contributions, voting rights, and profit distribution. Most US banks and investors expect to see a signed operating agreement before they will open accounts or fund the vehicle, and courts look to it when settling member disputes.

Step 7: Fulfill Beneficial‑Ownership Reporting (CTA) Requirements

As of the Treasury’s March 26, 2025, interim rule, only foreign entities that register to do business in a US state must file a Beneficial Ownership Information (BOI) report with FinCEN within 30 days of registration; purely domestic companies are now exempt. File electronically through FinCEN’s BOI E‑Filing System to avoid civil penalties.

Step 8: Register for Taxes and Note the Form 5472 Obligation 

Single‑member, foreign‑owned LLCs treated as “disregarded entities” must attach Form 5472 to a pro‑forma Form 1120 each year if they have transactions with a related foreign party, even if no US tax is ultimately due. 

Step 9: Open a US Business Bank Account

Most banks will ask for your approved Articles, EIN confirmation letter, and operating agreement. If you can’t travel, fintech platforms such as Wise or Mercury facilitate remote onboarding once your paperwork is in order, but they still require US AML/KYC screening and may limit services until you visit in person.

Taxation of Foreign-Owned LLCs

Now that we've covered the basics of foreign-owned LLCs, let's dive into the important topic of taxation. Understanding how taxes work for foreign-owned LLCs is crucial for anyone considering this business structure.

Foreign-owned LLCs are subject to certain tax obligations in the United States. These obligations include federal, state, and local taxes. It's important to consult with a tax professional or an attorney who specializes in international tax law to ensure compliance with all tax requirements.

Federal, State, and Local Taxes

Foreign-owned LLCs are generally treated as pass-through entities for federal tax purposes. This means that the LLC itself does not pay federal income taxes.

Instead, the profits and losses of the LLC "pass through" to the individual members, who report them on their personal tax returns. If you live and work in your home country, you may not owe US taxes at all. 

Also read: Guide to US LLC Taxes for International Founders

With that in mind, federal, state, and local taxes generally work the same for LLC members as they would for anyone earning income. Creating an LLC doesn’t change your tax obligations — the main exception is franchise tax, which is a tax paid to states for the privilege of maintaining a licensed business.

Tax Treaties

Some countries have tax treaties with the United States that may affect the taxation of foreign-owned LLCs. These treaties can provide certain benefits, such as reduced withholding rates on certain types of income. It's important to consult with a tax professional to determine if a tax treaty applies to your situation.

Compliance and Reporting

Foreign-owned LLCs must comply with all reporting requirements in the United States. This includes filing annual reports and beneficial ownership information. Failure to comply with these requirements can result in penalties and legal consequences

Seek Professional Advice

Given the complexity of international taxation, it's highly recommended to seek professional advice from a tax specialist or an attorney with expertise in this area. They can help you navigate the intricacies of tax laws and ensure that you are in full compliance with all tax obligations.

Keep Records

It's essential to keep accurate and organized records of all financial transactions related to your foreign-owned LLC. This includes invoices, receipts, bank statements, and any other relevant documentation. These records will be invaluable when it comes to preparing your tax returns and responding to any tax inquiries.

Stay Updated

Tax laws and regulations are subject to change, so it's crucial to stay updated on any developments that may impact the taxation of foreign-owned LLCs. Subscribe to reputable tax publications or consult with a tax professional to ensure that you are aware of any changes that may affect your business.

Can a US LLC Own a Foreign Company?

Short answer: Absolutely! 

Long answer: There are no legal restrictions preventing a US LLC from owning a foreign company. This means that as a US LLC owner, you have the opportunity to expand your business internationally and tap into new markets. While it's certainly possible for a US LLC to own a foreign company, there are a few things you should consider before diving into this venture:

Legal and Regulatory Requirements

Each country has its own set of laws and regulations regarding foreign ownership. It's crucial to familiarize yourself with these requirements to ensure compliance.

Tax Implications

Owning a foreign company may have tax implications both in the United States and the foreign country. Consulting with a tax professional is highly recommended to navigate these complexities.

Wrapping Up

Creating a business in a foreign country comes with its own set of challenges, such as cultural differences, language barriers, and logistical considerations. It's essential to be prepared for these challenges and have a solid plan in place.

By taking these considerations into account and seeking expert advice, you can make informed decisions and set your US LLC on the path to successful international expansion. We at Firstbase help both domestic and foreign LLCs stay compliant through Firstbase Agent.  

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