How Are Taxes Paid in the United States If You Have an LLC?

Forming a company in the United States is an excellent strategy to expand your business, sell to international customers, and access platforms like Amazon, Shopify, Stripe, and more. But once your LLC is registered, a fundamental question arises: How and when are taxes paid in the U.S.?

In this article, we explain how the U.S. tax system works, which types of taxes you must consider as the owner of an LLC, and which best practices will help you keep your company compliant.

How Does the U.S. Tax System Work?

The United States has a decentralized tax system, meaning there are three main levels:

1. Federal Taxes
   Collected by the IRS (Internal Revenue Service), they apply to all businesses regardless of the state in which they are registered.
2. State Taxes
   Each state has its own tax rules. Some—like Wyoming or Florida—do not levy a state income tax, while others—such as California or New York—do.
3. Local Taxes (counties or cities)
   In certain places, additional taxes may apply, especially if the company has a physical presence there.

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What Is an LLC and How Is It Taxed?

A LLC (Limited Liability Company) is a flexible business structure, widely used by entrepreneurs, freelancers, digital businesses, and growing companies. For tax purposes, an LLC can have different treatments depending on its structure:

• Single-member LLC
  Considered a “disregarded entity,” so taxes are reported directly under the owner’s name, as if it were a sole proprietorship.
• Multi-member LLC
  Treated as a partnership for tax purposes, and each partner declares their proportional share of income.
• LLC electing to be taxed as a corporation (optional)
  An LLC can opt to be taxed as a C-Corp or an S-Corp if it meets certain requirements. This can offer tax advantages in some cases but also involves greater accounting complexity.

Which Taxes Must You Consider as an LLC Owner?

1. Federal Income Tax

If your LLC has income, you must report it to the IRS. If you are a foreigner (not a U.S. tax resident) and have no “nexus” (significant economic connection), employees, or physical presence in the U.S., you may not owe income tax—but you still must file returns to demonstrate that. If you generate income considered “effectively connected” to U.S. activities, you could owe tax on those earnings.
In summary: Even if you owe nothing, it is mandatory to declare your income to keep your company in compliance.

2. State Income Tax

Depends on the state where your LLC is registered.

• Wyoming, Texas, Florida: No state income tax.
• California, New York, Illinois: Yes, they have state income tax, sometimes at high rates.
  Choosing the correct state when forming your LLC is key to optimizing your tax burden.

3. Sales Tax

If you sell physical products (and in some cases digital ones) in the U.S., you will likely need to collect and pay sales tax. Rates vary by state and product type. If you have “nexus” in a state—e.g., exceeding a sales threshold or having frequent customers there—you are obligated to register, collect, and remit. Many Latin American entrepreneurs are unaware of this obligation and accumulate liabilities without realizing it. At Openbiz, we help you evaluate it case by case.

4. Franchise Tax

Some states—such as Delaware or Texas—charge an annual franchise tax, regardless of whether your company generates income. In Delaware, for example, you pay a flat annual fee. In other states, it may depend on your company’s revenues.

When Are Taxes Paid in the U.S.?

Key dates for an LLC:

• April 15: Deadline to report prior-year income if the LLC is treated as a disregarded entity or partnership.
• March 15: Deadline if your LLC elects to be taxed as a corporation (C-Corp or S-Corp).
• Quarterly payments: If you owe taxes, the IRS may require estimated payments in April, June, September, and January.
• State filings: Each state has its own calendar, so it’s important to track your specific deadlines.

Which Tax Forms Must an LLC File?

• Form 5472 + Form 1120: For single-member LLCs with a foreign owner (reporting transactions with related parties).
• Form 1065: For multi-member LLCs.
• Form 1040-NR: If the foreign owner generated taxable U.S. income.
• Form W-8BEN / W-8BEN-E: To certify that you are not a U.S. tax resident and avoid unnecessary withholding.

Important: Even if you owe no taxes, you are often still required to file information returns to keep your company active and avoid penalties.

Best Tax Practices for Your LLC

• Separate your personal and business finances. Use a dedicated bank account for the LLC.
• Hire specialized tax advice. Especially if you are a foreign owner without U.S. residency.
• Maintain organized accounting. Use digital tools and keep invoices, contracts, and records.
• Don’t ignore state taxes or sales tax. Even without a physical office in the U.S., you may have obligations.
• File your returns on time. You’ll avoid fines, interest, or account freezes.

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Need Help Managing Your LLC Taxes?

At Openbiz, we assist entrepreneurs and companies throughout Latin America to:

• Register their LLC in the U.S.
• Choose the best state for their business model
• Comply with all federal and state tax and accounting obligations
• File forms such as 5472, 1120, and W-8BEN
• Determine if they must collect sales tax—and how to do it

The entire process is 100 % online, in Spanish, with personalized advice.

Paying taxes in the U.S. doesn’t have to be a headache if you understand how the system works and have the right support. Every business is unique, so it’s essential to have a clear tax strategy from the start.

📞 Have questions? Schedule a free consultation with our team and we’ll help you resolve them.

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