Julian Drago
October 11, 2023
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Limited liability companies (LLCs) are a popular business structure for many entrepreneurs because they offer the limited liability protection of a corporation with the pass-through taxation of a partnership. However, LLCs are also subject to a number of tax requirements, including the need to file Form 1120 and Form 5472 with the Internal Revenue Service (IRS).
This article will provide an overview of Form 1120 and Form 5472, and explain when LLCs are required to file these forms. It will also provide step-by-step instructions on how to fill out Form 1120 and Form 5472.
Form 5472 is an information return that is required to be filed by certain U.S. corporations and foreign businesses that have certain transactions with related parties. Related parties are individuals or entities that are related to the corporation by ownership, control, or family relationship.
If at least 25% of a business is owned by a foreign person or entity, Form 5472 must be filed to report all transactions that occurred during the company's tax year.
Form 1120 is the U.S. income tax return for C corporations. LLCs that are taxed as C corporations are required to file Form 1120 to report their income, expenses, and taxes.
Foreign-owned single-member LLCs can be owned either directly or indirectly. What's the difference?
A direct owner is a foreign person or foreign company.
Indirect ownership is when a separate disregarded entity LLC owns the single-member LLC.
Both types of ownership are subject to reporting requirements, but the difference can determine how and what is reported.
To complete the necessary reporting requirements, you must follow these three simple steps:
In certain cases, you may also need to file a Form 1040NR (Nonresident Alien Income Tax Return) and obtain an ITIN (Individual Taxpayer Identification Number). This depends on factors such as the type of business you have, the country you live in, and whether you have US source income.
Additionally, if you own multiple foreign-owned disregarded LLCs, you must submit separate information for each one. The IRS considers each of these LLCs to be a separate entity.
Once you get an EIN, you must file: Form 5472 and Form 1120.
Form 5472 has eight parts:
To complete Form 1120, only fill out the following:
Following completion, send both Form 5472 and Form 1120 via mail or fax.
LLCs operating in the calendar year (January-December) must file Form 5472 and Form 1120 by March 15th (multi-member LLCs) or April 15th (single-member LLCs) each year.
This can be a lot of work, so Openbiz can help. We will fill out and file all the complicated forms for you, and we can also help you get an EIN and a US address.
Form 5472 is an information return that is required to be filed by certain U.S. corporations and foreign businesses that have certain transactions with related parties. Related parties are individuals or entities that are related to the corporation by ownership, control, or family relationship.
If at least 25% of a business is owned by a foreign person or entity, Form 5472 must be filed to report all transactions that occurred during the company's tax year.
Form 1120 is the U.S. income tax return for C corporations. LLCs that are taxed as C corporations are required to file Form 1120 to report their income, expenses, and taxes.
Foreign-owned single-member LLCs can be owned either directly or indirectly. What's the difference?
A direct owner is a foreign person or foreign company.
Indirect ownership is when a separate disregarded entity LLC owns the single-member LLC.
Both types of ownership are subject to reporting requirements, but the difference can determine how and what is reported.
To complete the necessary reporting requirements, you must follow these three simple steps:
In certain cases, you may also need to file a Form 1040NR (Nonresident Alien Income Tax Return) and obtain an ITIN (Individual Taxpayer Identification Number). This depends on factors such as the type of business you have, the country you live in, and whether you have US source income.
Additionally, if you own multiple foreign-owned disregarded LLCs, you must submit separate information for each one. The IRS considers each of these LLCs to be a separate entity.
Once you get an EIN, you must file: Form 5472 and Form 1120.
Form 5472 has eight parts:
To complete Form 1120, only fill out the following:
Following completion, send both Form 5472 and Form 1120 via mail or fax.
LLCs operating in the calendar year (January-December) must file Form 5472 and Form 1120 by March 15th (multi-member LLCs) or April 15th (single-member LLCs) each year.
This can be a lot of work, so Openbiz can help. We will fill out and file all the complicated forms for you, and we can also help you get an EIN and a US address.
