Question 1

What is Sole Proprietor Person?

Accepted Answer

Sole Proprietor is an unincorporated business that has just one owner who pays personal income tax on profits earned from the business. Many sole proprietors do business under their own names because creating a separate business or trade name isn’t necessary.

Question 2

What is a Foreign Sole Proprietor Person?

Accepted Answer

When a Sole Proprietor Person is  a Non-U.S.-Resident, it is defined as  Foreign Sole Proprietor Person and special tax treatment and tax filing requirements apply.

Question 3

How is a Foreign Sole Proprietor Person taxed?

Accepted Answer

In most cases, Foreign Sole Proprietor Person does not pay U.S. income tax if:
There is no physical office, warehouse, shipping facility or other type of physical presence in the U.S.

If a Foreign Sole Proprietor Person has a income generated by U.S. employees / freelancers, or has a physical presence in the U.S., or a U.S Income, the income is considered: Effectively Connected Income (ECI) and it may be liable for U.S. Tax.

Question 4

Does a Foreign Sole Proprietor Person need to file annual tax return?

Accepted Answer

In most cases, yes.  Foreign Sole Proprietor Person must file annual federal tax return including forms 1140NR & 5472 and all related schedules and statements if during the year there was Effectively Connected Income (ECI).

Question 5

What is the filing deadline for a Foreign Sole Proprietor Person tax filing?

Accepted Answer

In general, the deadline to the Foreign Sole Proprietor Person's annual federal tax return including forms 1140NR& 5472 and all related schedules and statements is April 15 of each year for the previous tax year. This means that the deadline to file the 2022 tax return is April 15, 2023. If April 15 falls on a weekend, the deadline will be extended to April 18.

Question 6

Do you get any penalty if you do not file the annual tax return?

Accepted Answer

Yes, the IRS (Internal Revenue Service) which is the U.S.'s tax collection agency and administers the Internal Revenue Code enacted by Congress started to impost aggressive penalties on Foreign owned Single Member LLC if failing to file form 5472:

A penalty of $25,000 will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed. The penalty also applies for failure to maintain records as required by Regulations section 1.6038A-3.
Note.  Filing a substantially incomplete Form 5472 constitutes a failure to file Form 5472.
Each member of a group of corporations filing a consolidated information return is a separate reporting corporation subject to a separate $25,000 penalty and each member is jointly and severally liable.
If the failure continues for more than 90 days after notification by the IRS, an additional penalty of $25,000 will apply. This penalty applies with respect to each related party for which a failure occurs for each 30-day period (or part of a 30-day period) during which the failure continues after the 90-day period ends.
Criminal penalties under sections 7203, 7206, and 7207 may also apply for failure to submit information or for filing false or fraudulent information.

Question 7

Which information do I need to provide?

Accepted Answer

To prepare your annual tax return and all related forms, statements and schedules - we will ask you for the following information:

Personal information for the owner: 
1. Full name:
2. Marital status:
3. Home address:
4. % of ownership:
5. Country of citizenship:
6. Country of residency:
7. Any ITIN or SSN?
8. Any U.S. visa during the year?
9. Did you have any other U.S. visa in the past?
10. Days spent in the U.S. during the year
11. Did you file taxes in your country of residency
12. Any income from U.S. Source during the tax year?
13. Any previous year tax return? (if yes send us copy)

Company:
1. Company name: 
2. Company EIN: 
3. State of incorporation: 
4. Date of incorporation: 
5. Company mailing address:
6. What does the company do (short description):
7. Do you have any US      employees?
8. Did you ship any products from the U.S.?
9. Did you have any physical location in the U.S.?
10. Where is the company management located?

Manager information:
1. Full name:

Did you have any Effectively Connected Income (ECI) ? Yes / No

If yes, please send us:

1.       Income statement
Download Excel sample: https://templates.office.com/en-us/income-statement-1-year-tm16410109(https://templates.office.com/en-us/income-statement-1-year-tm16410109)
 
2.       Balance sheet
Download Excel template: https://templates.office.com/en-us/balance-sheet-tm03934533(https://templates.office.com/en-us/balance-sheet-tm03934533)

Question 8

What is the filing deadline for a Foreign Sole Proprietor Person tax filing?

Accepted Answer

In general, the deadline to the Foreign Sole Proprietor Person's annual federal tax return including forms 1140NR& 5472 and all related schedules and statements is April 15 of each year for the previous tax year. This means that the deadline to file the 2022 tax return is April 15, 2023. If April 15 falls on a weekend, the deadline will be extended to April 18.

Question 9

Do I need to submit annual tax return even if I did not have any activity?

Accepted Answer

If you are a sole proprietor and you own a single member LLC, you must file a tax return a report the ownership of the LLC on form 5472.

NON U.S.
Resident

The Basics

F.A.Qs

Form 5472 Filing Requirements Explained - IRS Form Filing FAQ

LLC Formation: A Comprehensive Guide

Don't Go Solo: Why a Registered Agent is Essential for Your LLC (form5442.online)

Unleash Your Entrepreneurial Spirit: 4 Reasons Why the USA Should Be Your Business Launchpad (form5472.online)

Tax Filing
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NON U.S. Resident