C-Corp or LLC in the US for a non-resident
C-Corp or LLC for a non-resident: 21% tax and 30% on dividends versus an LLC with no income tax, Form 5472, state payments and electing corporate tax.
- A corporation pays 21% federal tax, and dividends paid to a non-resident are taxed another 30% unless a treaty lowers the rate.
- A single-member LLC pays no income tax itself, but a foreign owner files Form 5472, with a $25,000 penalty for missing it.
- Any LLC can elect to be taxed as a corporation on Form 8832.
- Pactors will find you a specialist free of charge to compare the options for your business.
Choosing between a C-Corp and an LLC decides how profit is taxed, what you report and how much you pay the state. For a non-resident each form has its traps.
Comparison
| C-Corp | Single-member LLC | |
|---|---|---|
| Income tax | 21% federal (26 USC 11) | the company pays none; income goes to the owner |
| Dividends to a non-resident | 30% unless a treaty lowers it | no dividend payments |
| IRS reporting | a 1120 return with tax | a pro forma 1120 and Form 5472 |
| Form 5472 penalty | $25,000 | |
| Delaware per year | a $50 report + franchise tax from $175 or $400 | $400 tax |
An LLC with several members is a partnership by default. For employment taxes a single-member LLC remains a separate entity.
How an LLC elects corporate tax
On Form 8832 any LLC can be taxed as a corporation. The election takes effect no more than 75 days before the form is filed and no later than 12 months after.
Which to choose
An LLC is usually simpler if profit goes to the owner and there are no plans for new shareholders. A C-Corp is clearer if profit stays in the company or investors will come in. The decision depends on where and how the company earns, and it's best made before registration.
Both forms need an EIN and a registered agent in the state. The company number is covered in the article EIN or ITIN, Delaware payments in the article on keeping a Delaware company, and the chosen form can be registered through company registration in the US.
Common questions
Does a non-resident's LLC file anything if there's no profit?
Can an LLC change its tax status later?
Sources
- 26 U.S.C. 11 — corporate income tax
- 26 U.S.C. 871 — tax on non-resident income
- IRS — LLCs and Form 8832
- IRS — instructions for Form 5472
- Delaware — LLC, LP and GP annual tax
Links checked on 27 September 2026
