💼 U.S. TAXATION SERVICES

---

 Setting up a U.S. LLC is only the first step — understanding how taxes work is equally important to maintain legal compliance and avoid unexpected liabilities. At SK Financial Inc., we offer guidance and ongoing support to help you meet your U.S. tax obligations, whether you're a U.S. resident, a non-resident entrepreneur, or a foreign company expanding into the U.S. market.

Here’s a detailed breakdown of how taxation works for LLCs in the United States:

An LLC (Limited Liability Company) is a flexible legal structure — but it is not a tax classification by itself. Instead, the IRS allows an LLC to be taxed in different ways, depending on the number of members and their residency status:

• Single-Member LLC (default: disregarded entity)
   
• Multi-Member LLC (default: partnership)
   
• Optionally taxed as a C Corporation (if elected via Form 8832)
   

The tax treatment depends on:

• Where the LLC is formed (state-level taxes vary)
   
• Whether the owners (members) are U.S. persons or non-residents
   
• Whether income is connected to the U.S. (ECI – Effectively Connected Income)
   
• Whether the company has a physical presence or employees in the U.S.

Regardless of income or residency, almost all LLCs must file federal forms annually:

• Must file Form 5472 and Pro Forma 1120 (U.S. Informational Returns)
   
• This is mandatory even if the LLC had no income
   
• Failure to file may result in a $25,000 IRS penalty
   

• Must file Form 1065 (U.S. Return of Partnership Income)
   
• Each partner must receive a Schedule K-1
   
• If partners are non-residents, Form 8805 and 1042-S may apply
   

• Must file Form 1120 (U.S. Corporation Income Tax Return)
   
• Subject to 21% flat corporate income tax on U.S.-connected profits
   

If you are not a U.S. citizen or green card holder, your LLC is considered a foreign-owned U.S. disregarded entity. In this case:

• You're not taxed in the U.S. unless your business has U.S. source income
   
• You must still file the required informational returns (e.g., Form 5472)
   
• You are subject to withholding tax rules if you receive U.S. source payments
   

💡 Common mistake: Many international entrepreneurs believe they don't need to file anything if there's no U.S. income — this is false and may lead to penalties.

In addition to federal filings, each U.S. state has its own tax rules. Some states are tax-free for LLCs, while others require annual reports or franchise taxes.

For example:

• Wyoming, Montana, and Missouri: No state income tax or annual franchise tax
   
• Texas: Franchise tax may apply if your revenue exceeds a threshold
   
• California: $800 minimum annual LLC tax
   
• Florida: Annual report due each year to maintain active status
   

We guide you based on your LLC’s formation state and business activities.

The U.S. does not have VAT. Instead, it uses sales tax, which is:

• State-based (not federal)
   
• Applies to physical products sold to U.S. customers
   
• Varies by state (some states charge 0%, others up to 10%)
   

💼 Nexus rules (economic or physical) determine whether you're obligated to collect sales tax in a state. For example:

• Having inventory in a U.S. warehouse (e.g., Amazon FBA) creates nexus
   
• Exceeding sales thresholds in certain states creates economic nexus
   

We assist with:

• Sales tax registration
   
• Resale certificates
   
• Filing periodic sales tax returns
   

If you're a non-U.S. person, you may need an ITIN to:

• File U.S. tax returns as a foreign owner
   
• Receive income from U.S. companies
   
• Open business merchant accounts like PayPal (Fully Verified) or Stripe Express
   
• Avoid default 30% withholding on U.S. payments
   

We assist with ITIN applications via:

• Certified Acceptance Agent (CAA) route
   
• Passport verification
   
• Supporting document preparation (Form W-7, EIN, etc.)
   

Having an ITIN ensures you're properly recognized by the IRS and helps establish your business credibility in the U.S. financial ecosystem.

If your LLC receives payments from U.S. companies (as a contractor or vendor), those companies may be required to withhold 30% tax unless:

• You claim a reduced rate under a U.S. tax treaty
   
• You provide a valid W-8BEN or W-8ECI form
   

Many countries (like Pakistan, UAE, UK, India, etc.) have tax treaties with the U.S. — we help clients determine if benefits apply and file correctly.