QUESTION: How to Find an Accountant for a Non-US Resident with a Wyoming LLC?
EXPERT’S RESPONSE: If you are a non-US resident who owns an online business and you have formed a limited liability company (LLC) in Wyoming, you may be wondering how to handle your US tax obligations. In this article, we will explain the tax classification and filing requirements for your LLC, and how to find a qualified certified public accountant (CPA) who can assist you with your accounting and tax needs.
Tax Classification of Your LLC
An LLC is a type of business entity that provides limited liability protection to its owners, who are called members. An LLC can have one or more members, and can be owned by individuals, corporations, or other entities.
For US tax purposes, an LLC can be classified as either a disregarded entity, a partnership, or a corporation, depending on the number and type of its members. The default tax classification of an LLC is as follows:
- A single-member LLC is treated as a disregarded entity, unless it elects to be taxed as a corporation.
- A multi-member LLC is treated as a partnership, unless it elects to be taxed as a corporation.
A disregarded entity is not a separate tax entity from its owner. This means that the income and expenses of the LLC are reported on the owner’s personal tax return, as if the LLC did not exist.
A partnership is a separate tax entity from its owners, but it does not pay income tax itself. Instead, it files an information return (form 1065, K-1, K-2 and K-3) and passes through its income and losses to its partners, who report them on their personal tax returns.
A corporation is a separate tax entity from its owners, and it pays income tax on its profits. The owners of a corporation report their share of dividends or distributions from the corporation on their personal tax returns.
If you are a non-US resident who owns a single-member LLC in Wyoming, you are classified as a foreign-owned disregarded entity (FDE) for US tax purposes. This means that while your LLC is legally separate from you, it is not considered a separate entity for tax return purposes. The income and expenses of your LLC are passed through to your personal tax return, and you are subject to US tax on your effectively connected income (ECI) from your US business activities – unless a tax treaty applies.
Filing Requirements for Your LLC
As a foreign-owned disregarded entity, your LLC has specific filing requirements that you need to meet, such as:
- Proforma Form 1120: This is a dummy information return or cover sheet that you need to file for your LLC, even though it is not taxed as a corporation. The purpose of this form is to identify your LLC as a foreign-owned disregarded entity and to comply with the information reporting requirement. You need to file this form by the 15th day of the fourth month after the end of your LLC’s tax year, which is usually December 31. You can request a six-month extension by filing Form 7004.
- Form 5472: This is an information return that you need to file for your LLC along with the proforma 1120 mentioned above – to report its transactions with you as its foreign owner and with any other foreign related parties. You need to file this form along with your proforma Form 1120, and attach a separate Form 5472 for each foreign related party. You also need to keep records of the transactions that you report on Form 5472, and make them available to the IRS upon request.
- The Corporate Transparency Act: Foreign-owned LLCs must also be aware of the Corporate Transparency Act (CTA), which establishes uniform beneficial ownership information reporting requirements for certain corporations, limited liability companies, and other similar entities created or registered to do business in the U.S. The CTA is part of the Anti-Money Laundering Act of 2020 and aims to prevent criminals, terrorists, and corrupt individuals from hiding illicit money or property in the U.S.
For reporting companies created or registered before January 1, 2024, the initial beneficial ownership information report must be filed by January 1, 2025. If your company is created or registered on or after January 1, 2024, you have 90 days to file the initial report starting January 1, 2024.
If you fail to file any of these forms on time, or file them incorrectly or incompletely, you may face substantial penalties. Therefore, it is important to comply with these filing requirements and to keep accurate and complete records of your LLC’s income, expenses, and transactions.
How to Find a Qualified CPA for Your LLC
Working with a qualified CPA who understands the complexities of FDEs is essential to ensure you meet all compliance requirements and make informed financial decisions. Here are some tips on how to find the right CPA for your LLC in Wyoming:
- Look for specialized expertise: You want a CPA who has experience and knowledge in working with foreign-owned businesses, especially single-member LLCs in the US. They should be familiar with the tax classification and filing requirements for FDEs, as well as the U.S international tax laws and regulations that affect your LLC. You can ask for referrals from other business owners in similar situations, or search online for CPA firms that specialize in this area.
- Consider services offered: You want a CPA who can provide a range of services to support your accounting and tax needs, such as:
- Tax filing: They should be able to prepare and file your proforma Form 1120, Form 5472, and FBAR, as well as any other tax forms that may apply to your situation, such as Form 1040NR, Form 8833, or Form W-8 series, etc.
- Bookkeeping and accounting: They should be able to assist you with monthly bookkeeping, balance sheets, profit and loss statements, or accounting software recommendations, to help you keep track of your LLC’s financial performance and position.
- Check reputation and reviews: You want a CPA who has a good reputation and positive reviews from their clients. You can research their credentials and licensing status, as well as their online ratings and testimonials, to get a sense of their professionalism and quality of service.
- Compare fees and pricing transparency: You want a CPA who offers reasonable and transparent fees and pricing for their services. You should inquire about their fee structure and pricing for the specific services you require. You should also ask about any additional fees or charges that may apply, such as for consultations, revisions, or extensions.
Recommended CPA Firm: O&G Tax and Accounting
If you are looking for a CPA firm that meets all the criteria above, we recommend our firm – O&G Tax and Accounting. We are a firm that focuses on serving foreign-owned single-member LLCs in the US, and we offer a comprehensive range of services, including:
- Preparation of proforma Form 1120, Form 5472, BOI, FBAR etc.
- Monthly bookkeeping and accounting
- Accounting software recommendations
- General accounting services
- Consultations and personalized advice
We have extensive experience working with FDEs in Wyoming and other states, and we can help you navigate the US tax laws and regulations. We also offer competitive and transparent pricing, and we guarantee your satisfaction with our service.
Contact us today to schedule a consultation and discuss your specific needs. We look forward to working with you and helping you achieve your business goals.
