Frequently Asked Questions

US Taxes and Foreign Owned LLCs

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How are LLCs taxed?

For federal taxes with the IRS, there is no “LLC taxation” class. LLCs are taxed like existing businesses. The 4 business types are:

  • Sole Proprietorship
  • Partnership
  • S-Corporation
  • C-Corporation

A C-Corporation is subject to double taxation (both on the profits of the company and on the shareholders profits).

A Sole Proprietorship, on the other hand, pays no federal income tax at the company level because the profits and losses of the LLC “flow through” to the owner’s individual personal income return.

95% of foreign owned companies will not benefit from having their LLCs taxed as C-Corporations. This type of taxation usually applies to much larger and sophisticated businesses; not small business owners.