Complete Formation Guide

US LLC for Non-Residents:
Complete Formation Guide

This guide is for foreign nationals and Non-Resident Pakistanis (NRPs) who are deciding whether a US LLC is the right structure for their business. You'll learn who qualifies, what the EIN process actually involves, and where the $25,000 compliance trap catches founders who assume the hard part is over after filing. Most guides stop at formation. This one doesn't.

15 min read

Intermediate Level

Updated 2026

US LLC · EIN · Non-Resident · Pakistan

Quick Navigation

At a Glance

Key Takeaways

✓

Choose a US LLC if you:

✓Run a service, freelance, or e-commerce business and need Stripe or PayPal access
✓Want liability protection without forming a local company
✓Can commit to annual IRS informational filings even in zero-income years
✓Are a Pakistani founder who needs to operate in the global dollar economy

Avoid a US LLC if you:

✕Plan to raise institutional venture capital (a C-Corp is required for that path)
✕Expect zero ongoing compliance obligations
✕Have not looked into how FBR treats your foreign-sourced LLC income

Major Advantages
0% US federal income tax on non-US sourced income for foreign owners
No SSN, no visit, no physical presence required to form
Immediate access to US payment processors once EIN and banking are in place
Legal separation between your personal assets and business liabilities
Major Risks
$25,000 IRS penalty per year for missing Form 5472 - even on zero-income LLCs
EIN processing via IRS fax takes 4 to 6 weeks - most founders don't plan for this
State administrative dissolution if annual reports are skipped
FBR may treat LLC pass-through income as your personal worldwide income

Audience

Who This Is For

✓ This guide is for

This guide is written for:

→
Pakistani freelancers billing international clients who need Stripe or PayPal
→
NRP founders building SaaS, digital products, or remote service businesses
→
Foreign nationals evaluating US LLC formation without a US visit
→
Anyone researching US LLC tax implications for foreigners with no US income

✕ This guide is not for

This guide is not for:

✕
Founders raising money from US venture capital (C-Corp is the right structure)
✕
Anyone looking for a set-and-forget business structure with no annual obligations
✕
People assuming a US LLC removes their income from Pakistani FBR visibility

💡

Not sure if this applies to you? If you're a Pakistani founder earning in dollars from international clients and you've hit a wall with Stripe, PayPal, or USD bank accounts - this guide is exactly where to start.

Foundation

What Is a US LLC - and Why It Works as a Global Unlock

A US LLC - Limited Liability Company - is a legal business structure that separates your personal finances from your business. If your business gets sued or accumulates debt, your personal savings stay protected. That liability wall is the foundation.

For foreign founders, an LLC does something else on top of that. It gives you a US business identity - and that identity unlocks Stripe, PayPal, Mercury bank accounts, and USD payments from clients worldwide, all without setting foot in the United States. For a Pakistani freelancer competing against US-based contractors, that access changes the playing field entirely. Clients trust a US entity differently. Payment processors treat it differently. You stop being locked out of tools your competitors use without thinking.

🛡️

Liability Protection

Your personal savings, property, and assets are legally separated from your business. Business debts and lawsuits cannot reach your personal finances.

🌐

US Business Identity

A fully registered, legitimate US entity - without setting foot in the United States. Clients and payment processors treat it as a US business because it is one.

💳

Payment Processor Access

Unlocks Stripe, PayPal, Mercury bank accounts, and USD payments from clients worldwide. The access that changes the playing field for Pakistani founders.

Think of the LLC as a legal ghost. It exists on paper - fully registered, fully legitimate - and that existence alone is enough to open every door you need.

But for income tax purposes, the IRS treats a single-member foreign-owned LLC as if it isn't there at all. It's "disregarded." That distinction is the entire strategic advantage of this structure, and most guides explain it badly.

Note

The "disregarded entity" classification is the key strategic advantage. The LLC earns income, but the IRS looks through it directly to you as the foreign owner - and if your income isn't US-sourced, there is generally 0% US federal income tax owed. This is covered in full in the tax section below.

Qualification

Eligibility: Form an LLC as a Non-US Citizen Without a Visit

There's no legal requirement for LLC owners to be US citizens or residents. No SSN is required. No visit to the US is required. If you have a valid passport and can appoint a US registered agent in your chosen state, you can form a US LLC from anywhere in the world - including Pakistan.

🛂

Citizenship Required

None

Open to any nationality worldwide

✈️

US Visit Required

Not Needed

100% remote formation process

🪪

SSN Required

Valid passport is sufficient

The full process works remotely. You select a state, submit Articles of Organization through the state's filing system, and appoint a registered agent who holds a physical US address for legal correspondence. The LLC is typically formed within a few business days of filing.

How the Remote Formation Process Works

Select Your State

Choose your state of formation. Delaware and Wyoming are the most popular for non-residents. Each has different costs, privacy rules, and annual report requirements.

Appoint a US Registered Agent

Required by every US state. Your registered agent holds a physical US address in your chosen state and receives legal documents on your behalf. A PO box does not qualify.

Submit Articles of Organization

Filed through the state's online filing system. This is the document that legally creates your LLC. Processing typically takes a few business days.

Apply for Your EIN

The LLC is formed - but it is not yet operational. Your next step is applying for an EIN via IRS Form SS-4. This takes 4 to 6 weeks for foreign nationals. Plan for this before you begin.

⚠️

What most founders underestimate is what comes next. The LLC forms in days. The EIN - which you need before you can open a bank account or activate Stripe - takes 4 to 6 weeks via the IRS fax process. That gap catches most founders off guard. Plan for it before you start, not after.

Critical Distinction

EIN vs ITIN: Know This Before You Start

This is the section most guides bury at the back. It belongs here, before requirements, because confusing these two identifiers causes real delays and wrong assumptions right at the start of the process.

For Your Business

EIN

Employer Identification Number - the tax ID for your LLC as a business entity. Required to open a US bank account and activate Stripe or PayPal. Applied for via IRS Form SS-4 by fax or mail. Takes 4 to 6 weeks for non-residents. No fee charged by the IRS.

For You Personally

ITIN

Individual Taxpayer Identification Number - a personal tax ID for individuals who need to file a US individual tax return but cannot get an SSN. Applied for via IRS Form W-7. Only relevant if your personal income situation requires you to file a US individual return - which is uncommon for most foreign founders.

	EIN	ITIN
What it is	Tax ID for the business entity	Tax ID for you as an individual
Who needs it	Your LLC - always	You personally, only if filing a US individual return
How to get it	IRS Form SS-4 (fax or mail)	IRS Form W-7
Required to open US bank account	Yes	No
Required to activate Stripe	Yes	No
Processing time for non-residents	4 to 6 weeks via fax	Weeks to months

The Real Bottleneck

The EIN Is the Key. The LLC Is Just the Door.

Forming the LLC takes a few days. Getting the EIN as a foreign national takes 4 to 6 weeks through the IRS fax process. You can't open a US bank account without it. You can't activate Stripe or PayPal without it. Every guide makes the LLC look like the hard part. The EIN bottleneck is where founders actually stall. Plan for it before you start, not after.

Key Rule

Most non-resident LLC owners need an EIN. That's it. An ITIN only becomes relevant if your specific income situation requires you to personally file a US individual tax return - which is uncommon for foreign founders with no US-sourced income.

Before You Start

Essential Requirements Before Forming

Valid Passport

Your primary identification for the EIN application. Must be current and unexpired.

Required

US Registered Agent

A person or service with a physical US address in your state of formation. Required by every US state. They receive legal documents on your behalf. A PO box doesn't qualify.

Required

EIN (Employer Identification Number)

Your LLC's federal tax ID. Applied for via IRS Form SS-4, submitted by fax or international mail. No fee. Expect 4 to 6 weeks processing time for foreign applicants.

4-6 Week Wait

Business Name

Must be checked for availability in your chosen state before filing Articles of Organization.

Check Availability First

Pre-Formation Checklist

Everything You Need Before You File

✓

Valid passport (unexpired)

✓

US state selected for formation

✓

Business name confirmed available

✓

Registered agent service selected and engaged

✓

Form SS-4 prepared for EIN application

✓

Understanding of FBR reporting obligations on foreign-sourced income

Tax Structure + Payment Access

0% US Income Tax: How Pass-Through Taxation Works for Foreign Owners

A foreign-owned single-member US LLC is classified by the IRS as a "foreign-owned domestic disregarded entity." In practice, the IRS treats the LLC as if it doesn't exist for income tax purposes. Profits pass directly through to you as the owner.

If all of your LLC's income comes from outside the United States - meaning your clients aren't US-based and the work isn't performed in the US - there's generally 0% US federal income tax owed. The LLC earns. The LLC pays nothing. The money flows to you.

🏢

Your US LLC

Earns income from non-US clients

Disregarded Entity

Pass-Through

🏛️

IRS

Sees through the LLC entirely

0% Tax on Non-US Income

Flows To

👤

You (Foreign Owner)

Income lands with you directly

FBR Obligations Apply

That's the clean version. Here's what the same guides always leave out.

⚠ Critical - $25,000 Penalty

Zero US income tax doesn't mean zero US filing obligation.

A disregarded entity with a foreign owner is still required to file Form 5472 with a pro forma Form 1120 every year. This is an informational return - it tells the IRS your LLC exists, who owns it, and what transactions occurred between you and the entity. You're not paying tax. You're proving the structure is legitimate. Missing that filing is where the $25,000 penalty comes from.

Access to US Payment Processors: Stripe, PayPal, and USD Banking

Stripe and PayPal require a US-registered business entity and a US business bank account for full account activation. Without a US LLC and EIN, you're running personal accounts - lower limits, higher risk of suspension, no ability to build a legitimate payment history.

💳

Stripe

Requires a US-registered business entity and a US business bank account for full activation. Standard process once EIN is in hand.

🅿️

PayPal

Requires a US business entity for full business account access. Removes personal account limits and suspension risk.

🏦

Mercury

Built for remote and non-resident founders. No in-person visit required. Accepts registered agent address. Most commonly used option for foreign LLC owners.

💡

For Pakistani founders who previously had to route payments through workarounds or third-party platforms - once your LLC is formed and your EIN is in hand, this removes the core friction entirely. Stripe activation becomes a standard process, not a workaround.

Structure Decision

LLC vs C-Corp: The Non-Resident Perspective

For service-based businesses, freelancers, SaaS founders, and remote e-commerce operators, an LLC is typically the right structure. It's simpler, cheaper to maintain, and tax-efficient for income that flows outside the US. A C-Corp is what US venture capital firms require. Most VC term sheets are written for Delaware C-Corps.

Quick Mental Model

	LLC	C-Corp
Tax structure	Pass-through (disregarded entity)	Corporate-level tax, then personal
Best for	Service businesses, freelancers, e-commerce	Venture capital, institutional investors
Investor compatibility	Limited	Full (preferred stock, multiple share classes)
Compliance complexity	Moderate	High
Conversion later	Possible but not simple	Not required if started correctly

Recommended for Most Founders

LLC

Service businesses, freelancers, SaaS founders
Remote e-commerce operators
Simpler and cheaper to maintain
Tax-efficient for income flowing outside the US
Pass-through taxation - no corporate-level tax

For VC-Backed Paths Only

C-Corp

US venture capital firms require this structure
Most VC term sheets are written for Delaware C-Corps
Supports preferred stock and multiple share classes
Higher compliance complexity and cost
Start here if Series A is already the goal

⚠️

If your goal is a Series A with institutional investors, starting as an LLC and converting later is possible but carries legal and tax complexity. If that's the path you're heading toward, know it now before you form anything.

Get Expert Help

The Formation Part Is Easy.
The Compliance Part Is Where It Gets Expensive.

Missing Form 5472 isn't a technicality. The IRS raised the minimum penalty to $25,000 specifically because foreign-owned disregarded entities were being used to obscure transactions. Getting the EIN process right, banking set up correctly, and a compliance calendar in place from day one protects everything you've spent time and money building.

$25K

Minimum IRS penalty

4-6 wks

EIN processing time

US tax on non-US income

Chat on WhatsApp

Ongoing Obligations

Annual Compliance and IRS Obligations

Forming the LLC is a one-time task. Staying compliant is ongoing. None of this is optional.

📋

Critical Filing

Form 5472 and Pro Forma Form 1120

Every foreign-owned single-member LLC must file Form 5472 attached to a pro forma Form 1120 each year. The Form 1120 here isn't a real corporate return - it's a shell document filed purely to carry Form 5472. You're filing to inform, not to pay. But that informational obligation is mandatory from the first year of the LLC's existence, regardless of whether you earned a dollar.

$25K

CRITICAL: $25,000 Penalty - The IRS increased the minimum penalty for failing to file Form 5472 from $10,000 to $25,000. That penalty applies per year, per form. It doesn't matter if your LLC had zero income. It doesn't matter if you didn't know the filing was required. Non-compliance is treated as a structural violation, not a simple late fee.

🏛️

Annual Requirement

State Annual Reports

Most states require LLCs to file an annual report and pay a maintenance fee each year. The deadline and amount vary by state. Skipping this can result in your LLC being administratively dissolved - it stops existing legally.

⚠️

Once dissolved, your liability protection disappears, your business name becomes available for anyone to register, and reinstating the entity involves additional fees and paperwork. The state doesn't call you first.

📄

Situational Filing

Single-Member LLC Non-Resident Alien Filing Requirements

If your income situation changes - say, you begin receiving US-sourced income - additional forms may apply, including Form 1040-NR for individual reporting. Most foreign-owned LLCs with only non-US income don't reach this threshold, but it's worth knowing the boundary exists.

Pakistan Tax Authority

FBR Tax Implications for US LLC Income

Pakistan taxes its residents on worldwide income. Because a US LLC is a pass-through entity, the IRS doesn't collect income tax from it directly - those profits flow to you personally. From the FBR's perspective, that's your income, regardless of which country's entity generated it.

This means your US LLC doesn't make your income invisible to Pakistani tax authorities. The money still exists. You earned it. FBR reporting requirements on foreign-sourced personal income apply. Before you start receiving significant income through your LLC, understanding your FBR obligations isn't optional - it's the part of this setup that most formation guides actively avoid mentioning.

Avoid These

Common Mistakes and Risks

Assuming Zero Income Means Zero Filing

The $25,000 penalty isn't triggered by failing to pay tax. It's triggered by failing to file an informational return. Your LLC can sit at $0 revenue for a full year and still require a Form 5472 filing. Founders who skip this because "there was nothing to report" are the exact founders who receive IRS penalty notices years later.

$25,000 IRS Penalty

Treating the EIN as an Afterthought

The LLC is formed in days. The EIN takes 4 to 6 weeks for foreign nationals using the IRS fax process. That's 4 to 6 weeks where your LLC is legally formed but completely non-operational - no bank account, no Stripe, no PayPal. Founders who don't plan for this gap find themselves waiting a month or more after formation before they can receive a single payment.

4-6 Week Operational Gap

Skipping State Annual Reports

Every US state that allows LLCs requires annual reports. Missing one doesn't trigger a warning - it triggers dissolution. The state doesn't call you first. One day your LLC is active; after the deadline passes unaddressed, it isn't. Rebuilding takes time, fees, and in some cases your business name is gone.

Administrative Dissolution

Assuming the LLC Hides Income From FBR

A US LLC isn't a tax shelter for Pakistani residents. Income that passes through your LLC passes through to you - and FBR treats your worldwide income as taxable. If you're a Pakistani tax resident receiving income through a US entity, that income exists for FBR purposes. Plan accordingly.

FBR Worldwide Income Rule

The Pattern

Every One of These Mistakes Is Avoidable With a Plan

None of the four mistakes above require specialized knowledge to avoid. They require knowing they exist before formation, not after. The founders who get hit by these penalties and dissolutions are the ones who treated formation as the finish line.

Decision Framework

Is This the Right Choice for You?

✓ Good Fit

A US LLC fits your situation if:

✓You run a freelance, service, or digital product business
✓Your revenue comes from clients outside Pakistan
✓You need Stripe, PayPal, or a US business bank account to operate
✓You're prepared to file annual IRS informational returns regardless of income

⚠ Pause and Reconsider

Pause and reconsider if:

!Your funding plan involves US venture capital (start with a C-Corp)
!You haven't assessed your FBR obligations on foreign-sourced income
!You have no plan for ongoing compliance - the $25,000 penalty makes non-compliance expensive
!Your income is US-sourced, which changes the tax analysis significantly

The Bottom Line

For Most Pakistani Founders Running Remote Businesses

For most Pakistani founders running remote businesses and needing global payment access, a US LLC is the most practical structure available. The compliance requirements are real but manageable.

Operating without a US entity and routing payments through personal accounts carries its own risks and limits growth in ways that become harder to fix the longer you wait.

Expert Guidance

Need Help Setting This Up Without the $25,000 Risk?

The formation part of a US LLC is straightforward. The compliance part is where foreign founders run into serious, expensive problems.

Missing Form 5472 isn't a technicality. The IRS raised the minimum penalty to $25,000 specifically because foreign-owned disregarded entities were being used to obscure transactions. That context means the IRS treats non-compliance firmly. Founders who didn't know about the filing requirement don't get exceptions.

✓ Getting the EIN process right from the start
✓ Setting up banking correctly with Mercury or equivalent
✓ Building a compliance calendar that covers both IRS informational returns and state annual reports
✓ These are the steps that protect the structure you spent time and money forming

If you want this done correctly from the beginning, working with someone who has handled US LLC formation for NRP and foreign founders is worth the investment.

Start here: How to Apply for an EIN Without an SSN

Minimum IRS Penalty

$25,000

Per year, per form - regardless of income

Applies even when your LLC had zero revenue
"I didn't know" is not accepted as an exception
Treated as a structural violation, not a late fee
IRS raised the penalty from $10,000 to $25,000 to enforce compliance

Common Questions

Frequently Asked Questions

Can a non-resident form a US LLC without an SSN?

Yes. No Social Security Number is required. Your valid passport serves as identification for the EIN application. Foreign nationals apply for an EIN using IRS Form SS-4, submitted by fax or mail. The process takes 4 to 6 weeks and there's no fee charged by the IRS.

Do foreign LLC owners pay US taxes if they have no US income?

Generally no. A foreign-owned single-member LLC with no US-sourced income typically owes 0% US federal income tax. That said, the LLC is still required to file Form 5472 and a pro forma Form 1120 every year as an informational return. Not filing triggers a $25,000 minimum penalty - completely separate from any tax obligation.

What are the single-member LLC non-resident alien filing requirements?

A foreign-owned single-member LLC must file Form 5472 attached to a pro forma Form 1120 annually. This applies regardless of income level. If the owner has US-sourced income, Form 1040-NR may also apply for individual reporting. The pro forma Form 1120 isn't a real corporate tax return - it exists purely to carry Form 5472 to the IRS.

What is the difference between an EIN and an ITIN?

An EIN is a tax ID for your LLC as a business entity - required for banking and payment processor access. An ITIN is a personal tax ID for individuals who need to file a US individual return but can't get an SSN. Most non-resident LLC owners only need an EIN. An ITIN only becomes relevant if your personal income situation requires you to file a US individual return, which is uncommon for foreign founders earning outside the US.

What are the FBR tax implications for income earned through a US LLC?

Pakistan taxes residents on worldwide income. A US LLC is a pass-through entity, so profits flow to you personally rather than being taxed at the LLC level. From the FBR's perspective, that income is your personal global income and may need to be declared. A US LLC doesn't make your income invisible to Pakistani tax authorities. Get local tax advice specific to your situation before you begin earning significant income through the structure.

What happens if I miss the Form 5472 filing deadline?

The IRS imposes a minimum $25,000 penalty per year, per form. This applies even if your LLC had zero income during the year. The filing is informational - it exists to confirm the structure and report related-party transactions. Missing it is treated as a compliance violation regardless of whether any tax was owed.

Can I open a US bank account as a non-resident LLC owner?

Yes. You need your LLC formation documents, your EIN, and typically a US address - your registered agent's address is usually accepted. Online banking services like Mercury are designed for non-resident founders and don't require an in-person visit. Traditional US banks are significantly harder to access without a physical presence. Mercury is the most commonly used option for foreign LLC owners at the early stage.