Am I actually compliant with the IRS and my state?
Failing to file the right forms even if your company made zero revenue can trigger penalties as high as $25,000 per missed form. Missing state annual reports can cause your company to lose good standing, making it impossible to open accounts, sign contracts, or pass a due diligence check.
This 2026 USA Company Compliance Checklist covers every federal and state filing obligation you need to know: IRS tax returns, Form 5472, state annual reports, Delaware franchise tax, Wyoming annual reports, payroll taxes, sales tax nexus rules, and where Corporate Transparency Act BOI reporting stands after FinCEN exempted US companies in 2026.
Whether you run a single-member foreign-owned LLC or a C-Corporation with investors, this guide will help you stay compliant, avoid penalties, and keep your US company in good standing.
Why US Company Compliance Matters in 2026
Registering a US company is the first step. Keeping it compliant is the ongoing job that most founders underestimate. The IRS and individual US states have separate reporting requirements and they don’t coordinate with each other to notify you when something is due.
Here’s what non-compliance actually costs you:
Compliance Failure | Agency | Penalty |
Missing Form 5472 | IRS | $25,000 per form, per year |
Missing Form 1120 | IRS | 5% of unpaid tax per month, up to 25% (minimum: the smaller of the tax due or $525 if over 60 days late; IRS) |
Missing State Annual Report | Secretary of State | Late fees, loss of good standing, dissolution |
Missing BOI Report (foreign-formed entities only) | FinCEN | Civil and criminal penalties; US-formed LLCs and corporations exempt since Aug 2026 |
Missing Delaware Franchise Tax | Delaware | $200 penalty + 1.5%/month interest |
Unpaid payroll taxes | IRS / State | Trust Fund Recovery Penalty (personal liability) |
The good news: all of this is manageable when you know the deadlines and have a system. That’s exactly what this guide gives you.
Federal Tax Filing Requirements (IRS)
Regardless of whether your company earned income, you are required to file annual tax returns with the IRS. The type of return depends on your entity structure.
C-Corporation: Form 1120
All US C-Corporations regardless of revenue must file IRS Form 1120, the US Corporation Income Tax Return.
- Deadline: April 15 (15th day of the 4th month after the tax year end)
- Extension deadline: October 15 with Form 7004 (automatic 6-month extension)
- Zero income filing: Required even if the company had no revenue, no employees, and no activity
- State equivalent: Most states also require a corporate income tax return filed separately
Single-Member Foreign-Owned LLC: Form 1120 + Form 5472
A disregarded entity LLC (single-member) owned by a foreign person or foreign entity is one of the most misunderstood structures in US tax law. The IRS treats it as a corporation for reporting purposes under Treasury Regulation 1.6038A-1, which means it must file:
- Form 1120 (pro forma): As a reporting vehicle, not a tax payment the LLC is still a pass-through for income tax purposes
- Form 5472: For every reportable transaction between the LLC and its foreign owner (see Section 3)
⚠ IRS Filing Requirement Even with Zero Income |
This is the #1 misconception among foreign founders: if your LLC did nothing — no revenue, no bank account activity, no contracts — you may still be required to file. |
The IRS requires foreign-owned single-member LLCs to file Form 1120 + Form 5472 as soon as they are formed and have any transactions with their foreign owner. |
Even a capital contribution of $1 counts as a reportable transaction. Even paying annual state fees with your own money counts. |
Multi-Member LLC: Form 1065
If your LLC has two or more members, it is treated as a partnership and files Form 1065 (US Return of Partnership Income).
- Deadline: March 15 (15th day of the 3rd month after the tax year end)
- Extension: September 15 with Form 7004
- K-1 forms: The LLC also issues Schedule K-1 to each member showing their share of income, deductions, and credits
S-Corporation: Form 1120-S
S-Corps file Form 1120-S annually, also due March 15. Note: foreign individuals and foreign entities generally cannot be S-Corp shareholders, making this structure less common for non-US founders.
Entity Type | IRS Form | Due Date | Extension |
C-Corporation | Form 1120 | April 15 | October 15 |
Foreign-Owned LLC (SMLLC) | Form 1120 + 5472 | April 15 | October 15 |
Multi-Member LLC | Form 1065 | March 15 | September 15 |
S-Corporation | Form 1120-S | March 15 | September 15 |
Form 5472: The $25,000 Penalty for Foreign-Owned LLCs
Form 5472 is the most dangerous filing requirement most foreign founders don’t know about until they receive an IRS notice.
What Is Form 5472?
Form 5472 (Information Return of a 25% Foreign-Owned US Corporation or a Foreign Corporation Engaged in a US Trade or Business) must be filed by:
- Any US corporation that is 25% or more foreign-owned, AND
- Had any reportable transactions with a related foreign party during the year
Since 2017, the IRS expanded the rule to include single-member LLCs owned by foreign persons making this a critical requirement for the majority of foreign-owned US companies.
What Counts as a Reportable Transaction?
Almost everything is a reportable transaction, including.
- Capital contributions from the foreign owner to the LLC
- Loans between the owner and the LLC
- Payment of LLC expenses by the foreign owner
- Distributions or withdrawals from the LLC
- Rent, royalties, or service fees paid between the LLC and owner
- Any money movement between the LLC and its foreign owner
⚠ Form 5472 Penalty: $25,000 Per Form, Per Year |
The IRS penalty for failure to file Form 5472 is $25,000 per form, per tax year automatically assessed, with no de minimis exception. |
If you miss 3 years of filings, you’re looking at $75,000 in penalties before any abatement proceedings. |
The IRS has been actively enforcing this since 2018, and many foreign founders have received assessment notices with no prior warning. |
Note: first-time penalty abatement does not cover the Form 5472 penalty. The IRS lists it only for failure-to-file, failure-to-pay and failure-to-deposit penalties on tax returns (IRS), so relief for a missed 5472 has to be argued on the facts with a properly prepared request. |
How to File Form 5472
- Step 1: Prepare a pro forma Form 1120 (the LLC’s ‘corporate return’ for filing purposes only)
- Step 2: Complete Form 5472 listing all reportable transactions
- Step 3: Attach Form 5472 to the Form 1120 and mail to the IRS (electronic filing not available for this combination)
- Step 4: File by April 15 or request an extension with Form 7004
Because this must be filed by mail, plan ahead IRS processing times can be slow and proof of mailing matters.
Form 7004: How to Request a Filing Extension
If you need more time to prepare your federal tax return, Form 7004 (Application for Automatic Extension of Time to File Certain Business Income Tax Returns) gives you an automatic 6-month extension.
Key Points About Form 7004
- It is automatic: The IRS grants the extension without reviewing your reason
- It extends the filing deadline, NOT the payment deadline: If you owe taxes, estimated payments are still due on the original due date
- For C-Corps: Extends deadline from April 15 to October 15
- For Partnerships and S-Corps: Extends deadline from March 15 to September 15
- File before the original deadline: Late Form 7004 submissions are rejected
- Electronic filing available: Form 7004 can be e-filed through IRS-authorized e-file providers
ℹ Pro Tip: Always File Form 7004 as Insurance |
Even if you plan to file on time, filing Form 7004 costs nothing and gives you a safety net if your accountant needs more time. |
This is especially important for foreign owners who may face delays getting documents apostilled, notarized, or translated. |
State Annual Report Requirements
Every US state requires registered entities LLCs, corporations, and often foreign-registered companies to file annual reports with the Secretary of State. These are separate from your federal and state tax filings.
Annual reports typically confirm or update basic company information: registered agent, principal address, members/officers, and other public records. Failure to file results in late fees, and eventually your company is administratively dissolved meaning it ceases to legally exist.
State | Annual Report Fee | Due Date | Late Penalty |
Delaware | $50 (LLC) / $50+ (Corp) | June 1 (LLC) / March 1 (Corp) | $200 + interest |
Wyoming | $60 minimum | 1st day of anniversary month | $50 late fee |
Florida | $138.75 (LLC) | May 1 | $400 late fee |
Nevada | $350 (LLC) | Last day of anniversary month | $75 + dissolution |
New Mexico | No annual report | N/A | N/A |
California | $20 (LLC) | April 15 (LLCs) | $250 penalty |
Texas | No annual report (has franchise tax) | May 15 (franchise tax) | Varies |
Note: Requirements change frequently. Always verify current deadlines and fees on your state’s Secretary of State website or with a registered agent service.
Delaware Franchise Tax and Annual Report
Delaware is the most popular state for US company formation especially for startups and foreign-owned businesses. It has two separate annual compliance requirements that are often confused
Delaware LLC Annual Report
- Due: June 1 each year
- Fee: $400 flat annual tax, due by 1 June (paid to the Delaware Division of Corporations)
- Note: Delaware LLCs pay an annual tax, not a ‘franchise tax’ — this is a flat fee regardless of income or activity
Delaware C-Corporation Franchise Tax
Delaware C-Corps must file an Annual Report and pay Franchise Tax by March 1 each year. The amount owed depends on the calculation method you choose:
Method | How It’s Calculated | Best For |
Authorized Shares Method | Based on number of authorized shares can be very high for startups with many shares | Companies with few authorized shares |
Assumed Par Value Capital Method | Based on total assets relative to issued shares usually results in minimum tax | Most startups and foreign-owned corps |
- Minimum franchise tax: $400 using the Assumed Par Value Capital Method
- Minimum using Authorized Shares: $175 for up to 5,000 shares, rising to as much as $200,000 ($250,000 for Large Corporate Filers) for companies with millions of shares
- Annual Report filing fee: $50 (separate from franchise tax)
- Late penalty: $200 flat penalty + 1.5% monthly interest on unpaid tax
ℹ Delaware Franchise Tax Calculation Tip |
If your company has millions of authorised shares, recalculate using the Assumed Par Value Capital Method when filing online; for most early-stage companies it gives a much lower tax. |
The Delaware Division of Corporations online portal defaults to the Authorized Shares Method, which can show a falsely inflated tax amount. Switch the calculation method manually before paying. |
Wyoming Annual Report ($60 Fee)
Wyoming is increasingly popular among foreign-owned LLC founders for its low costs, strong privacy protections, and no state income tax. Wyoming’s annual compliance requirements are among the simplest in the US.
- Annual Report: Required every year by the Wyoming Secretary of State
- Due date: First day of the anniversary month of formation (if you formed in March, it’s due March 1 every year)
- Fee: $60 minimum (based on assets in Wyoming minimum applies to most foreign-owned companies with no Wyoming assets)
- Filing method: Online through the Wyoming Secretary of State portal typically takes under 5 minutes
- Late fee: $50 late fee after the due date
- Dissolution: Companies that miss two consecutive years of annual reports are administratively dissolved
✓ Why Wyoming Is Foreign-Founder Friendly |
No state income tax on individuals or corporations |
$60 flat annual report fee one of the lowest in the US |
Strong charging order protection for single-member LLCs |
No public disclosure of LLC members strong privacy |
No operating agreement required by law |
Payroll Tax Obligations: FICA, FUTA & State Taxes
If your US company has employees including yourself if you are a US resident or green card holder receiving a salary you are required to withhold and remit payroll taxes. This is one of the most serious compliance areas because unpaid payroll taxes can create personal liability for company owners.
Federal Payroll Taxes
Tax | Employee Rate | Employer Rate | Wage Cap (2026) |
Social Security (FICA) | 6.2% | 6.2% | $176,100 |
Medicare (FICA) | 1.45% | 1.45% | No cap |
Additional Medicare | 0.9% over $200K | N/A | Employee only |
Federal Unemployment (FUTA) | N/A | 6.0% on first $7,000 | Reduced with state credit |
State Payroll Taxes
Most states with income taxes require separate state income tax withholding, state unemployment insurance (SUI), and sometimes state disability insurance. Requirements vary significantly by state.
⚠ Trust Fund Recovery Penalty Personal Liability |
Unlike other IRS penalties, unpaid payroll taxes (specifically the employee portion withheld) can be assessed personally against business owners, officers, and anyone responsible for collecting and remitting payroll taxes. |
This ‘Trust Fund Recovery Penalty’ equals 100% of the unpaid trust fund taxes meaning the IRS can collect directly from your personal assets, even if the company is dissolved. |
This is not dischargeable in bankruptcy. Payroll taxes must be prioritized above all other business obligations. |
Do Foreign Owners Without US Employees Need Payroll Taxes?
If your company has no US employees and all work is performed outside the US by non-US persons, you generally do not have US payroll tax obligations. However, this analysis changes if:
- You pay a US resident contractor who is then reclassified as an employee
- You have a US-based director or officer receiving compensation
- You are a foreign owner who becomes a US resident and takes a salary
Always get professional advice before determining you have no payroll tax obligations the IRS is increasingly auditing worker classification.
Sales Tax Collection & Nexus Rules
US sales tax is not a federal tax it’s administered by individual states, and there are over 10,000 taxing jurisdictions across the US. Whether your company is required to collect and remit sales tax depends on whether you have ‘nexus’ in a state.
What Is Sales Tax Nexus?
Nexus means a sufficient connection to a state that triggers sales tax collection obligations. Following the 2018 Supreme Court decision in South Dakota v. Wayfair, Inc., states can impose economic nexus meaning you can be required to collect sales tax even with no physical presence in a state.
Types of Nexus
- Physical nexus: Office, warehouse, inventory, employees, or contractors in a state
- Economic nexus: Exceeding a state’s sales threshold typically $100,000 in annual sales OR 200 transactions into that state
- Click-through nexus: Affiliate relationships in a state that drive sales to your business
- Marketplace nexus: Selling through Amazon FBA or similar platforms may create nexus
State | Economic Nexus Threshold | Notes |
Most States | $100,000 or 200 transactions | Standard post-Wayfair threshold |
California | $500,000 | Revenue threshold only |
Texas | $500,000 | Revenue threshold only |
New York | $500,000 + 100 transactions | Both required |
Oregon, Montana, NH, DE | No sales tax | No collection required |
Do Online Businesses Need to Collect Sales Tax?
Yes if you sell taxable goods or services into states where you have nexus. Digital products, SaaS, and software have varying rules by state. Services are generally not taxable in most states, but this varies widely.
If you’re selling physical products through Amazon FBA, you almost certainly have nexus in multiple states through Amazon’s fulfillment centers. Use a sales tax automation tool like TaxJar, Avalara, or Quaderno to manage compliance automatically.
Corporate Transparency Act / BOI Reporting (2026 Update)
Updated October 2026: FinCEN’s final rule, issued 11 August 2026 and effective 14 August 2026, permanently exempts every US-formed company (corporations, LLCs and LPs) and all US persons from Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act. That covers a Delaware C-Corp or Wyoming LLC owned entirely by Indian residents. Source: FinCEN BOI guidance.
What Is BOI Reporting?
BOI reporting means disclosing your beneficial owners individuals who own 25% or more of the company, or who exercise substantial control directly to FinCEN. Since August 2026 it applies only to entities formed under foreign law and registered to do business in a US state, and they report only their non-US beneficial owners.
Current BOI Reporting Status
After two years of litigation and interim rules, here is where BOI stands under the August 2026 final rule.
- US-formed LLCs and corporations (any formation date): No initial report and no updates, whether the owners live in the US or India
- Reports already filed: FinCEN will delete BOI previously filed on US persons; US-formed companies have nothing further to file
- Foreign-formed entities registered in a US state: Still file, reporting only their non-US beneficial owners
⚠ What the 2026 Rule Means for Indian Founders |
A US LLC or C-Corp you set up from India, in Delaware, Wyoming or any other state, has no BOI filing and no BOI penalty exposure. Your Indian company itself would file only if it registers to do business in a US state as a foreign entity. |
The federal filing that still catches most Indian-owned single-member LLCs is IRS Form 5472, covered earlier in this guide not BOI. |
Check the current rule at fincen.gov/boi. FinCEN can change it again through new rulemaking. |
Who Still Files a BOI Report?
Only entities formed under foreign law that have registered to do business in a US state, and only for their non-US beneficial owners. Every US-formed LLC and C-Corp is exempt, including small foreign-owned ones, and US persons never need to be reported.
Good Standing Certificate What It Is and Why You Need It
A Certificate of Good Standing (also called a Certificate of Existence or Certificate of Status) is an official document issued by a state’s Secretary of State confirming that your company:
- Is currently registered and active in that state
- Has paid all required fees and taxes (including franchise taxes and annual report fees)
- Has not been dissolved, revoked, or otherwise administratively cancelled
When Do You Need a Good Standing Certificate?
- Opening a US bank account: Most banks require it before opening a business account
- Applying for business loans or credit: Lenders require proof of good standing
- Signing major contracts: Enterprise clients and investors often require it as part of due diligence
- Registering as a foreign entity: Required when expanding to do business in additional states
- Selling your business: Acquirers require good standing in all states where you’re registered
How to Get a Good Standing Certificate
Most states issue certificates through their Secretary of State website for a small fee ($10–$50). Processing times range from immediate (online) to several weeks (certified paper copies). Some states only issue paper certificates by mail.
Your registered agent service can typically order this on your behalf if you need a certified copy urgently.
Complete USA Compliance Checklist
ℹ How to Use This Checklist |
Go through each item and confirm it applies to your company structure and state of formation. |
Use the free PDF version (link below) to track completion with checkboxes throughout the year. |
Review this list every January to reset your annual compliance calendar. |
Federal IRS Compliance
- Determine correct entity tax classification (disregarded entity, partnership, C-Corp, S-Corp)
- File annual tax return by deadline (Form 1120 / 1065 / 1120-S)
- File Form 5472 if you are a foreign-owned single-member LLC (attached to Form 1120)
- File Form 7004 if you need a filing extension (before original due date)
- Obtain an EIN (Employer Identification Number) if you haven’t already
- Apply for ITIN if you are a foreign individual who needs to sign tax returns
State Compliance
- Identify annual report requirements and deadlines for your state(s) of registration
- File state annual report on time each year
- Pay Delaware franchise tax / annual LLC tax if registered in Delaware
- Pay Wyoming annual report fee if registered in Wyoming
- Register as a foreign entity in any state where you have physical nexus
- Confirm your registered agent is active and will receive state correspondence
BOI / FinCEN Reporting (2026 Update)
- US-formed LLC or C-Corp: no BOI report or update is required since August 2026
- Foreign-formed entity registered in a US state: file BOI covering non-US beneficial owners
- Recheck fincen.gov/boi each January in case the rule changes
Payroll Tax (If Applicable)
- Confirm whether your company has employees who trigger US payroll tax obligations
- Set up payroll system to withhold and remit FICA, FUTA, and state payroll taxes
- File quarterly payroll tax returns (Form 941) if you have employees
- File Form W-2 for employees and Form 1099-NEC for US contractors by January 31
Sales Tax (If Applicable)
- Determine whether you have physical or economic nexus in any US state
- Register for sales tax permits in states where nexus exists
- Set up sales tax collection on your website or platform
- File sales tax returns on required schedule (monthly, quarterly, or annual by state)
Good Standing & Records
- Keep your registered agent active and address current in all states
- Maintain your company’s operating agreement / shareholder agreements
- Keep records of all bank accounts, transactions, and financial statements
- Order a Good Standing Certificate before any major business transaction
- Store all IRS correspondence, state notices, and tax returns for minimum 7 years
Frequently Asked Questions (FAQ)
Do I need to file with the IRS if my US company made no money?
In most cases, yes. Foreign-owned single-member LLCs must file Form 1120 + Form 5472 regardless of income if they had any transactions with their foreign owner including capital contributions. C-Corps must file Form 1120 regardless of revenue. Failure to file when required triggers automatic penalties.
What is the penalty for missing Form 5472?
The penalty is $25,000 per form, per tax year, assessed automatically. Additional penalties of $25,000 apply for each 90-day period the failure continues after IRS notification. First-time penalty abatement is available but must be formally requested.
Can I file my own US company taxes as a foreign owner?
Technically yes, but it is strongly not recommended. The reporting requirements for foreign-owned US companies are complex, and mistakes are costly. The cost of a US CPA who specializes in international tax ($500–$2,000 annually for a simple structure) is far less than even one missed Form 5472 penalty.
What is the difference between a state annual report and a tax return?
A state annual report is a simple informational filing with the Secretary of State confirming your company’s basic details (registered agent, address, members). A state tax return is a separate filing with the state’s tax authority reporting income and calculating tax owed. Many states require both, on different deadlines, filed with different agencies.
Does my Wyoming LLC need to collect sales tax?
Wyoming imposes sales tax, but whether your LLC needs to collect it depends on what you sell and where your customers are. If you sell to customers in other states, you need to analyze nexus in each state independently. If you only sell services and have no nexus in states with service-based sales taxes, you may have no collection obligation.
When is the BOI report due for my company?
If your company was formed in the US, never. FinCEN’s final rule, effective 14 August 2026, permanently exempts US-formed LLCs, corporations and LPs from BOI reporting, whoever owns them. Only entities formed under foreign law and registered to do business in a US state still file, reporting their non-US beneficial owners. See fincen.gov/boi for the current rule.
What happens if my company loses good standing?
A company that loses good standing can no longer legally do business in that state, cannot obtain a certificate of good standing for banking or contracts, may have its business licenses revoked, and may ultimately be administratively dissolved. Reinstatement is possible in most states but requires paying all past-due fees, penalties, and filing any missing reports.
Final Thoughts: Build Compliance Into Your Calendar
US company compliance is not complicated once you know the system but it requires attention to deadlines and an understanding that federal and state requirements are completely separate from each other.
The most common mistake foreign founders make is assuming that because they paid to form their company, compliance is handled. It never is. Formation is day one. Compliance is every year after that.
Use the free compliance calendar PDF to set annual reminders for every deadline that applies to your company structure. Build a relationship with a US CPA who understands international tax. And if you’re unsure whether a filing applies to you, err on the side of filing the penalties for over-filing are zero, while the penalties for under-filing are steep.
