When choosing a jurisdiction for a future company, it is important to consider not only the cost and registration timelines but also the ongoing convenience of doing business: accounting and tax reporting requirements, the possibility of remote management, and overall administrative burden. These requirements can vary significantly between countries, from simple rules to multi-level models divided between federal and state levels. This is why the United States is often perceived as a jurisdiction with a complex tax system and numerous reporting forms.
In practice, the U.S. accounting and reporting system appears complex only at first glance. In previous materials, we have already reviewed the main types of companies and the specifics of their taxation. In this article, we explain the general logic of accounting and the typical reporting obligations of American companies, including accounting for non-residents, so that business owners can understand how the system works from their perspective.
This article covers the key accounting and reporting requirements for foreign-owned companies and non-residents in the U.S.
- Accounting is based on primary documents
- Tax reporting depends on the company structure
- Obligations may arise at the state level
- In most cases, collaboration with a CPA is required
How to manage Primary Documentation in the U.S.
All companies in the U.S. are required to maintain primary documentation, including invoices, receipts from payment systems (Stripe/PayPal), checks, signed contracts, bank statements, and other supporting documents. Typically, these documents should be retained for 3 to 7 years, depending on the type of transactions, while certain categories (such as assets and capital investments) may need to be kept for a longer period.
Companies must also record all financial transactions in internal accounting. For very small businesses, “manual” tracking in Google Sheets or Excel may suffice, but in most cases, it is more efficient to use accounting software such as QuickBooks or Xero. These platforms allow you to connect your bank account, automatically import transactions, issue invoices to clients, integrate with Stripe, PayPal, Shopify, or Amazon, and work with other tools necessary for regular accounting.
For small companies with low turnover, the owner can often manage basic functions in QuickBooks independently. When transaction volume increases or additional sources of income and expenses arise, bookkeeping is typically outsourced to a bookkeeper. The cost of their services depends on the tasks and volume of transactions, but for small businesses, fees are usually charged hourly.
Preparing Financial Statements and the role of a CPA
At the end of a company’s reporting period, a bookkeeper typically prepares a Profit & Loss statement for the period. Based on this, a Balance Sheet is created, showing assets, liabilities, and equity on a specific date, along with a Cash Flow Statement.
The key factor here is the scale of operations. If a company conducts 10–20 simple transactions per month, it is usually sufficient to consult an accountant at year-end for reconciliation and report preparation.
For companies with hundreds of transactions, such as regular subscriptions, contractor payments, or income from multiple sources, interaction with an accountant needs to be systematic, typically at least quarterly.
Along with bank statements and other supporting documents, these materials are provided to the accountant. In the U.S., this professional is often a CPA (Certified Public Accountant) who prepares tax forms in accordance with requirements and submits them to the IRS.
In addition to federal obligations, companies may have reporting duties at the state level, particularly where there is a nexus: physical presence (office, warehouse, employees) or economic activity (e.g., sales exceeding thresholds). At the state level, Annual Reports and Franchise Taxes are often filed with state agencies (such as the Secretary of State or Department of Revenue) rather than the IRS. Forms, rates, and deadlines depend on the company type (Corporation, LLC, LP) and specific state regulations. Some states, such as Wyoming or Nevada, have no state income tax but may require annual franchise or license fees.
While basic bookkeeping can sometimes be done independently, engaging a CPA in the U.S. is generally a practical solution due to the multi-layered tax system, diverse form requirements, and frequent regulatory updates.
What reporting may arise for non-residents in the USA
The list of forms that may be filed in the U.S. depends on the type of company, the chosen tax regime, and other factors. Below is a generalized overview of typical scenarios for companies owned by non-residents of the U.S. The specific set of forms and filing deadlines are determined individually, depending on the business structure and nature of operations.
Basic reports filed by a company with a foreign owner in the USA
- The most common structure among non-residents is a foreign-owned Single-Member LLC (disregarded entity).
By default, these companies are subject to pass-through taxation: tax obligations arise at the owner level, not at the LLC level. Typically, reporting involves filing Form 5472 together with a pro forma Form 1120. A non-resident owner files Form 1040-NR if they have U.S.-source income or effectively connected income. Form 5472 is used to report transactions with the foreign owner and may be required even if the company has no income. The standard filing deadline is April 15, with an extension available to October 15 if Form 7004 is submitted.
- A different taxation and reporting framework applies to foreign-owned C-Corporations or LLCs that have elected corporate taxation under the check-the-box rules.
In this case, the company pays federal corporate income tax and, if applicable, state taxes. The owner may receive dividends, which are subject to withholding tax: the default rate is 30%, but this may be reduced under an applicable double taxation treaty. Typically, the company files Form 1120 and Form 5472 (for transactions with foreign shareholders). If dividends are paid to a U.S. resident, Form 1099-DIV may apply. For dividends paid to a non-resident, the company generally files an annual withholding agent report (Form 1042) and a form for each foreign recipient (Form 1042-S). The standard filing deadline is April 15, with an extension available to October 15 via Form 7004.
- Another common structure is a foreign-owned Multi-Member LLC, which has multiple partners.
By default, these entities are taxed and reported as partnerships, meaning taxation occurs at the partner level (pass-through taxation) rather than at the company level. Reporting typically involves Form 1065, with a Schedule K-1 prepared for each partner. In certain cases, Form 5472 may also be required if reportable transactions occur with foreign-related parties. If withholding tax applies, companies must file Form 8804 (annual report) and Form 8805 for each foreign partner, even if the withholding amount is $0. The standard deadline is March 15, with an extension available to September 15 via Form 7004.
While U.S. reporting may appear complex, it is structured according to roles: the bookkeeper is responsible for accurate accounting and financial statement preparation, the CPA handles tax forms and filing, and the owner or company administrator ensures timely submission of primary documents and reviews and signs reporting forms as requested by the accountant.
In practice, these processes are carried out through the preparation of specific forms and the submission of reports — you can learn more about this on the page dedicated to U.S. tax reporting preparation and filing services.
Additional reporting requirements for non-residents
In addition to regular tax and financial reporting, U.S. companies may need to complete additional forms in certain situations. For example, if a foreign individual or entity owns a 10% or greater stake, Form BE-12 may be filed once every five years.
When working with non-resident counterparties, companies typically receive W-8 series forms from them and either retain them internally or submit them to their withholding agent. These forms are generally not submitted directly to the IRS but serve as supporting documentation for accurate reporting (particularly in connection with Forms 1042/1042-S).
Employees or co-owners of companies in the United States who receive shares subject to vesting may file a Form 83(b) Election. This form allows them to pay tax on the full value of the shares upfront, at the time they are granted, rather than when the ownership rights vest. It must be filed within 30 days of receiving the shares and can reduce the tax burden if the shares increase in value.
Following changes effective in late March 2025, companies formed in the U.S. (domestic), are generally exempt from filing BOI reports, whereas the obligation mainly remains for foreign companies created abroad and registered to operate in the U.S. through state filings (foreign reporting companies).
If a company has employees in the U.S., additional payroll tax reporting obligations may arise: quarterly federal forms for withholding, Social Security, and Medicare, as well as state-level reports, including state income tax withholding and contributions to state unemployment insurance (SUI).
In summary, beyond the “basic” filings, a company may face additional reporting requirements depending on ownership structure, counterparty type, and the presence of a U.S.-based team. It is therefore important to understand in advance the triggers that initiate additional reporting.
A separate type of obligation is sales tax, which is regulated at the state level.
Sales Tax in the U.S.
Sales tax is a consumption tax often compared to VAT; however, it operates under a different framework in the United States.
There is no single nationwide rate. The tax is established at the state level (state sales tax) and may be supplemented by local rates imposed by counties or municipalities (local sales tax). Unlike VAT, sales tax is a single-stage tax paid by the end consumer. Certain states do not impose sales tax at all, including Oregon, Delaware, New Hampshire, and Montana.
Sales tax may apply to tangible goods as well as certain categories of digital products. Depending on the state, taxable items may include software, data processing services, electronic books, digital audio and video content, streaming services, and other digital products.
The obligation to register for sales tax arises when a company has nexus in a state—either physical presence (office, warehouse, employees, retail location) or by exceeding established thresholds for the number of transactions or total sales (economic nexus). In such cases, the business must obtain a Sales Tax Permit (Seller’s Permit) and acts as a tax collection agent, calculating and collecting tax on each transaction. Collecting sales tax without proper registration is not permitted.
For proper administration, the company must determine the applicable rate based on the place of delivery or consumption (destination-based sourcing), correctly display the tax on invoices or receipts, and retain supporting documentation. The process is largely automated through services such as TaxJar, Avalara, or QuickBooks, which determine the applicable rate for each transaction, calculate the tax amount, and generate reporting data. Integrations with Shopify, Stripe, and WooCommerce allow tax to be calculated at checkout. Marketplaces such as Amazon, Etsy, and eBay collect and remit sales tax on behalf of sellers in many states; however, sellers may still be required to register and file reports, even if those reports reflect zero tax due.
After collecting sales tax, the company files a Sales Tax Return and remits the corresponding amount to the state. The filing frequency is determined individually by each state and depends on the volume of taxable sales: the higher the turnover, the more frequently returns must be filed. Even if no sales occurred during the reporting period, a zero return is generally required. There is no single federal form, each state determines the format, title, and method of submission for its sales tax return.
For example, in Wyoming, different forms apply depending on filing frequency: Form 41-1 (monthly or quarterly reporting), Form 42-1 (annual reporting), or Form 43-1 (for one-time or occasional sales).
Conclusion
Although the U.S. accounting and tax reporting system may initially appear complex, in practice it is structured and predictable. The use of automated tools, well-organized primary recordkeeping, and a clear understanding of key reporting obligations allow these processes to be managed efficiently without excessive administrative burden.
The key factors remain the consistent maintenance and retention of primary documentation, timely preparation of required forms, and proper oversight of tax liabilities at both the federal and state levels. With this approach, even foreign owners can organize the financial and tax aspects of their company in a way that enables them to focus on operations and business development.
Frequently asked questions about accounting and reporting in the U.S. for non-residents
Retain all invoices, receipts, contracts, and bank statements in either electronic or paper form. In the U.S., financial documents are typically stored for 3 to 7 years, and for certain transactions, longer. A systematic approach to document management significantly simplifies reporting preparation and reduces the risk of errors.
Formally, no. However, in practice, it greatly simplifies accounting. Systems such as QuickBooks or Xero allow automatic import of bank transactions, integration with Stripe, PayPal, Shopify, or Amazon, preparation of financial statements, and generation of data for tax reporting.
In most cases, yes. Even if basic bookkeeping is performed by the owner, a CPA ensures proper preparation of federal and state tax forms, takes into account the specific tax treatment of the company’s structure, and reduces the risk of penalties.
State obligations arise when a company has nexus—either physical presence or economic activity (exceeding sales or transaction thresholds). In such cases, filings such as an Annual Report, Franchise Tax return, or Sales Tax Return may be required.
Take a proactive approach: regularly provide documentation for bookkeeping, plan tax payments in advance, and review and approve reporting forms in a timely manner. This helps prevent penalties and allows you to focus on business development rather than resolving urgent compliance issues.
Not necessarily. U.S. tax obligations depend on the company’s structure, state of registration, type of activity, and sources of income. Solutions that work for one business may be unsuitable or risky for another.
Disclaimer
The information provided in this article is for informational purposes only and does not constitute tax, legal, or accounting advice. Although we strive to ensure the accuracy and relevance of the material, U.S. tax and corporate regulations may change, and their application depends on the specific circumstances of each company.
Before making any decisions regarding company formation, accounting practices, tax reporting, or the sale of goods and services in the U.S., we recommend obtaining individualized advice from a qualified tax professional, CPA, or licensed attorney in the relevant jurisdiction.
