01You need an EIN
Every business that hires, opens a US bank account, or files most returns needs an Employer Identification Number — the IRS's ID for your entity. A foreign-owned single-member LLC must obtain one even with no employees and no US income.
02Your entity type decides your return
How you're taxed follows your structure: a single-member LLC is "disregarded" and flows to the owner's return (Schedule C); a multi-member LLC files a partnership return (Form 1065); an S-corp files 1120-S; a C-corp pays corporate tax and files 1120. The "check-the-box" rules let you elect how an LLC is treated.
03Foreign ownership must be reported — Form 5472
A US disregarded entity that is 25% or more foreign-owned must file Form 5472 with a pro forma 1120 every year — even with zero income — reporting transactions with its foreign owner. Missing it is a $25,000 penalty, plus $25,000 for every 30 days after the IRS notifies you.
04You must keep your books
The law requires you to keep records that support every figure on your return — income, expenses, deductions. Keep them generally three years (up to seven for some items). No books, no defense in an audit.
05Taxes are paid quarterly, not just in April
Businesses and the self-employed pay estimated tax four times a year — roughly April 15, June 15, September 15, and January 15 — or face an underpayment penalty. April is the reconciliation, not the only payment.
06Self-employment tax — 15.3%
If you run a sole proprietorship or are a partner, your net earnings carry a 15.3% self-employment tax (Social Security + Medicare) on top of income tax. Many first-time owners forget this and under-budget.
07Payroll: withhold, match, and deposit on schedule
Employers withhold income tax and the employee's share of Social Security/Medicare, match the employer share, and deposit on a monthly or semi-weekly schedule (set by your prior-year liability), reporting on Form 941. Late deposits draw fast penalties.
08Federal unemployment tax (FUTA)
On top of FICA, employers owe federal unemployment tax, reported yearly on Form 940, with a quarterly deposit once your liability passes $500.
09Unpaid payroll tax is personal — the Trust Fund Recovery Penalty
Withheld payroll taxes are held "in trust" for the government. If they aren't paid over, the IRS can pursue the responsible person individually for 100% of the amount — the corporate shield does not protect you here. This is the single most dangerous rule for a small employer.
10Employee vs. independent contractor
You can't just call a worker a "contractor" to skip payroll tax. The IRS applies a common-law control test; misclassification means back taxes, interest, and penalties. Employees get a W-2; genuine contractors get a 1099-NEC.
11Report what you pay others — Form 1099-NEC
Pay a non-employee (contractor, freelancer) $600 or more in a year for services and you must report it on Form 1099-NEC and send them a copy by January 31.
12S-corp owners must take a reasonable salary
If you elect S-corp status, you can't pay yourself only in distributions to dodge payroll tax. The law requires owner-employees to take reasonable W-2 compensation first; the IRS reclassifies distributions that are too low.
13Sales tax follows your customers — the Wayfair rule
Since the Supreme Court's Wayfair decision, a state can require you to collect its sales tax once your sales into that state cross an economic-nexus threshold (commonly $100,000 a year) — even with no physical presence there.
14States have their own annual filing and franchise taxes
On top of federal, most states require an annual report and/or a franchise tax to keep your entity in good standing — from $0 (e.g., Ohio, New Mexico) to $800 (California), each with its own due date. Miss it and the state can dissolve your company.
15Beneficial-ownership reporting (Corporate Transparency Act)
The CTA created a federal beneficial-ownership registry at FinCEN. As of 2026, entities formed in the US are exempt (an interim rule in March 2025 removed the requirement for domestic companies); only entities formed under foreign law and registered to do business in a US state must file a BOI report. If that's you, the deadline is tight.
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