# US companies for founders abroad

> No S election, Form 5472 either way, a Delaware flip for companies formed abroad, and the EIN and ITIN from outside the US.

Source: https://lopifi.com/learn/us-company-for-foreign-founders
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**How do non-US founders set up a US company?** No S election, Form 5472 either way, a Delaware flip for companies formed abroad, and the EIN and ITIN from outside the US.

Founders who live outside the US can own a US company, and many raise from US investors through a Delaware corporation. Three things change.

| Question | The rule | Where it's covered |
| --- | --- | --- |
| Can it be an S corporation? | No — a nonresident alien can't be an S shareholder | [The S election](https://lopifi.com/md/learn/s-corporation-election) |
| A single-member LLC? | Disregarded for income tax, but files Form 5472 with a pro forma 1120 | [A foreign-owned LLC](https://lopifi.com/md/learn/us-company-for-foreign-founders/foreign-owned-llc) |
| A US corporation 25%+ foreign-owned? | Form 5472 with its Form 1120 | [Form 5472 and BOI](https://lopifi.com/md/learn/form-5472-and-boi-reporting) |
| Already incorporated abroad? | A new Delaware parent by share exchange | [The Delaware flip](https://lopifi.com/md/learn/us-company-for-foreign-founders/delaware-flip) |
| Taxpayer numbers | EIN for the company; ITIN for a person without an SSN | [EIN and ITIN](https://lopifi.com/md/learn/us-company-for-foreign-founders/ein-and-itin) |

What a non-US founder meets.

> “a corporation shall not be treated as having more than 1 class of stock solely because there are differences in voting rights among the shares of common stock.”

— [26 U.S.C. §1361(b)(1), (c)(4)](https://www.law.cornell.edu/uscode/text/26/1361), Small business corporation: no more than 100 shareholders, eligible shareholders only, one class of stock

*[Figure: w9 tin match]*

Every payer and payee is matched by taxpayer number — the company's EIN, a person's SSN or ITIN. Illustrative.

**Delaware C corporation**
- Pro: What US investors buy.
- Pro: Preferred stock and options.
- Con: Form 1120 and Delaware's filings.
- Con: Form 5472 if 25% or more foreign-owned.
- Con: Founders' home-country tax on their US shares.
- Best for: Founders raising from US venture investors.

**Single-member LLC**
- Pro: No US corporate income tax at the entity.
- Con: Form 5472 and a pro forma 1120 every year, with a $25,000 penalty for missing it.
- Con: The owner's home country may tax the LLC's income directly.
- Best for: A founder selling to US customers with no outside investors.

Two common structures.

> “A foreign-owned U.S. DE is a domestic DE that is wholly owned by a foreign person.”

— [Instructions for Form 5472 (Rev. 12/2024), Foreign-owned U.S. DE](https://www.irs.gov/instructions/i5472), A foreign-owned single-member LLC files Form 5472 with a pro forma Form 1120

> **A foreign founder can't hold an S corporation; a Delaware C corporation is what US investors buy; and foreign ownership adds Form 5472 either way.**

In this lesson: [the Delaware flip](https://lopifi.com/md/learn/us-company-for-foreign-founders/delaware-flip), [a foreign-owned LLC](https://lopifi.com/md/learn/us-company-for-foreign-founders/foreign-owned-llc), and [EINs and ITINs from abroad](https://lopifi.com/md/learn/us-company-for-foreign-founders/ein-and-itin).

## Pages in this lesson

- [The Delaware flip](https://lopifi.com/md/learn/us-company-for-foreign-founders/delaware-flip) — 4 min. What is a Delaware flip?
- [A foreign-owned LLC](https://lopifi.com/md/learn/us-company-for-foreign-founders/foreign-owned-llc) — 2 min. What does a foreign-owned single-member LLC have to file?
- [EIN and ITIN from abroad](https://lopifi.com/md/learn/us-company-for-foreign-founders/ein-and-itin) — 2 min. How does a foreign founder get an EIN or an ITIN?

## Where this lesson's rules come from

- [26 U.S.C. §1361(b)(1), (c)(4)](https://www.law.cornell.edu/uscode/text/26/1361) — Small business corporation: no more than 100 shareholders, eligible shareholders only, one class of stock (statute)
- [Instructions for Form 5472 (Rev. 12/2024), Foreign-owned U.S. DE](https://www.irs.gov/instructions/i5472) — A foreign-owned single-member LLC files Form 5472 with a pro forma Form 1120 (irs)
- [Instructions for Form 5472 (Rev. 12/2024), Penalties](https://www.irs.gov/instructions/i5472) — Information return of a 25% foreign-owned U.S. corporation or a foreign corporation engaged in a U.S. trade or business (irs)
- [IRS, Employer ID numbers](https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers) — An EIN for a company run from outside the United States (irs)
- [IRS, Individual Taxpayer Identification Number](https://www.irs.gov/individuals/individual-taxpayer-identification-number) — ITIN — the individual number for someone without an SSN (irs)

- **Track:** [Entity types](https://lopifi.com/md/learn/entities)
- **Lesson:** Lesson 7 of 9 — 6 min
- **Terms taught:** [Form 5472](https://lopifi.com/md/glossary/form-5472), [ITIN](https://lopifi.com/md/glossary/itin), [Disregarded entity](https://lopifi.com/md/glossary/disregarded-entity), [S corporation](https://lopifi.com/md/glossary/s-corporation)
- **Previous:** [Where to incorporate, Entities · Lesson 6](https://lopifi.com/md/learn/where-to-incorporate)
- **Next:** [The Delaware flip](https://lopifi.com/md/learn/us-company-for-foreign-founders/delaware-flip)
- **The course:** https://lopifi.com/md/learn