LLC or C-corp: the right entity for entering the United States

Key points

• The decision is mainly a tax question involving both the US and your home country. Corporate law is secondary.

• A Delaware entity that operates in New York must also register in New York, so you deal with two states.

• A US LLC wholly owned by a foreign person must file Form 5472 with a pro forma Form 1120 each year, even with no US income. The penalty for not filing is $25,000.

• Foreign applicants can obtain an EIN by phone, fax or mail, but not through the IRS online application.

• FinCEN’s final rule, effective August 14, 2026, permanently removed beneficial ownership reporting for US companies and US persons.

LLC or C-corp: the general considerations

A C-corporation is taxed as a separate entity in the US. It is the familiar form for US investors and venture funds, and it keeps the US operation’s tax profile separate from the parent.

An LLC is flexible. Depending on its owners and elections, it can be treated as a disregarded entity, a partnership or a corporation for US tax purposes. How your home country treats a US LLC may differ from how the US treats it, which can create mismatches. This is the main reason the choice needs a tax advisor who knows both systems.

Many operating businesses owned by a foreign parent end up as corporations, but there is no rule that fits everyone.

Delaware or New York

Delaware is widely used for its established corporate law and courts, and investors are used to it. If the business operates in New York, a Delaware entity must still register in New York as a foreign entity, which means filings and annual obligations in two states.

New York LLCs, and foreign LLCs registering in New York, have a publication requirement. A foreign LLC must publish a notice in two newspapers chosen by the county clerk within 120 days after filing its application for authority, then file a Certificate of Publication, which costs $50. Missing the deadline suspends its authority to do business.

EIN for foreign owners

Every US entity needs an Employer Identification Number to open a bank account, hire and file taxes. The IRS online application is only available when the principal business is located in the US. International applicants can call the IRS at 267-941-1099 (not toll-free), Monday to Friday, 6 a.m. to 11 p.m. Eastern, or submit Form SS-4 by fax or mail. The application must name a responsible party, who must be an individual.

Form 5472 for foreign-owned entities

According to the IRS instructions (revised December 2024), a US corporation that is at least 25 percent foreign-owned files Form 5472 to report transactions with related parties. A US LLC wholly owned by a foreign person and treated as a disregarded entity must also file it, attached to a pro forma Form 1120. The penalty for failing to file is $25,000, with additional penalties if the failure continues after IRS notice.

Opening a bank account

Banks apply customer identification and due diligence rules, so expect to provide formation documents, the EIN, ownership details and identification for owners and signatories. Some banks require a visit in person. Budget time for this step; it is often the one that delays the first US payroll or lease payment.

Beneficial ownership (BOI) reporting in 2026

FinCEN issued a final rule on August 11, 2026, effective August 14, 2026, that permanently removes the requirement for US companies and US persons to report beneficial ownership information. Entities formed under foreign law and registered to do business in a US state can still be reporting companies and may have to report their foreign beneficial owners within 30 days after notice that their registration is effective, unless an exemption applies. If your foreign parent registers directly in a US state, check this point.

Typical sequence

1. Agree on the structure with a cross-border tax advisor and a US corporate attorney.

2. Form the entity and appoint a registered agent.

3. Register in the operating state if formed elsewhere, and complete New York publication if required.

4. Obtain the EIN.

5. Open the bank account and set up payroll and bookkeeping.

6. Calendar annual filings, including Form 5472 where applicable.

How Devolus can help

Devolus coordinates US company setup for foreign brands with partner attorneys and accountants, and handles the operational steps that follow, such as banking, payroll and bookkeeping. Start with the Readiness Check or write to us.