How to Pay Yourself From a US LLC as a Non-Resident

You take distributions, not a salary. For income tax purposes a single-member LLC is disregarded, so you are not its employee and you do not put yourself on payroll. Every movement between you and the LLC — a draw, a loan either way, a reimbursement, or a real service fee — is a reportable transaction that belongs on Form 5472.

The question arrives in almost every intake form: how do I pay myself? Usually there is a Wyoming or New Mexico LLC, a US business account, clients paying in through Stripe or Wise, and a growing balance the owner wants to move abroad.

There is no payroll to run and no wage to calculate. What matters is labelling each movement in terms that survive contact with Form 5472, whose categories are not the categories in your bookkeeping app.

Getting the label wrong is the expensive part. The instructions for Form 5472 state that a $25,000 penalty will be assessed on a reporting corporation that fails to file when due and in the manner prescribed, and a filing treated as substantially incomplete is a failure to file.

If you would rather hand over the bank statements than classify the transfers yourself, we prepare and fax the complete package from $149.

Can a non-resident owner take a salary from a US LLC?

No. A single-member LLC that has not elected corporate treatment has no salary to pay its own member, because for income tax purposes the entity and the owner are the same taxpayer.

The IRS states that for income tax purposes an LLC with only one member is treated as an entity disregarded as separate from its owner unless it files Form 8832 and elects corporate treatment, and that the LLC's activities are reflected on its owner's federal tax return (single-member limited liability companies). The same page states that an individual owner of a single-member LLC that operates a trade or business is subject to the tax on net earnings from self employment in the same manner as a sole proprietorship — the treatment of someone self-employed, not of an employee drawing wages.

One line on that page causes genuine confusion: for purposes of employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity, and uses its own name and EIN to report and pay employment taxes. That rule lets your LLC hire staff and run payroll for them. It does not convert the member into one of those employees.

A transfer you call your "salary" is therefore, in substance, a distribution to the owner. The IRS's "Paying yourself" page states that you cannot designate a worker, including yourself, as an employee solely by issuing a Form W-2.

Why does the owner's self-employment position matter to a non-resident?

Because the self-employment tax that normally follows sole-proprietor treatment generally does not reach a non-resident owner, which removes the last reason people reach for a payroll structure.

The IRS states that nonresident aliens are not subject to self-employment tax, that once a nonresident alien becomes a US resident alien under the residency rules they become liable on the same conditions as a US citizen, and that the tax may nonetheless be imposed on a nonresident alien under an international Social Security agreement, known as a Totalization Agreement (Social Security tax, Medicare tax and self-employment).

Whether the LLC's profit attracts US income tax at all is a separate question that turns on facts, and it is the subject of our guide on whether a foreign-owned LLC pays US tax. What your own country does with the money you withdraw is outside our scope; ask your local tax authority or a local adviser.

Neither answer changes the information return. Form 5472 is due on the transactions themselves, profit or no profit.

Where does each way of paying yourself land on Form 5472?

Each movement has a characterisation, and each characterisation has a home on the form. Part IV holds the listed monetary categories; Part V holds the other transactions of a foreign-owned US disregarded entity, described on an attached statement.

Line numbers below are those on the December 2023 revision of Form 5472. All amounts go on the form in US dollars.

How you move the money	How it is characterised	Where it lands on Form 5472	Evidence to keep
Owner draw or distribution	Distribution of the LLC's funds to its owner. Not wages, not a deductible expense	Part V statement, as a distribution, direction LLC to owner	Bank record with date and US dollar amount
A "salary" you pay yourself	Still a distribution. A disregarded entity pays no wages to its own member	Part V statement as a distribution — there is no compensation line for it	The bank record, plus a corrected label in your books
You fund the LLC, at formation or later	Capital contribution	Part V statement, as a contribution, direction owner to LLC	Transfer record and the funding resolution
Loan from you to the LLC	Borrowing by the LLC	Part IV line 17, Amounts borrowed — beginning and ending balance, or the monthly average	Written note: amount, rate, repayment terms
Loan from the LLC to you	Lending by the LLC	Part IV line 31, Amounts loaned — on the same balance basis	Written note plus repayment record
Interest actually charged on either loan	Interest	Part IV line 18, Interest received, or line 32, Interest paid	Interest calculation tied to the note
Reimbursement of an LLC cost you paid personally	Reimbursement, or a contribution if the LLC never repays you	Part V statement, as a reimbursement or contribution, with the direction shown	Receipt for the cost and the transfer
Payment for genuine services under a real arrangement	Service consideration	Part IV line 29, Consideration paid for technical, managerial, engineering, construction, scientific, or like services	Signed agreement, invoice, proof of payment

Part V is worth reading in the original: describe on an attached separate sheet any other transaction as defined by Regulations section 1.482-1(i)(7), such as amounts paid or received in connection with the formation, dissolution, acquisition, and disposition of the entity, including contributions to and distributions from the entity, and check here. That sheet is where an ordinary owner draw gets reported, and our Part V statement example shows the format we use.

For the service row, the label has to be earned. Routine things you do in your capacity as owner are not automatically a service transaction, and inventing a fee to fill a line creates a pricing problem instead of solving a reporting one — read related-party services and management fees before using line 29.

What actually separates a distribution from a loan?

Documentation, before the money moves, and repayment behaviour afterwards.

A loan needs a written note with an amount, a rate and a repayment date, and a repayment history that matches it. Without those, a transfer out is a distribution however the memo field describes it, and a transfer in is a capital contribution.

The reporting mechanics also differ, and this is where filings drift. The instructions require amounts borrowed and amounts loaned — including borrowings and loans in place at the start of the year — to be reported using either the outstanding balance method or the monthly average method. Under the balance method you enter the beginning and ending balances; under the monthly average method you skip the beginning balance line and enter the monthly average. A loan is therefore reported as a balance, not as a list of transfers, while a distribution is reported as an amount that moved.

One rule applies throughout: report gross. Do not net a withdrawal against a contribution made two months later. If a single transfer covered a reimbursement and a draw, split it and support both halves.

How do you turn a year of transfers into the filing?

Work from the bank record, not from memory.

Export every account the LLC used for the whole tax year, including Wise, Mercury, Relay or any payment platform balance.
Set aside customer revenue. What clients paid the LLC is not a related-party transaction; only movements between the LLC and you or another foreign related party are. More cases: reportable transaction examples.
Label every remaining owner movement as a contribution, distribution, loan advance, loan repayment, interest, reimbursement or service payment.
Convert non-US-dollar amounts on a consistent, reasonable basis, and attach the exchange-rate schedule the instructions ask for.
Map each label to its destination — a Part IV line, or the Part V statement — and total each category gross.
Total to the summary lines. The value reported flows to line 1f, and line 1h totals across all Forms 5472 filed for the year. Two foreign related parties usually means two Forms 5472.
Attach Form 5472 to a pro forma Form 1120 with "Foreign-owned U.S. DE" across the top of page 1; only the name and address and items B and E are required there.
Sign and file on paper. A foreign-owned US DE cannot e-file. Fax to 855-887-7737 or mail to Internal Revenue Service, 1973 Rulon White Blvd, M/S 6112, Attn: PIN Unit, Ogden, UT 84201, and keep the timestamped receipt.

Keep the notes, receipts and statements behind each label — our recordkeeping checklist sets out what we ask for.

What if last year's draws were already booked as a salary?

A wrong label is worth fixing, and the fix is a correct filing rather than a rewritten history.

The form has no line reporting wages to the member of a disregarded entity, so an amount described that way has to be reported as what it was — almost always a distribution in Part V. A Form 5472 that omits or mis-states reportable transactions risks being treated as substantially incomplete, which the instructions treat as a failure to file.

If payroll filings or Forms W-2 were actually issued for the owner, that is beyond a reporting correction: employment tax returns and possibly state registrations are involved, and a qualified tax accountant should unwind it.

Getting the package prepared

Our work is the classification and the paperwork: reading the year's statements, separating customer revenue from owner movements, drafting the Part V statement, completing Form 5472 and the pro forma Form 1120, and faxing the package to the Ogden PIN Unit with a timestamped receipt — transmission evidence, not IRS acceptance.

$149 standard (5–7 business days), $199 express (within 3 business days), +$99 per additional past tax year, IRS fax delivery included; see pricing.

A qualified tax accountant reviews each package before submission. We are not a CPA firm and do not give tax advice: we do not decide income tax positions, treaty positions or withholding, and we do not advise on any other country's tax.

Frequently asked questions

Can I put myself on my LLC's payroll as a non-resident owner?

No. A single-member LLC is disregarded from its owner for income tax, so it has no wages to pay its member. The LLC can run payroll for actual employees using its own EIN; the owner takes distributions instead.

Is an owner draw a separate taxable event in the US?

The draw is not a payment between two taxpayers, because the LLC is disregarded from you. Whether the profit itself is taxable in the US turns on other facts: read whether a foreign-owned LLC pays US tax.

Do I issue myself a Form W-2 or 1099?

No. Neither form reports a distribution to the member of a disregarded entity, and the IRS says you cannot designate anyone, including yourself, as an employee just by issuing a W-2.

Do draws still go on Form 5472 if the LLC owed no US tax?

Yes. Form 5472 is an information return about transactions, not a tax return about profit. A distribution to the foreign owner is reportable whether or not any tax was due.

How do I report a loan I made to my LLC?

As a balance on Part IV line 17, Amounts borrowed, using either the beginning and ending balances or the monthly average for the year — not as a list of transfers. Keep the written note.

Will my own country tax the money I withdraw?

Possibly, and that is outside what we do. Your country decides that under its own rules, not by how the movement is labelled on Form 5472. Ask your local tax authority or a local adviser.

Pay yourself by distribution, document anything you want treated as a loan before the money moves, and keep each movement gross and labelled. Do that and the filing is bookkeeping; skip it and it becomes guesswork a year later.

Start your filing, or read the Part V statement example to see how the year's draws are presented.

Splitting the year across several countries? The Form 5472 guide for digital nomads covers filing when you have no single tax residence.

Educational content only; not tax or legal advice.