Compliance for cross-border entrepreneurs

I performed a focused, multi-source review to collect authoritative, up-to-date (through early Jan 2026) guidance for U.S. business owners and LLC founders operating across borders. The research prioritized official government sources (IRS, FinCEN, Treasury/OFAC, BIS, CBP, SBA) and high-quality practitioner guidance where it clarified practical filings and pitfalls (e.g., Form 5472 filing practice).

The summary below distills the compliance obligations, deadlines, penalties, and a practical startup/ongoing compliance checklist you can use to draft the requested blog and newsletter content. Key findings (condensed): 1) Form 5472 and pro forma Form 1120 for foreign-owned U.S. entities - Foreign-owned U.S. entities (including many single‑member LLCs treated as disregarded entities) must file Form 5472 and attach a pro forma Form 1120 when they have reportable transactions with related parties.

Penalties for failure to file are severe (e.g., $25,000 initial penalty and continuing penalties). Action: obtain EIN, understand reportable transactions (capital contributions, loans, management fees, distributions), file Form 5472 by the applicable tax deadline and maintain detailed records. 2) Beneficial Ownership Information (BOI) reporting (FinCEN/CTA) — recent change - As of the FinCEN interim final rule (March 26, 2025), FinCEN revised the scope: U.S.-created entities (domestic companies) are exempted from BOI reporting; reporting companies are defined to be foreign entities that have registered to do business in the U.S.

There are transitional deadlines for foreign entities that registered before March 26, 2025 (file by April 25, 2025) and new-registrations must file within 30 days after notice of effective registration.

Action: determine whether your entity is a foreign entity required to file BOI; if so, file via FinCEN e-filing and follow the exemption rules closely. 3) FBAR (FinCEN Form 114) and FATCA/8938 - U.S. persons (including U.S. entities and certain owners) must report foreign financial accounts by FBAR (FinCEN Form 114) when aggregate foreign accounts exceed $10,000 at any time during the year.

FATCA/Form 8938 obligations apply for specified individuals with foreign financial assets over reporting thresholds. Action: inventory foreign accounts, set calendar reminders, and file FBAR and any FATCA-related forms as required. 4) Withholding taxes and information returns for payments to foreign persons - Withholding rules (Publication 515) and Forms 1042/1042-S and related guidance apply when the U.S. business makes payments to foreign persons (FDAP income).

Payments to foreign partners (effectively connected income) trigger other filings (Forms 8804/8805). Action: screen payees, determine withholding obligations, collect W-8 forms, apply tax treaty reductions where appropriate, and file required returns and Forms 1042-S. 5) Entity choice, state registration, and nexus/sales tax - The entity type (LLC vs.

C-Corp) impacts U.S. tax treatment for foreign owners (e.g., pass-through phantom income for LLC members vs. corporate taxation). Forming in one state (e.g., Delaware/Wyoming) doesn’t avoid multi-state nexus; states have different fees (e.g., California $800 minimum franchise tax) and foreign qualification rules.

Action: choose entity type with international owners in mind, register (foreign qualify) in states where you “do business,” and track sales-tax economic nexus thresholds.

I performed a focused, multi-source review to collect authoritative, up-to-date (through early Jan 2026) guidance for U.S. business owners and LLC founders operating across borders. The research prioritized official government sources (IRS, FinCEN, Treasury/OFAC, BIS, CBP, SBA) and high-quality practitioner guidance where it clarified practical filings and pitfalls (e.g., Form 5472 filing practice).

The summary below distills the compliance obligations, deadlines, penalties, and a practical startup/ongoing compliance checklist you can use to draft the requested blog and newsletter content. Key findings (condensed): 1) Form 5472 and pro forma Form 1120 for foreign-owned U.S. entities - Foreign-owned U.S. entities (including many single‑member LLCs treated as disregarded entities) must file Form 5472 and attach a pro forma Form 1120 when they have reportable transactions with related parties.

Penalties for failure to file are severe (e.g., $25,000 initial penalty and continuing penalties). Action: obtain EIN, understand reportable transactions (capital contributions, loans, management fees, distributions), file Form 5472 by the applicable tax deadline and maintain detailed records. 2) Beneficial Ownership Information (BOI) reporting (FinCEN/CTA) — recent change - As of the FinCEN interim final rule (March 26, 2025), FinCEN revised the scope: U.S.-created entities (domestic companies) are exempted from BOI reporting; reporting companies are defined to be foreign entities that have registered to do business in the U.S.

There are transitional deadlines for foreign entities that registered before March 26, 2025 (file by April 25, 2025) and new-registrations must file within 30 days after notice of effective registration.

Action: determine whether your entity is a foreign entity required to file BOI; if so, file via FinCEN e-filing and follow the exemption rules closely. 3) FBAR (FinCEN Form 114) and FATCA/8938

114) when aggregate foreign accounts exceed $10,000 at any time during the year. FATCA/Form 8938 obligations apply for specified individuals with foreign financial assets over reporting thresholds.

Action: inventory foreign accounts, set calendar reminders, and file FBAR and any FATCA-related forms as required. 4) Withholding taxes and information returns for payments to foreign persons

515) and Forms 1042/1042-S and related guidance apply when the U.S. business makes payments to foreign persons (FDAP income). Payments to foreign partners (effectively connected income) trigger other filings (Forms 8804/8805).

Action: screen payees, determine withholding obligations, collect W-8 forms, apply tax treaty reductions where appropriate, and file required returns and Forms 1042-S. 5) Entity choice, state registration, and nexus/sales tax - The entity type (LLC vs.

C-Corp) impacts U.S. tax treatment for foreign owners (e.g., pass-through phantom income for LLC members vs. corporate taxation). Forming in one state (e.g., Delaware/Wyoming) doesn’t avoid multi-state nexus; states have different fees (e.g., California $800 minimum franchise tax) and foreign qualification rules.

Action: choose entity type with international owners in mind, register (foreign qualify) in states where you “do business,” and track sales-tax economic nexus thresholds.

• U.S. persons (including U.S. entities and certain owners) must report foreign financial accounts by FBAR (FinCEN Form
• Withholding rules (Publication

Banking, KYC/AML, sanctions (OFAC) and FinCEN considerations - Banks apply strict KYC/AML and sanctions screening. OFAC SDN/sectoral sanctions require screening counterparties and transactions. FinCEN monitoring and AML rules affect banking relationships. Action

prepare KYC documents (EIN, operating agreement, ownership data), screen for sanctions lists, and consult counsel if you work in sanctioned jurisdictions or with high-risk counterparties.

Export controls, customs, and imports - Exports may be subject to BIS (EAR) or State (ITAR) controls; classification and license determinations are required for controlled items/technology. Imports must meet CBP requirements (HTSUS classification, duties, de minimis rules such as $800 Section 321 for qualifying shipments, and using customs brokers). Action

classify products, check licensing requirements, budget duties and fees, and use a customs broker for imports. 8) Employment/immigration and payroll compliance - Hiring U.S. employees or sponsoring foreign workers requires immigration authorization, payroll withholding (federal and state), unemployment insurance, and worker classification compliance. Action: verify work authorization, register for payroll accounts, collect I-9, and remit withholdings.

Data privacy and IP - Cross-border data transfers may trigger GDPR or state privacy laws. IP protection requires filings/timely registrations and careful licensing agreements. Action

adopt privacy policies, consider data transfer mechanisms, and register trademarks/patents where needed.

Common pitfalls & penalties - Major risks

failing to file 5472 (large penalties), missing FBAR/FATCA filings, BOI misinterpretation, uncollected/untimely withholding, and unmanaged multi-state obligations. Action: retain international-tax CPA and counsel; maintain a compliance calendar. Practical checklist (short): - Decide entity type (LLC vs C-Corp) with international tax counsel - Obtain EIN (SS-4) and set up U.S. registered agent and U.S. business bank account - Determine BOI reporting requirement (FinCEN) and file if required - Identify whether Form 5472 applies; obtain EIN and file pro forma Form 1120 + Form 5472 annually - Inventory foreign accounts (FBAR/FinCEN Form 114) and foreign financial assets (FATCA/8938) - Screen payees/customers for OFAC/SDNs and collect W-8s/W-9s as needed - Classify products for export controls; secure licenses if needed - Register and foreign-qualify in states where you do business; track sales-tax nexus - Register payroll accounts and payroll withholding where you employ people - Maintain records, implement KYC/AML processes, and engage qualified CPA/attorney Next steps I recommend before drafting the final blog and newsletter: - Confirm whether you want state-specific callouts for particular states (e.g., CA, NY, DE, FL, WY) or a general “state checklist” (the user’s geotag_states field is “Not available”) - Decide length and tone for the blog (practical checklist vs deep technical guide) and whether to include sample calendar and templates - If you want, I can now draft the full blog post, state-specific sections for selected states, and a newsletter email using the default template and provided subject line. Citations (supporting sources and verbatim excerpts): see citations_excerpts array below for exact excerpts used in the summary.