International SaaS founder compliance

I ran a comprehensive web search and extraction focused on "International SaaS founder compliance" with U.S.-focused guidance (entity formation, tax & reporting, state registration, sales tax nexus, privacy/data transfers, export controls, banking/KYC, employment and payroll, BOI/FinCEN reporting, OFAC). I prioritized authoritative sources (IRS, state SOS/Revenue pages, FinCEN guidance, OFAC, major tax/law firms, and top SaaS compliance resources) and extracted the most relevant guidance to build a complete compliance checklist and state-aware notes for international/foreign SaaS founders targeting the U.S. market. Research steps taken - Performed targeted searches covering: foreign-owned LLC formation, Form 5472, EIN/ITIN, FinCEN BOI (Corporate Transparency Act), sales tax & economic nexus for SaaS/digital goods, state foreign qualification (DE, CA, NY, TX, FL), privacy laws (CCPA/CPRA, Virginia CDPA, GDPR), SCCs/data transfers, OFAC/export controls on software/encryption, banking KYC for foreign entities, employment/payroll withholding and contractor classification, and practical launch checklist items. - Prioritized and extracted compressed content from law firm and specialist guides, SaaS compliance blogs, tax advisory pages, and practical how-to resources. - Collated recurring requirements, traps, deadlines, and recommended operational controls for foreign founders. Key findings and summary (sufficient to draft comprehensive blog content and newsletter) 1) Entity selection & formation - Foreign founders commonly form a U.S. entity (LLC or C-Corp) to improve customer confidence, banking access, and limit litigation exposure. Delaware is frequently recommended for investor-readiness (venture paths), while states like Wyoming/Nevada/Delaware are used for formation but businesses should consider where they actually operate for ongoing compliance. Considerations: investor goals, fundraising, tax exposure, privacy, and maintenance burden. - Banks and payment processors expect a bank-ready packet (articles/operating agreement, EIN confirmation, beneficial-owner IDs, signatory resolutions, business plan/payment flows). Virtual offices alone can trigger additional scrutiny. 2) Federal tax & information reporting (critical for foreign-owned LLCs) - Form 5472: single-member LLCs wholly owned by non-U.S. persons generally must file Form 5472 (informational) with a pro-forma Form 1120; penalties for failure are severe (e.g., $25,000+). This applies even if no U.S. income. Accurate transaction schedules and bookkeeping are required. - EIN/ITIN: non-resident owners need an EIN for the entity; owners may need ITINs when filing personal returns. Many steps can be done remotely but legal/tax counsel helps. - U.S. federal income tax exposure depends on whether activities create effectively connected income (ECI); tax election (e.g., treat LLC as corporation) can change filing and tax rates. 3) Beneficial ownership / BOI (FinCEN Corporate Transparency Act) - New BOI reporting requirements apply to many U.S. entities formed or registered after March 2024/2025 windows; foreign reporting companies generally remain in scope. Missing BOI filings can lead to significant penalties. Maintain accurate beneficial owner records; banks still perform KYC under the CDD rule. 4) Banking & KYC - U.S. banks have strict CDD/AML checks: expect to provide IDs for control persons, operating agreement, EIN, business purpose, and beneficial-owner information. Some fintech banks (Mercury, Wise) can be more accommodating but still require documentation. 5) Sales tax & nexus for SaaS/digital goods - SaaS taxability and nexus rules vary by state and locality; Wayfair (economic nexus) means remote sellers can create sales tax obligations based on revenue or transaction thresholds. Identify taxable events, register in states where nexus occurs, collect and remit taxes, and keep exemption certificates. Sales tax rules and taxability (service vs. software vs. digital goods) differ widely—state research is required for each target market. 6) State registration / foreign qualification - If you maintain physical presence, hire employees, or have regular operations in a state, you will typically need to foreign-qualify (register) there. Failure to register can result in loss of standing to sue in that state and fines. Choose a formation state strategically but plan for multi-state filings as operations expand. 7) Privacy & data protection - U.S. state privacy laws (California CCPA/CPRA, Virginia CDPA, others) and international laws (GDPR) impact SaaS providers. Requirements include data mapping, privacy policy disclosures, rights handling (access, deletion, opt-out), and possibly appointing privacy officers. For international transfers, use appropriate safeguards (SCCs or other lawful mechanisms) and monitor updates. 8) Export controls & sanctions (OFAC) - Software (especially encryption) and certain cloud services can be subject to export control rules and OFAC sanctions screening. Implement sanctions screening, avoid providing services to sanctioned persons/regions, and review export classification for encryption. 9) Employment, contractors & payroll - Hiring U.S. employees creates payroll withholding, unemployment insurance, and employer tax obligations in the state of work. Misclassification of contractors is a common risk. Multi-state payroll withholding rules can apply; engage employer-of-record or local payroll providers where needed. 10) Practical operational checklist for international SaaS founders launching in the U.S. - Formation decision: choose entity type and state aligned with funding and operations. - Obtain EIN; prepare bank-ready packet; open business bank account and payment processing. - File BOI/FinCEN initial report (if applicable) and schedule annual updates as required. - Maintain clean bookkeeping and accounting to support Form 5472 if required. - Evaluate sales tax exposure by state; register and collect where nexus thresholds are met. - Update privacy policy and implement data protection (GDPR/SCCs, CCPA/CPRA compliance where applicable). - Implement OFAC/sanctions screening and export-control review for your product. - Set up payroll and contractor compliance; register for state employment taxes where you have employees. - Maintain calendar of federal and state filing deadlines and penalties; engage a U.S.-focused CPA/attorney for initial setup. State-specific points to include when drafting the blog (targets: general US with callouts for major states) - Delaware: Favored for formation/VC; but operations in other states will require foreign qualification and tax/registering. - California: $800 minimum franchise tax for LLCs, data privacy obligations (CCPA/CPRA), and a high enforcement environment—consider local counsel and privacy compliance. - New York: aggressive tax nexus rules and local payroll/withholding complexities; foreign qualification needed when operating or hiring. - Texas/Florida: Texas has franchise tax; Florida has no personal income tax—consider operational footprint and state filing fees. - Sales-tax-free states (for sales tax purposes): Delaware, Oregon, Montana, New Hampshire, Alaska do not impose statewide sales tax (but Alaska has local taxes). Consider where customers are located rather than formation state for sales tax. Recommendations for content and next steps (for newsletter/blog generation) - Draft a long-form blog post covering: Why form a U.S. entity; choosing state & entity type; step-by-step formation checklist; federal tax & Form 5472 obligations; BOI/FinCEN; banking/KYC; sales tax considerations for SaaS; privacy & data transfer; export controls; hiring & payroll; ongoing compliance calendar and resources/tools. - Include a downloadable checklist and state-by-state quick reference (at least for CA, DE, NY, TX, FL) and links to authoritative resources (IRS, FinCEN, OFAC, state revenue/SOS pages). - Provide CTAs: recommended consult with U.S. CPA/lawyer; offer bank-ready packet template or formation checklist. I am ready to convert this research into: (A) a full blog post (with SEO meta, headings, checklist, state-specific sections), (B) a newsletter draft (subject line provided), and (C) downloadable checklist/CTA items. Please confirm which deliverables you want next and any preferred tone/length for the blog/newsletter.