If you're a founder outside the US selling online, someone has probably told you to "just get a Wyoming LLC". It's cheap, Stripe works, and there's supposedly no tax. Sometimes that's genuinely the right move. Often it's the right move for a reason the person giving the advice didn't explain.
So here's the comparison properly, US LLC against a Hong Kong limited company, for someone who isn't a US citizen or resident.
To be upfront, I form and run Hong Kong companies. I don't form US LLCs or prepare US tax returns. For that side, use a US CPA or a US formation service you trust.
What a single-member LLC really is for tax
A US LLC owned by one foreign person is, by default, a disregarded entity for US federal tax. The IRS looks straight through it as if the business belongs to you personally. The LLC itself pays no federal income tax.
If you're not doing business inside the US (more on that below), you often owe no US income tax either. That's where the "no tax" story comes from.
But the profit doesn't vanish. It's treated as yours, and your home country will usually tax it as your personal income, at your personal rates, in the year it's earned. For a founder in a high tax country, that can be a lot worse than paying corporate tax in a company and taking dividends later. The LLC doesn't remove the tax. It moves it home.
The filing everyone forgets: Form 5472
A foreign-owned single-member LLC has to file Form 5472 attached to a pro forma Form 1120 every year, even if it made no money and owes no tax. The form reports transactions between the LLC and its foreign owner, which includes you putting money in or taking money out.
It can't be e-filed. It goes by fax or post, and it's due on the corporate return date, which is 15 April for a calendar year, with an extension available on Form 7004.
The penalty for not filing, or filing a substantially incomplete form, is USD 25,000. If you still haven't filed 90 days after the IRS writes to you, another USD 25,000 applies for each further 30 days. People get caught by this every year because nobody told them the form existed.
When the US does tax you
The "no US tax" position only holds if you aren't engaged in a US trade or business. If you are, the profit connected to it is effectively connected income, and you file a US non-resident return (Form 1040-NR) and pay US tax on it. You'd then need an ITIN, a US taxpayer number for people who can't get a Social Security number.
What counts as a US trade or business is a judgement call. A US office, US staff, a US agent who signs deals for you, or stock held in US warehouses can all push you over the line. A treaty between the US and your home country may change the answer. This is exactly where you need a US CPA, not a forum thread.
Separately, if you sell physical goods to US customers, state sales tax can apply once you pass a state's sales threshold, LLC or no LLC.
How your home country sees an LLC
This is the part most advice skips. The US sees your LLC as transparent. Your home country might not.
Some countries treat a US LLC like a normal company. The UK is the well-known example, where the tax authority has long treated US LLCs as opaque, though it consulted in 2025 on changing that for individual owners. Other countries treat it as see-through, and some have no clear rule at all.
When the two sides disagree, you can end up taxed at the wrong time, taxed twice, or unable to claim credit for tax paid in the other country. Ask a tax adviser in your own country how they treat a US LLC before you form one. A Hong Kong limited company doesn't have this problem. Every tax system recognises it as a company.
Side by side
| Hong Kong limited company | US single-member LLC (foreign owner) | |
|---|---|---|
| Limited liability | Yes | Yes |
| Tax at company level | 8.25% on first HKD 2m, 16.5% above | None federally, disregarded entity |
| Where profit is taxed | In the company, offshore profits exempt if you can prove them | On you, usually in your home country |
| Tax on dividends to you | None in Hong Kong | Not applicable, profit is already yours |
| Annual state or registry fee | Business Registration and annual return | Delaware USD 400 tax, or Wyoming USD 60 minimum |
| Key annual filings | Profits tax return, audited accounts, annual return | Form 5472 with pro forma 1120 |
| Audit | Mandatory every year | Not required |
| VAT or sales tax | None | State sales tax can apply to US sales |
| Bank and Stripe access | Bank accounts harder, Stripe available | Remote US fintech accounts common, Stripe straightforward |
Costs, and the Delaware change
A US LLC is cheap to keep alive. Wyoming charges USD 100 to form one, and its annual report licence tax is USD 60 or two hundredths of a cent per dollar of Wyoming assets, whichever is higher. For most foreign founders, that's USD 60.
Delaware has gone up. Its flat annual LLC tax was USD 300 for years. House Bill 400, signed in May 2026, raised it to USD 400, and the first USD 400 bill is the one due on 1 June 2027. Lots of websites still say USD 300.
Add a registered agent, typically USD 50 to 300 a year, and a US preparer for Form 5472, typically USD 300 to 1,000. Then add whatever your home country accountant charges to report the income on your personal return.
A Hong Kong company costs more, usually HKD 20,000 to 45,000 in year one, mostly because of the mandatory audit, accounting and company secretary. You're paying for a real company with its own tax position, not a pass-through.
BOI, banking and Stripe
BOI reporting. The Corporate Transparency Act was meant to make every small US company report its owners to FinCEN. In March 2025 an interim rule exempted all US-formed companies, and a final rule effective 14 August 2026 made that permanent. Only companies formed outside the US and registered to do business there still report. A plain Delaware or Wyoming LLC doesn't file BOI with FinCEN now. Some states have their own rules, New York for example, so check yours.
EIN. You don't need a Social Security number to get an EIN for your LLC. Foreign owners apply with Form SS-4 by fax or post instead of online.
Banking and payments. This is where the LLC genuinely wins. Several US fintech banks open accounts for foreign-owned LLCs remotely, and Stripe onboarding is simple. Hong Kong banks are slower for foreign-owned companies, sometimes months. Stripe does operate in Hong Kong, so if Stripe is your only reason for the LLC, check whether your Hong Kong company could use it directly.
What a Hong Kong company gives you instead
A Hong Kong company is a separate taxpayer. It pays profits tax at 8.25% on the first HKD 2 million and 16.5% above, there's no tax on dividends, and there's no VAT. Under the territorial system, profits from work genuinely done outside Hong Kong can be claimed as offshore, though you need evidence and it isn't automatic.
It also carries weight in Asia. Suppliers in China and across the region know what a Hong Kong company is. Opening a factory account or a supplier contract is easier with one than with a Wyoming LLC they've never heard of.
One thing to know: Hong Kong and the US have no comprehensive tax treaty. That rarely matters for a small trading company, but it does if you mix the two.
So which one
Pick a US LLC if most of your customers are American, you need US payment rails and a US bank account quickly, and your home country handles LLC income sensibly. Stay on top of Form 5472 every year.
Pick a Hong Kong company if your business is Asia facing, you buy from Chinese or Asian suppliers, or you want a proper corporate tax position where profit can stay in the company instead of landing straight on your personal return.
Some founders end up with both, often a Hong Kong company that owns a US LLC for American sales. That can work well, but it needs advice on both sides. If you want to talk through whether a Hong Kong company fits, book a free fifteen-minute call. I'll say so if it doesn't.
Common questions
Does a US LLC pay no tax?
A foreign-owned single-member LLC usually pays no federal tax itself, and you may owe no US tax if you're not doing business in the US. But the profit is treated as yours, so your home country will usually tax it.
What happens if I don't file Form 5472?
The penalty is USD 25,000 per form, with more if you don't fix it after the IRS writes to you. It applies even if the LLC made no money.
Does my US LLC need to file a BOI report?
Not with FinCEN, as things stand. Since March 2025, and permanently since a final rule effective 14 August 2026, US-formed companies are exempt. Some states have their own disclosure rules.
Is the Delaware LLC tax still USD 300?
No. It rises to USD 400 under House Bill 400, with the first USD 400 payment due 1 June 2027. Wyoming's minimum is still USD 60.
Can a Hong Kong company use Stripe?
Yes, Stripe operates in Hong Kong. The bigger hurdle for a Hong Kong company is usually opening the bank account.
Do I need an ITIN for a US LLC?
Not to get an EIN. You'd need one if you have to file a US personal return because the LLC is doing business in the US.
Can you form my US LLC?
No. I only set up and run Hong Kong companies. For the US side, use a US CPA or formation service.
