LLC Formation Services and the Tax Filing They Leave Out
Summary
Formation and compliance packages cover state registration and annual reports. None of them file Form 5472, the annual federal return a foreign-owned LLC owes with a $25,000 penalty.
Formation services register your company with a US state. Compliance add-ons keep that registration in good standing. Neither of those things is your federal tax filing, and for a foreign-owned LLC the federal filing is the one carrying a $25,000 annual penalty. That gap is structural rather than accidental, and it is the same across every provider.
This page explains what each category of service actually covers, what the compliance products mean by the word compliance, and which obligation is left sitting with you no matter which provider you chose.
What you bought and what it covers
Formation providers sell three distinct things, often bundled so tightly that they read as one purchase. Separating them is the whole point of this page.
| Service | What it actually does | Covers Form 5472? |
|---|---|---|
| Company formation | Files articles with the state, obtains the EIN | No |
| Registered agent | Receives legal and state mail at a US address | No |
| Compliance subscription | Tracks and files state annual reports | No |
The conclusion that matters: no mainstream formation package includes the federal Form 5472 filing for a foreign-owned LLC. Formation is a one-off state registration. Registered agent service is a mailing address. A compliance subscription tracks state deadlines. The annual IRS information return sits outside all three, and it is the only one of these obligations with a five-figure penalty attached.
What a compliance subscription actually covers
The phrase is a product name, and it means state compliance specifically.
ZenBusiness sells a subscription under that name which tracks state annual report deadlines, sends reminders, and files the annual report with the state on your behalf, along with a limited number of amendments. It is a real service and it does what it says. What it does not do, and does not claim to do, is file anything with the IRS.
The word "compliance" is doing a lot of work in that name, and it is where foreign founders are most often misled, usually by their own reasonable reading rather than by the seller. If a company is filing your compliance, the natural inference is that your filings are handled. For a US-resident owner of a US LLC that inference is close to correct, because a domestic single-member LLC often has no separate federal return at all. For a foreign owner it is wrong, because foreign ownership adds an information return that domestic ownership does not.
The same reading applies to every provider's equivalent product whatever it is called. Read these subscriptions as state annual report services, because that is what they are.
Provider by provider, Incfile, Bizee and ZenBusiness compared goes through what Worry-Free Compliance and its equivalents cover at the state level, and what each one leaves with you.
Why the federal filing is never included
There is a practical reason, and understanding it prevents the assumption from recurring.
Filing Form 5472 requires knowledge the formation provider does not hold. It requires the total of every transaction between the LLC and its foreign owner during the year, in both directions, including capital contributions and distributions. A registered agent knows your company name, your state and your mailing address. It does not know what you transferred from your personal account in Karachi to your Mercury account in March.
Neither can the form be automated from a bank feed, because the reporting entity has to characterise each amount. So the filing sits where the information sits, which is with you. For what that filing involves, see the complete guide to Form 5472.
The gap, stated plainly
A foreign-owned US single-member LLC owes an annual Form 5472 attached to a pro forma Form 1120, due April 15, extended to October 15 by Form 7004. The penalty for not filing is $25,000 per form, per year, under IRC §6038A(d)(1), and it applies whether or not the LLC earned anything.
Under IRC §6038A(d)(2) a further $25,000 applies for each 30-day period once 90 days have run from an IRS notice. Under IRC §6501(c)(8) the statute of limitations on the whole return does not begin until the information is filed, so an unfiled year stays open indefinitely rather than ageing out.
Set against that, the state annual report a compliance subscription files for you typically costs a modest state fee, and missing it leads to administrative dissolution, which is recoverable. The two obligations are not comparable in consequence, and the cheaper one is the one being monitored.
If your LLC is foreign-owned with a single related party and standard transactions, filetax.co generates your completed Form 5472 and pro forma 1120 packet in under 15 minutes for $99.
How the providers differ, and where they do not
Providers differ in price, in interface, in how aggressively they upsell, and in whether registered agent service is bundled or separate. Those differences are real and worth comparing on their own terms.
On the federal filing they do not differ. Whether the company was formed through Stripe Atlas, doola, Firstbase, Bizee, ZenBusiness or Northwest, the Form 5472 obligation is identical and it is not included. The provider-specific detail is covered separately: what doola's compliance package covers, the federal gap for Bizee and ZenBusiness customers, and Northwest registered agent and LLC tax.
One genuine difference is worth knowing. Some providers bundled beneficial ownership reporting as a paid service during 2024 and early 2025. That obligation no longer exists for US-formed entities, and what changed for Firstbase customers covers how that unwound.
Changing provider does not change the filing
Moving your registered agent or cancelling a compliance subscription has no effect on the Form 5472 obligation in either direction. It was never included, so cancelling removes nothing, and switching adds nothing.
It also does not reset anything historic. Years that were already missed stay missed and stay open. If you are leaving a provider, the useful step is not choosing a replacement subscription but establishing which years since formation had a reportable transaction and were never filed.
What to do with this
Work out which years are actually open. List every year since formation, mark the ones where money moved between you and the LLC in either direction, and treat each of those as a required Form 5472. The formation year is almost always one of them, because funding the company is itself a reportable transaction. The entity-level picture of every obligation is at what a foreign-owned US LLC has to file.
Keep the state subscription if you value not tracking annual report deadlines. It is a reasonable purchase for what it is. Just do not read it as covering the federal return. For a single current year with one related party and ordinary transactions, filetax.co produces the completed packet in under 15 minutes for $99. Where there are several unfiled years, real US-source income, or more than four related parties, an automated tool is not the right solution and a qualified CPA review is the appropriate next step.
What founders ask about formation services and tax
Does my formation package include Form 5472?
No. No mainstream formation package includes the federal Form 5472 filing for a foreign-owned LLC. Formation registers the company with a state, and Form 5472 is an annual IRS information return that sits outside that service.
Is Bizee or ZenBusiness better for a foreign owner?
On the federal filing the answer does not depend on the provider, because neither includes Form 5472. Compare them on price, registered agent terms and interface, and plan to handle the federal information return separately either way.
Does doola file my taxes?
Check what the specific package covers rather than assuming, because offerings change. The durable point is that state compliance and federal information reporting are different products, and the Form 5472 obligation rests with the entity and its owner regardless.
My registered agent forwards my IRS mail. Is that enough?
No. A registered agent receives and forwards correspondence. It does not prepare or file anything with the IRS, and an IRS notice arriving through your agent means the filing obligation was already missed.
I paid for a compliance subscription and still got an IRS penalty. How?
The subscription covers state annual reports. The penalty came from a federal information return that was never part of it. The two obligations run to different authorities under different rules, and only one of them was being tracked.
Do I still need a BOI report through my formation provider?
No. FinCEN's interim final rule of 26 March 2025 exempted all entities formed in the United States, so a US-formed LLC no longer files one regardless of who owns it or who offered to file it.
If I cancel my formation service, do I lose my LLC?
Not directly, but you do need a registered agent in the formation state and you still owe the state's annual report. Cancelling changes neither the state requirement nor the federal Form 5472 obligation.
Which provider handles catch-up filings for missed years?
Formation providers generally do not, because catching up requires reconstructing transactions between you and the LLC for each open year. Where several years are unfiled or there is real US-source income, a qualified CPA review is the appropriate route.
Related pages
Continue reading
Incfile and ZenBusiness - The Annual Tax Gap Foreign Founders Hit →
Incfile (now Bizee) and ZenBusiness handle formation and basic compliance. Foreign-owned LLC owners are responsible for Form 5472 separately.
Is Form 5472 in Your Doola Plan? How to Check in Five Minutes →
Some doola plans include the yearly federal filing for a foreign-owned LLC and some do not. If your plan does not name Form 5472, assume it is yours to file.
Form 5472: The Complete Guide for Foreign-Owned US LLCs →
A foreign-owned US single-member LLC files Form 5472 with a pro forma Form 1120 by April 15. Funding the LLC is itself reportable. Missing it costs $25,000 per form, per year.