Taxes for Pakistani Sellers With a US LLC: A Plain-English Overview

A US LLC is a popular structure for Pakistani ecommerce sellers, but it comes with tax and filing duties in the US and in Pakistan. Some online advice makes it sound like a way to pay no tax at all. The reality is more nuanced, and getting it wrong can be expensive.

This is a plain-English overview for a single-member LLC owned by one person living in Pakistan. It is not tax advice. Your situation depends on your facts, so use a US tax professional who works with non-resident owners and a Pakistani tax adviser.

1. How the IRS sees your LLC

A single-member LLC is, by default, a disregarded entity for US federal income tax. That means the LLC itself does not pay federal income tax; its income is treated as yours.

Because you are a non-resident alien, the US generally taxes you only on:

income effectively connected with a US trade or business (ECI), and
certain US-source income such as some dividends, interest or royalties.

2. Is my ecommerce income taxed in the US?

This is the key question, and the honest answer is: it depends on the facts. Things that point towards a US trade or business include employees or dependent agents in the US, an office or other fixed place of business in the US, and people in the US habitually concluding sales for you. The US–Pakistan tax treaty can also affect whether business profits are taxable in the US, through its permanent establishment rules.

Many non-resident sellers who run their business from Pakistan, with no US staff or office, are advised that their profits are not effectively connected income. Holding stock in third-party warehouses such as Amazon FBA is a grey area that tax professionals assess differently. Do not rely on a blog post, including this one, for your conclusion: get written advice for your specific setup.

If your income is ECI, you would file a US income tax return (Form 1040-NR) and pay US tax on it.

3. Form 5472 and pro forma Form 1120: required every year

Whatever your income tax position, a foreign-owned single-member LLC must file Form 5472 attached to a pro forma Form 1120 each year. It reports "reportable transactions" between the LLC and you, such as money you put in, money you take out and expenses paid on its behalf.

Due date: generally April 15 for calendar-year LLCs, with an extension available using Form 7004.
How: these forms cannot be e-filed by most individuals in this situation; they are usually faxed or posted. Check current IRS instructions.
Penalty: $25,000 for failing to file, or filing an incomplete form, plus more if the failure continues after IRS notice.

This filing applies even if the LLC had no income at all.

4. State fees and reports

Each state has its own yearly requirement. Examples:

Wyoming: an annual report with a license tax, which has a $60 minimum.
Delaware: a $300 annual LLC tax.
New Mexico: no annual report for LLCs.

You also need to keep a registered agent in the state. If you have a real business presence in another state, you may need to register and file there too.

5. Sales tax

US sales tax is set by each state.

Marketplace sales: Amazon, Walmart, eBay, Etsy and TikTok Shop are "marketplace facilitators" in nearly all states with sales tax. They calculate, collect and pay sales tax on sales made through their platforms.
Your own Shopify store: you may need to register and collect sales tax in states where you pass that state's economic nexus threshold (often based on sales value or number of transactions), or where you have physical presence such as stock in a warehouse you control. Shopify's tax tools help track this.

6. Other reporting to be aware of

Beneficial ownership reporting (BOI): the rules for reporting company owners to FinCEN have changed several times. Check FinCEN's current position for your company.
Bank and payment forms: banks and platforms may ask you for Form W-8BEN (for you) or a W-9 (for the LLC) depending on the situation. Answer accurately.

7. Tax in Pakistan

If you are a Pakistani tax resident, Pakistan taxes your worldwide income. Your LLC's profits, which are treated as yours, generally need to be declared in your Pakistani tax return, along with foreign assets such as foreign bank accounts. How the income is taxed depends on its nature and current Pakistani law, so speak to a Pakistani tax adviser. Bringing money home through proper banking channels keeps your records clean.

A simple yearly checklist

Keep the LLC's bank account separate and keep records of every transaction with you.
Pay your registered agent and file the state annual report on time.
File Form 5472 with pro forma Form 1120 (or extend it) by the due date.
Review whether you have any US income tax filing obligation with your adviser.
Check sales tax registration needs if you sell through your own store.
Declare the income and foreign assets in Pakistan.

Frequently asked questions

Do I pay zero tax with a US LLC?

Not automatically. You may owe no US federal income tax if your income is not connected with a US trade or business, but you still have US filings, state fees, possibly sales tax, and Pakistani tax on your income.

Can I skip Form 5472 if the LLC made no money?

No. It is required whenever there are reportable transactions with the owner, and even forming and funding the LLC counts. The penalty for missing it is $25,000.

Can Markify help?

We set up LLCs and remind clients of their yearly filings as part of our US company formation service, and we work with tax professionals for the filings themselves. See also common US company mistakes.

Work with Markify Ecommerce

Markify Ecommerce (listed on Google Maps as Markify Ecommerce - Unicored Technologies) is an ecommerce marketplace management agency in Bahria Orchard, Lahore. We manage Amazon, eBay, Walmart, Shopify, Etsy and TikTok Shop accounts, and we set up US LLCs and UK Ltd companies for Pakistani sellers.

Office: Central Block, Bahria Orchard, Raiwind Road, Lahore 55150, Punjab, Pakistan
Phone & WhatsApp: +92 321 3131641
Free account audit: Send us your store or account details and we will reply with the first fixes we would make.