US Tax and Accounting for Founders Outside the US
A Delaware C-Corp owned by a founder abroad files Form 1120 every year, Form 5472 if a foreign person owns 25% or more ($25,000 penalty if missed), and Delaware franchise tax by March 1. We handle the EIN without an SSN, the books, the returns and transfer pricing, so you can run the company from Sydney, Bangalore or Berlin. Plans start at $299/month with no setup fees.
What a foreign-owned Delaware C-Corp must file each year
A Delaware C-Corp is a US tax resident no matter where its founders live. Expect four filings in a normal year, and a fifth if the Delaware company owns a foreign subsidiary.
| Filing | Who files | Deadline | If you miss it |
|---|---|---|---|
| Form 1120 (federal corporate income tax return) | Every Delaware C-Corp, including one with no revenue | 15th day of the 4th month after year end (April 15 for a calendar year); extension with Form 7004 | Late filing and late payment penalties; extending gives more time to file, not to pay |
| Form 5472, attached to Form 1120 | A corporation that is at least 25% foreign-owned (one foreign person holding 25% of votes or value) with reportable related-party transactions | With the Form 1120, including extensions | $25,000 per form, plus $25,000 for each 30 days the failure continues more than 90 days after IRS notice |
| Delaware annual report and franchise tax | Every Delaware corporation, wherever it operates | March 1 each year | $200 penalty plus 1.5% interest per month on unpaid tax |
| State foreign qualification and state returns | A corporation with employees, an office or enough sales in a US state to create nexus there | Register before doing business in the state; returns on that state’s calendar | State penalties and back taxes; fees and deadlines vary by state |
| Form 5471 | A Delaware parent that controls a foreign subsidiary (for example an Indian or UK operating company) | With the Form 1120 | Penalties start at $10,000 per foreign corporation per year |
Form 5472 and the pro forma Form 1120
The 25% test counts direct and indirect ownership at any time during the tax year. Reportable transactions include founder capital contributions, loans to or from the founder, and payments to a founder's foreign company. A foreign-owned single-member LLC is treated differently: it has no income tax return of its own, so it files a pro forma Form 1120 just to carry the Form 5472, and it cannot e-file (the IRS takes it by fax at 855-887-7737 or by mail). A C-Corp attaches Form 5472 to its regular Form 1120.
BOI reporting no longer applies to US-formed companies
FinCEN's final rule, effective August 14, 2026, keeps the March 2025 exemption for every entity created in the United States, regardless of who owns it. Your Delaware C-Corp does not file a beneficial ownership report. Only companies formed under foreign law and registered to do business in a US state still report.
Delaware incorporation alone does not create Delaware income tax if you do not operate there. Hire an employee in California or open an office in New York, though, and that state expects you to register as a foreign corporation and file its returns. Our tax filing service covers federal and multi-state returns.
Avoiding penalties on Delaware franchise tax as a foreign founder
File the annual report and pay by March 1, and calculate the tax under the Assumed Par Value Capital Method. Those two habits avoid almost every franchise tax problem we see.
Delaware's default bill uses the Authorized Shares Method. A typical startup authorizes 10,000,000 shares, which under that method costs $85,165 ($250 for the first 10,000 shares plus $85 for each additional 10,000). The Assumed Par Value Capital Method uses gross assets from Form 1120 Schedule L and issued shares instead, at $400 per $1,000,000 of assumed par value capital, with a $400 minimum.
A worked example (hypothetical): 10,000,000 authorized shares at $0.00001 par, 8,000,000 issued, and $500,000 of gross assets. Assumed par is $500,000 / 8,000,000 = $0.0625. Multiply by 10,000,000 authorized shares to get $625,000 of assumed par value capital. That is under $1,000,000, so the tax is $400. Add the $50 annual report fee and the March 1 bill is $450.
Missing March 1 costs a $200 penalty plus 1.5% interest per month on unpaid tax. Run your own numbers in our Delaware franchise tax calculator.
First-year cost of a Delaware C-Corp for a founder outside the US
Delaware's own charges are small and fixed in US dollars. The larger costs are the registered agent and the accounting and tax work, which is where SpryTax comes in. Founders in Australia, India, the UK or anywhere else pay the same USD amounts; convert at the rate on the day you pay.
| Item | Amount (USD) | Basis |
|---|---|---|
| Delaware certificate of incorporation | From $109 | State fee, varies with authorized stock |
| Optional expedite | $50 (24-hour) or $100 (same day) | State fee, optional |
| Registered agent in Delaware | Typically about $50 to $300 a year | Typical market range, not a state fee; get quotes |
| EIN (Form SS-4) | $0 | The IRS does not charge for an EIN |
| Delaware annual report | $50 | State fee, first due March 1 after the year you incorporate |
| Delaware franchise tax | From $400 (Assumed Par Value Capital Method) | State tax; $175 minimum under the other method, but only for very small share counts |
| SpryTax Founder plan (books, Form 1120) | $299/month ($3,588 a year) | SpryTax price; no setup fees |
| SpryTax Scale plan (adds Form 5472, transfer pricing) | $1,299/month ($15,588 a year) | SpryTax price; international compliance is part of this plan |
Delaware state costs for a company formed this year come to $109 at formation, then $450 or a little more each March 1 if you use the Assumed Par Value Capital Method. If your company operates in another US state, add that state's foreign qualification fee and annual report.
Which SpryTax plan fits depends on your structure. Form 1120 is included in every plan. International compliance, meaning Form 5472 and transfer pricing documentation, is part of the Scale plan at $1,299/month. The 30-minute call is where we confirm which plan you need. Full plan details are on the See pricing.
How to register a Delaware C-Corp as a foreign founder, step by step
You can do all of this from abroad. The Delaware filing takes days; the EIN and bank account usually set the pace.
Incorporate in Delaware
Appoint a Delaware registered agent and file a certificate of incorporation with the Division of Corporations. No US citizenship, residency, visa or SSN is required for directors, officers or shareholders. Authorize shares with a small par value (for example $0.00001) so the franchise tax works in your favor.
Get an EIN without an SSN
The IRS online EIN application is closed to applicants without a US principal place of business and to responsible parties without an SSN, ITIN or EIN. Use Form SS-4 instead: call the IRS international line at 267-941-1099 (not toll free, 6 a.m. to 11 p.m. Eastern, Monday to Friday) and receive the EIN on the call, fax it to 304-707-9471 from outside the US, or mail it to IRS, Attn: EIN International Operation, Cincinnati, OH 45999 (allow 4 to 5 weeks). For line 7b, follow the current SS-4 instruction for a responsible party without an SSN or ITIN.
File 83(b) elections within 30 days
If founder shares vest, mail an 83(b) election within 30 days of issue by trackable courier. There is no extension. Our guide for cross-border founders covers the mailing address nonresidents use.
Open a US bank account
Several US fintech banking platforms open accounts remotely for Delaware companies with non-resident founders; most branch banks still expect a signer in person. Have the certificate of incorporation, EIN confirmation letter, bylaws or board consent, passports and proof of address ready. Eligibility by country changes often, so check before applying.
Set up books that track related parties
Every founder capital contribution, loan and payment to a founder’s foreign company is a potential Form 5472 line. Recording them monthly is what makes the April filing quick and accurate.
When you need an ITIN
You do not need an ITIN to form the company or to get its EIN. An ITIN is for individuals who have a US federal tax purpose and are not eligible for an SSN: filing a US individual return (for example after doing paid work while in the US), claiming a refund, or claiming certain treaty benefits. You apply on Form W-7, normally with the tax return attached. An ITIN is for federal tax only; it does not authorize work in the US.
For the longer version, including dividend withholding rates and 83(b) mailing for nonresidents, read our guide to the Delaware C-Corp for cross-border founders.
Transfer pricing documentation for US–India and other parent-subsidiary structures
If your Delaware parent pays a subsidiary in India, the UK or elsewhere, IRC §482 requires the price to be what unrelated parties would agree (the arm's-length standard), and you need written support for it before the return is filed.
The usual setup for an engineering subsidiary has five parts:
- A signed intercompany services agreement, in place before the first invoice, stating that IP the subsidiary develops belongs to the US parent.
- A cost-plus pricing policy: the subsidiary's costs plus a markup.
- A benchmarking study of comparable independent companies that supports the markup.
- Monthly intercompany invoices that follow the agreement and get paid.
- A US documentation report meeting Treas. Reg. §1.6662-6, plus the local report (in India, the accountant's report on Form 3CEB).
Why the documentation matters: under §1.6662-6 the IRS can add a 20% penalty when a net §482 adjustment exceeds the lesser of $5 million or 10% of gross receipts, and 40% above the lesser of $20 million or 20%. For a startup with $3 million of revenue, an adjustment above $300,000 is enough. Documentation protects you only if it exists when the return is filed and reaches the IRS within 30 days of a request.
A worked example (hypothetical): an Indian subsidiary with $800,000 of annual costs and a 15% markup bills the US parent $920,000. India taxes the $120,000 profit, and the parent deducts $920,000 in the US. The deduction holds up only if the 15% is supported by the benchmark. More detail is in our post on transfer pricing for startups.
The US R&D credit when your engineers are outside the US
Only research performed in the United States (or Puerto Rico or a US possession) counts toward the US R&D credit. IRC §41(d)(4)(F) excludes research conducted anywhere else.
For a cross-border team that means wages paid to engineers in India or Poland, and the cost-plus fees your parent pays a foreign subsidiary, do not count. Work done by US-based employees or US contractors can. The tax treatment of the costs differs too: domestic research costs can be deducted right away under §174A, while foreign research costs are still amortized over 15 years. If part of your team is in the US, it is worth tracking their time from the first month, since that record is what supports a claim.
How SpryTax works with founders across time zones
You should not have to stay up until 2 a.m. to talk to your accountant. Support is available 24/7, and we respond within 4 hours.
- Two weeks of cleanup if your books are behind, then books closed by day 10 each month.
- Form 1120 included in every plan, from $299/month, with no setup fees.
- Form 5472 and transfer pricing documentation on the Scale plan ($1,299/month).
- Delaware annual report and franchise tax filed on the cheaper method, before March 1.
- We coordinate with your home-country accountant on how the structure is taxed there.
The first step is a 30-minute call. We look at who owns the company, where the work happens and what has been filed so far, then tell you which plan fits. This page is general information, not tax or legal advice for your specific facts.
Frequently asked questions
What is the best Delaware C-Corp service for cross-border startup founders?
Pick a provider that covers what comes after the state filing: an EIN without an SSN, 83(b) elections within 30 days, Delaware franchise tax on the cheaper method by March 1, and Form 1120 with Form 5472 every year. Formation-only services leave those to you. SpryTax plans start at $299/month with Form 1120 included; Form 5472 and transfer pricing are part of the Scale plan at $1,299/month.
What does it cost an Australian founder to set up and run a Delaware C-Corp in the first year?
Delaware charges from $109 to incorporate, then a $50 annual report and franchise tax from $400 (Assumed Par Value Capital Method) each March 1, all in US dollars. A registered agent typically costs about $50 to $300 a year. The EIN is free. SpryTax plans start at $299/month with Form 1120 included; if the company also needs Form 5472 (25% or more foreign-owned with reportable transactions with a foreign related party), that is part of the Scale plan at $1,299/month. Convert to AUD at the rate on the day you pay.
How can a foreign founder avoid penalties on Delaware franchise tax?
File the annual report and pay by March 1, and calculate the tax under the Assumed Par Value Capital Method, which needs your gross assets and issued shares. Delaware bills startups with millions of authorized shares under the Authorized Shares Method by default, which can produce bills over $85,000. Missing March 1 costs a $200 penalty plus 1.5% interest per month on unpaid tax.
Does a foreign-owned Delaware C-Corp have to file Form 5472?
Yes, if one foreign person owns at least 25% of the votes or value at any time in the year and the company had reportable transactions with a related party, such as founder loans or payments to a founder’s foreign company. Form 5472 is attached to Form 1120. The penalty is $25,000 per form, with more if the failure continues after IRS notice.
Do I need an ITIN to run a Delaware C-Corp from abroad?
Not to form the company or get its EIN. You need an ITIN only when you personally have a US federal tax purpose and are not eligible for an SSN, for example filing a US individual return or claiming treaty benefits that require one. You apply on Form W-7, usually with the tax return attached.
Does a foreign-owned Delaware company still file a BOI report?
No. FinCEN’s final rule, effective August 14, 2026, keeps the March 2025 exemption for all entities created in the United States, whoever owns them. Only companies formed under foreign law and registered to do business in a US state must report. Checked November 13, 2026.
Sources (checked 2026-11-13)
- IRS: Instructions for Form 5472 (Rev. 12/2024)
- IRS: Instructions for Form 1120 (2025)
- IRS: Instructions for Form 5471
- IRS: Instructions for Form SS-4 (Rev. 12/2025)
- IRS: Get an employer identification number
- IRS: Individual Taxpayer Identification Number (ITIN)
- IRS: Transfer pricing (IRC §482)
- Treas. Reg. §1.6662-6 (transfer pricing penalties and documentation)
- IRC §41(d)(4)(F) (foreign research excluded from the credit)
- Delaware Division of Corporations: Annual Report and Tax Information
- Delaware Division of Corporations: How to Calculate Franchise Taxes
- Delaware Division of Corporations: Fee schedule (revised August 1, 2026)
- FinCEN: Beneficial Ownership Information Reporting
The registered agent range is a typical market range, not a published fee. Worked examples are hypothetical.
Run your Delaware C-Corp from anywhere
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