How to Pay Yourself from Your LLC as a Non-US Owner

Most entrepreneurs start an LLC for two reasons: legal protection and tax flexibility. But the moment the first $10,000 hits the business bank account, a stressful realization sets in: You can’t just Zelle that money to your personal account and call it "income."

If you treat your business account like a personal ATM, you risk "piercing the corporate veil." This legal slip-up allows creditors to come after your house and car if your business is sued. And if you own the LLC from outside the US, every transfer between you and the company is something the IRS expects you to report. You’re likely wondering whether you should take a "salary," a "draw," or a "distribution." This guide starts with the path that applies to a non-resident owner, and covers the S-Corp salary route separately at the end — it is only open to US citizens and residents.

---

1. Identify Your Tax Classification (The "How" depends on the "What")

Before you move a single dollar, you must know how the IRS views your LLC. "For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and affirmatively elects to be treated as a corporation." A domestic LLC with two or more members "is classified as a partnership for federal income tax purposes unless it files Form 8832 and elects to be treated as a corporation." (IRS — Single member limited liability companies)

An S-Corp election (Form 2553) is not an option if any owner is a nonresident alien: an S corporation must have "no nonresident alien shareholders (other than as potential current beneficiaries of an ESBT)." (IRS Instructions for Form 2553)

For Single-Member LLCs (Default)

You do not receive a W-2 salary. You pay yourself through Owner’s Draws.

• The Process: Transfer funds from the business account to your personal account.
• The Tax Reality: A draw is not a salary and not a business expense. If the LLC is disregarded, "the LLC's activities should be reflected on its owner's federal tax return" (IRS) — what counts for tax is the LLC's profit, not how much you draw.
• Generally no US self-employment tax for non-residents: "Nonresident aliens are not subject to self-employment tax unless an international social security agreement in effect determines that they are covered under the U.S. social security system." (IRS Publication 519) Check whether your country has such an agreement: IRS — Totalization agreements.
• Income tax can still apply: "Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U.S. citizens and residents." (IRS Publication 519) Whether your LLC's income is effectively connected depends on your facts; confirm it with a CPA.

---

2. The Step-by-Step Execution

Step 1: Separate the Accounts

Never, under any circumstances, pay personal bills (Netflix, groceries, rent) directly from the LLC account. Open a dedicated business checking account. Co-mingling funds is one of the most common reasons courts disregard an LLC's limited liability protection.

Step 2: Execute the Transfer

• Record the transaction in your bookkeeping software as "Equity Draw" or "Owner’s Distribution."
• Money you put into the LLC is recorded the same way, as an owner's contribution.

Step 3: Keep the Records Form 5472 Needs

A foreign-owned single-member LLC reports its transactions with you on Form 5472. The instructions list, among the reportable transactions of a foreign-owned US disregarded entity, "amounts paid or received in connection with the formation, dissolution, acquisition, and disposition of the entity, including contributions to, and distributions from, the entity." (IRS Instructions for Form 5472) Every draw and every contribution therefore needs a dated entry you can total at year end.

---

3. Compliance Checklist to Avoid Audits

1. Keep Mint Records: Every "Draw" should have a corresponding entry in your ledger. If you can't explain a $5,000 transfer to an auditor three years from now, they will classify it as taxable income. The Form 5472 instructions require a reporting corporation to "keep the permanent books of account or records as required by section 6001." (IRS)
2. File Form 5472 with a pro forma Form 1120: A foreign-owned US disregarded entity is "required to file a pro forma Form 1120, U.S. Corporation Income Tax Return, with Form 5472 attached by the due date (including extensions) of that Form 1120." "A penalty of $25,000 will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed. The penalty also applies for failure to maintain records as required by Regulations section 1.6038A-3." (IRS Instructions for Form 5472)
3. Estimated Payments, if you owe US income tax: No tax is withheld from draws. Publication 519 explains that a nonresident alien may have to pay estimated tax using Form 1040-ES (NR); "Generally, you must make estimated tax payments for 2026 if you expect to owe at least $1,000 in tax" and your withholding and certain refundable credits are expected to fall short. (IRS Publication 519)
4. File Form 1099-NEC: If you pay an outside contractor $2,000 or more in a year (payments made from 2026 on) from your LLC, you must report it. Failing to do this is a common trigger for a broader business audit.

---

4. Only for US Citizens and Residents: S-Corp Salary + Distributions

Everything in this section applies only if every owner is a US citizen or US resident. It is not available if any owner is a nonresident alien (Form 2553 instructions), and a nonresident alien owner generally has no self-employment tax to reduce (Publication 519).