Taking Profits Out of Your US LLC

Once you have built a successful business in the USA, you need to know how to take the profits you have built up there out of the company, or how to distribute them. That is what this page covers in detail.

Unlike a C Corporation, a partnership has to distribute for tax purposes at the end of the fiscal year. The profit is then taxed at the level of the members (owners). This applies even if the profit stays in the company's bank account.

You'll find all the facts on the American LLC as a legal form here.

1Distributing profits

All profits on the company's books at year end are paid out to the members or booked as paid out. The company must pay up to 37% withholding tax to the IRS (the rate for individual members under § 1446; 21% for corporations).

The members report their share of the profit on their US income tax return and then receive a refund of any tax overpaid through withholding.

Which tax obligations apply in your country of residence depends on where you live. As a rule, if there is a tax treaty in place, you owe no further tax in your country of residence as long as you can show that the US company is engaged in active business.

1.1LLC with no US connection

If you are the sole member of a single-member LLC, it is treated as a disregarded entity. For tax purposes it is recognized and treated like a sole proprietorship. Income and expenses go on your personal tax return.

If your LLC has no US permanent establishment, employees or other relevant presence in the States that would trigger US tax liability, and you live in a non-dom country such as Ireland, Malta or similar (the UK abolished its non-dom status on 6 April 2025), then the LLC can distribute profits without any tax being due. In that case, no US withholding tax applies. And since your country of residence does not tax foreign income, you pay no tax there either.

Disregarded entities used to have no filing obligation, but for some years now the IRS has also required them to file the following forms:

1. FBAR: The Foreign Bank Account Report, or FBAR, covers foreign financial accounts totaling more than $10,000. So the LLC files as soon as its accounts exceed that amount.

Since many LLCs now hold accounts with payment providers or other fintechs, these would have to be reported on the FBAR.

2. Form 5472: This form must be filed by every foreign-owned single-member LLC that had reportable transactions with its owner or other related parties during the year. It lists the LLC's transactions with its owner or other related persons or companies, in both directions, including contributions and distributions.

Note too that Form 5472 cannot be filed on its own. It must be accompanied by a pro forma Form 1120. This means Form 1120 can be a zero return.

It's important to note that these two forms are purely a reporting obligation. In this case the profits still remain tax-free.

There may also be situations where only part of the profit is taxable in the USA. If a disregarded entity has both foreign and US income, the member or owner of the LLC must file a Form 1040-NR, the income tax return for nonresidents. On it, he reports only the portion of the profit that is taxable. For this he needs an ITIN (the US tax number for foreigners), which we apply for on your behalf through ITIN Express. It takes a few weeks to be issued: the IRS quotes about 7 weeks until you are notified of your application status, and during peak season (15 January to 30 April) and for applications from abroad 9 to 11 weeks.

If the LLC has two or more members, a partnership tax return must be filed, and a zero-tax setup is no longer possible. For more on this, see our page on taking profits out of your US LP.

2Ways to reduce profit

To keep the tax burden as low as possible, the company's distributable profit can be reduced through various measures. We briefly outline them in the next section.

Unlike with a corporation, with a partnership it is generally not possible to avoid a distribution that is taxable to you personally by investing, for example in real estate.

Which of the solutions discussed here works best in your situation needs to be clarified up front. In your case, a C Corporation may be the better legal form.

2.1A foreign company invoices the US company

You set up a foreign company in a low-tax country with a US tax treaty (such as Malta or Ireland). It invoices the US company for things like:

• Head office functions (accounting, logistics, management, marketing, website development, etc.)

• Specialist work (you have a software developer you "lend" to the US company for, say, $2000 a day)

• Renting out specialist machinery, tools and staff (the cameraman in our opening example rented the cameras owned by his British company to the US company).

• Purchasing company (so that part of the margin is earned in the foreign company).

• License fees (if you own licensable intellectual property)

2.2Loans from the foreign company

The foreign company can lend money to the US company, and the interest can be deducted as an expense in the US company. Mezzanine capital, for example, currently carries interest of 10-15%. So there is real room to work with.

2.3Business expenses & investments

Deducting travel and meal costs is a rather joyless subject in the USA too. Business meals are only 50% deductible. Hotel costs are fully deductible.

Other business expenses are treated quite generously. Since you'll usually have a Visa or Mastercard linked to the company's US business account, you can use it to pay business expenses and expense claims directly.

As of 2026, capital assets can be written off immediately, meaning deducted as business expenses. Assets acquired after 19 January 2025 qualify for 100% bonus depreciation, made permanent by the One Big Beautiful Bill Act of 2025. The limit for immediate expensing under IRC § 179 for 2026 is $2,560,000, phasing out once purchases exceed $4,090,000 (Rev. Proc. 2025-32). Immediate expensing was introduced with the US tax reform of 2017.

2.4Loans to managers and members

The US company can make loans to managers and members. This is not unusual in the USA and is fine as long as the agreement is at arm's length.

As usual with such arrangements, the key is structuring it correctly, especially regarding interest rates, loan term and avoiding a constructive distribution.

You'll find more on borrowing from your own company under a commercial agreement in the USA here.

2.5Company retirement plans

Only makes sense if you live in the USA. Profits put into a company retirement plan are, up to a certain limit, not taxed.

2.6Salary

Another very popular way to take money out of your company without paying high tax on dividends is to pay a salary to the director, which usually means yourself.

Bear in mind, of course, that this salary is subject to ordinary income tax. So here too, think carefully in advance about whether this step, which also involves some effort, is really worth it.

For one group, salary payments are an attractive alternative: members resident in a non-dom country (Ireland, Malta, Cyprus, Dubai, etc.; the UK abolished non-dom status in 2025). For them, this route usually brings far more advantages than a profit distribution.

2.7The big advantages of a salary for residents of low-tax countries

If you pay yourself a salary as manager, the tax you owe on it is only as high as the income tax due in your country of residence. That is a major advantage for residents of some countries.

Residents of places like Dubai naturally come out ahead. Dubai levies no income tax, so every kind of personal income is tax-free: salary, pensions and investment income such as dividends, interest and capital gains of every kind.

This approach is also attractive for people who have settled in Ireland, Malta or Cyprus as non-doms and pay no tax there on this income as long as they do not bring it into their country of residence (the remittance basis).

You can find more on taking a salary instead of distributing company profits here.

Mount Bonnell Advisors supports you with whatever you need: ongoing tax support for your US company, registering your company in another US state, payroll, building a professional website and much more. To dig deeper, read our pages on how the US LLC is taxed and on tax-efficient withdrawals from your US company. For a tax-free US LLC without a US permanent establishment, our sister site zerotax.llc is the place to go.

In short

• For tax purposes, a partnership distributes its profit at the end of the financial year: the profit is taxed at the partner level, even if it stays in the company account.
• The LLC withholds up to 37 percent and pays it to the IRS; the partners report their share on their US tax return and get back anything they overpaid.
• Invoices and loans from a foreign company, business expenses, immediate expensing, loans and salary all reduce the profit to be distributed.
• Which of these solutions fits should be settled in advance; in some cases a C Corporation is the better choice of entity.

How we help you

• LLC and LP Tax ReturnForm 1065 and K-1 for your LLC or LP.
• Tax structureA clean structure between parent company and US subsidiary, or between you and your US company, coordinated with your accountant.
• PayrollPayroll, payroll taxes and filings for your employees in the USA.
• Form an LLCThe US LLC with a permanent establishment, turnkey in six states.
• US Tax ConsultationYour US tax question, answered by people who know both sides.