US LLC bookkeeping: which records the IRS wants to see, and for how long

If you come from Europe, you probably expect American bookkeeping to work like the system back home: fixed accounting principles, a standard chart of accounts, a balance sheet. US tax law thinks differently. It doesn't prescribe any particular format, but it does require you to back up every number on your return, and for companies with foreign owners it requires more than many people realize. This page explains what the IRS expects from the records of your US LLC or US corporation, what Form 5472 adds on top, how to handle euros and other currencies, which software fits, and how long to keep your records. When the returns you need these numbers for are due is covered in the annual calendar for your US company.

1What US law requires

The core rule is short. Under Section 6001 of the Internal Revenue Code, anyone subject to a tax must keep the records, file the returns and follow the rules the Treasury prescribes. The regulation, 26 CFR 1.6001-1, gets more specific: you must keep permanent books or records, including inventories, sufficient to establish gross income, deductions, credits and every other item on the return. These books must be available for inspection at all times and kept for as long as their contents may be material to the administration of any tax law.

Federal law doesn't prescribe a particular format. In Publication 583, the IRS lets you choose between single-entry and double-entry bookkeeping, and points out that double entry, with its journals and ledger, has built-in checks. For a company with owners in Europe, double entry is the norm in practice anyway, because your accountant at home will need a balance sheet sooner or later.

The states have their own requirements, especially for sales tax: if you're registered in a state, you must be able to document sales and tax state by state. How that works is explained in Sales tax and nexus for European sellers.

2What Form 5472 adds

If your LLC is wholly owned by you as a foreign person, it counts as a reporting corporation under Section 6038A, even though it's a disregarded entity for tax purposes. The same applies to a corporation in which a foreign shareholder holds at least 25 percent. For these companies, the Instructions for Form 5472 tighten the general rule: the books must be sufficient to establish the accuracy of the return, including information that may be relevant to the correct treatment of transactions with related parties.

The related party is, first and foremost, you. For a single-member LLC, Form 5472 explicitly also covers amounts related to forming, dissolving, acquiring and disposing of the company, including your contributions to the LLC and your distributions from it. For your bookkeeping, that means every transfer between your personal account and the LLC's account is a transaction you record, with date, amount and purpose. If you pay business expenses personally and get reimbursed later, you document both.

The regulation for this reporting requirement, 26 CFR 1.6038A-3, also covers location. As a rule, the records must be kept in the US. If they're held abroad, the company must, at the IRS's request, hand them over or bring them to the US within 60 days and appoint a custodian there, and provide translations of individual documents within 30 days. If the company fails to keep the required records, Section 6038A(d) imposes the same penalty as for a missing form: $25,000 per year. What goes on the form, line by line, is covered in Form 5472 and pro forma 1120, and the penalties in Penalties and late filing.

3Records: what belongs to an entry

Every entry needs supporting documentation. In Publication 583, the IRS lists what counts: cash register tapes, paid bills, sales invoices, receipts, deposit slips and canceled checks. For a company that works online, add bank statements, statements from payment processors and marketplaces, and electronic invoices.

Three habits make the difference between bookkeeping that answers an IRS question in an hour and bookkeeping that takes weeks.

3.1One account for the company, not one for everything

Run the LLC's payments through a dedicated business account, not your personal one. Every bit of mixing creates transactions you'll have to explain later and separate out for Form 5472. How to open a US account for your company is covered on the US Bank Account Opening page.

3.2Record receipts right away, not at year end

Photograph or save every receipt as soon as you get it, and match it to the bank transaction. Electronic records are allowed; under Publication 583 they must meet the same requirements as paper records, and you keep the systems available for as long as the records are material to the tax.

3.3Note the purpose

A receipt without a purpose doesn't answer the IRS's question. For travel, note the reason; for meals, the attendees; for payments to yourself, the reason. It takes seconds if you do it right away, and hours if you have to reconstruct it.

4Method, tax year and balance sheet on the return

The IRS recognizes two basic methods. Under the cash method you report income in the year you receive it; under an accrual method in the year you earn it, even if the money arrives later. If you must keep inventories, Publication 583 generally requires the accrual method for purchases and sales, though certain small businesses may still use the cash method. Under Rev. Proc. 2025-32, for tax years beginning in 2026 a corporation or partnership counts as small if its average annual gross receipts for the three prior years don't exceed $32,000,000.

Whether the IRS wants a balance sheet depends on size. Under the instructions, a corporation with total receipts and total assets at year end each below $250,000 doesn't have to complete Schedules L, M-1 and M-2 of Form 1120 if it answers yes to the relevant question on Schedule K. Similar relief applies to a partnership's Form 1065, with the conditions set out on the form itself in Schedule B. You still have to keep the numbers. The relief applies to the form, not to your bookkeeping, and your accountant at home will want the balance sheet anyway.

Which return your structure files is explained in LLC tax returns by structure; the individual forms are covered under Form 1120 and Form 1065.

5Dollars, euros and other currencies

Your IRS return is prepared in US dollars. As the IRS puts it on its exchange rate page, amounts on a tax return must be reported in US dollars, and if you have income or expenses in a foreign currency, you convert them. Generally, you use the rate on the day you receive the income, pay the expense or record the item. For certain cases the IRS publishes yearly average rates, and it also accepts other published rates as long as you use them consistently. The IRS has no official exchange rate.

For your bookkeeping, that means: keep the US company's books in dollars. Payments from your company at home to the LLC in euros or another currency are booked at the rate on the payment date, and you stick with the method you've chosen. For the books of your company at home you'll need the figures in your local currency, so record which rate you used.

6Retention periods

How long you keep records follows from the period during which the IRS can still examine a return. The IRS lists the periods shown in the table on its recordkeeping page. The standard period is three years from filing the return. The periods are longer if a substantial amount of income went unreported, for certain losses and for payroll records. If you didn't file a return, there's no time limit.

Records for property, such as the purchase of equipment or an equity stake, are kept until the period expires for the year in which you dispose of the property. Your home country has its own retention periods. If you need the records for both sides, follow the longer one.

7Contractors, payroll and payments abroad

Three types of payment trigger their own reporting, and for each one you need certain paperwork at the time you pay. If you pay fees to US self-employed contractors, get Form W-9 (where the recipient provides their taxpayer ID) before the first payment, and report the fees on Form 1099-NEC after year end; under the instructions, the reporting threshold for tax years from 2026 is $2,000. If you have employees, payroll and employment tax filings come on top; see our article Payroll in the USA.

If you pay royalties, interest or dividends to your company back home or to yourself, the US company is the withholding agent. You then need the recipient's W-8BEN-E or W-8BEN before the payment, and Forms 1042 and 1042-S after the year. Rates and liability are explained in US withholding tax by type of income.

8Software: how to choose

For a small US company, cloud accounting software of the kind American small businesses use is all you need. We don't name vendors here, but we do give you the criteria to choose by. The software should pull in the transactions from your US business account automatically, so you only categorize them instead of typing them in. It should attach receipts to entries by photo or upload, so receipt and entry stay together. It should handle multiple currencies if you have payments in euros, kroner or other currencies. It should produce reports based on the American chart of accounts that your US tax advisor understands, and export in formats your accountant at home can import. And it should give your advisor their own login, so nobody is emailing files back and forth.

If you collect sales tax in several states, you also need a solution that calculates rates by delivery address and prepares the filings. If you have employees, you need payroll software that generates the federal and state filings. Both can usually be connected to your accounting software.

9The home-country side

Whether and how your LLC's profits are taxed at home, and which financial statements your accountant needs for that, depends on how your country classifies the LLC. The page Taxation of your US LLC answers that question. For an overview of all your US company's tax obligations, see the guide Tax obligations of a US company.

In short

• Federal law doesn't require any particular form of bookkeeping, but it does require permanent records that support every figure on the return; single-entry or double-entry is your choice.
• If the LLC must file Form 5472, this includes transactions with you as the owner, contributions and distributions included; the records are kept in the US or brought there within 60 days.
• The return is prepared in US dollars; convert amounts in other currencies at the daily rate or the IRS yearly average rate, consistently.
• The standard retention period is three years from filing; in certain cases it is six or seven years, or indefinitely.
• Your home country has its own requirements; check them with your accountant at home.

How we help you

• Form an LLCThe US LLC with a permanent establishment, turnkey in six states.
• Zero Tax Return LLCPro forma Form 1120 and Form 5472 for the single-member LLC.
• LLC and LP Tax ReturnForm 1065 and K-1 for your LLC or LP.
• Corporation tax returnForm 1120 and Form 5472 for your US corporation.
• US Tax ConsultationYour US tax question, answered by people who know both sides.