US trade or business: what counts for a foreign-owned LLC

There is no single bright line for when a non-resident is doing business in the United States. The answer turns on facts: who does what, where, and how regularly. This guide goes through the factors the IRS and courts look at, and how they apply to foreign-owned LLCs.

By Mirza Fahad Baig, Chartered Accountant. Reviewed by Hamza Fida, Chartered Accountant. Checked against official sources on . 3 minute read.

Short answer

A non-resident is engaged in a US trade or business when they, or people acting for them, carry on considerable, continuous and regular business activity in the United States. Performing services in the US generally counts. Being a partner in a partnership with a US business counts. Owning a US LLC, having a registered agent or selling to US customers from abroad does not count on its own.

At a glance

Core test
Considerable, continuous and regular business activity in the US
Performing services in the US
Generally counts
Dependent agents in the US
Their activity can be attributed to you
Partners
Engaged in business if the partnership is
Does not count alone
Owning an LLC, a registered agent, US customers, US bank account
Treaty residents
Business profit taxed only with a US permanent establishment
US trade or business: what counts for a foreign-owned LLCCore test: Considerable, continuous and regular business activity in the US; Performing services in the US: Generally counts; Dependent agents in the US: Their activity can be attributed to you; Partners: Engaged in business if the partnership is; Does not count alone: Owning an LLC, a registered agent, US customers, US bank account; Treaty residents: Business profit taxed only with a US permanent establishment.KEY FACTS AT A GLANCEUS trade or business: what counts for aforeign-owned LLCCore testConsiderable, continuousand regular businessactivity in the USPerforming services in the USGenerally countsDependent agents in the USTheir activity can beattributed to youPartnersEngaged in business ifthe partnership isDoes not count aloneOwning an LLC, a registeredagent, US customers, US bankaccountTreaty residentsBusiness profit taxedonly with a US permanentestablishmentChecked against official sourcesTax BakersUS trade or business: what counts for a foreign-owned LLCCore test: Considerable, continuous and regular business activity in the US; Performing services in the US: Generally counts; Dependent agents in the US: Their activity can be attributed to you; Partners: Engaged in business if the partnership is; Does not count alone: Owning an LLC, a registered agent, US customers, US bank account; Treaty residents: Business profit taxed only with a US permanent establishment.KEY FACTS AT A GLANCEUS trade or business: what countsfor a foreign-owned LLCCore testConsiderable, continuous and regularbusiness activity in the USPerforming services in the USGenerally countsDependent agents in the USTheir activity can be attributed to youPartnersEngaged in business if the partnership isDoes not count aloneOwning an LLC, a registered agent, UScustomers, US bank accountTreaty residentsBusiness profit taxed only with a USpermanent establishmentChecked against official sourcesTax Bakers
Key facts at a glance, as set out in this guide.

What is the test?

The tax code does not define "trade or business within the United States" in full. Courts have generally required business activity in the US that is considerable, continuous and regular, rather than isolated or occasional. The activity can be your own, or that of employees and dependent agents acting for you. The decision is made on all the facts, year by year.

What usually counts?

  • Performing personal services in the US, including working in the US for your own LLC. There is a narrow exception for short stays working for a foreign employer with small amounts of pay.
  • Employees or dependent agents in the US who carry on the business regularly, such as staff running a US office or an agent who habitually negotiates and concludes contracts for you.
  • An office or other fixed place of business in the US used for the business.
  • Being a partner in a partnership, including a multi-member LLC, that is engaged in a US trade or business. The partnership's business is attributed to each partner.

What does not count on its own?

  • Forming or owning a US LLC.
  • Having a registered agent, mailing address or bank account in the US.
  • Selling to US customers while doing all the work from abroad.
  • Using independent agents, such as an independent broker or a marketplace, acting in the ordinary course of their own business.
  • Trading stocks, securities or commodities for your own account, under a statutory safe harbor.

What are the grey areas?

Inventory in US warehouses

Storing goods in a third-party fulfillment center, such as Amazon FBA, and selling online from abroad is a common and unsettled situation. The more activity in the US that is carried on for you, and the more the US operation looks like your business rather than a service provider's, the stronger the case for a US trade or business. Get advice on the specific facts. See Amazon FBA taxes.

Occasional trips

Visiting the US for meetings or conferences is different from working there regularly. Frequent or long working stays move towards a trade or business, and time in the US also affects residency. See the substantial presence test.

How do treaties change it?

If you are resident in a country with a US income tax treaty, business profits are generally taxable in the US only if attributable to a permanent establishment: a fixed place of business, or a dependent agent who habitually concludes contracts for you. Treaty permanent establishment is often a higher bar than a US trade or business. Claiming treaty protection requires disclosure on Form 8833.

What follows if you do have one?

  • Income effectively connected with the business is taxed at graduated rates. See effectively connected income explained.
  • The owner files Form 1040-NR, or the partnership withholds and files for foreign partners.
  • State taxes may also apply where the activity happens.

A single-member LLC also files Form 5472 either way.

Want your position reviewed?

We look at where your work, people, stock and contracts sit, and tell you whether you have a US trade or business and what follows from it.

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Questions people ask

Does owning a US LLC mean I have a US trade or business?

No. What matters is the business activity carried on in the US, by you or by people acting for you, not the fact of owning a US company.

Does working in the US for my LLC count?

Generally yes. Performing services in the US is one of the clearest signs of a US trade or business.

Are partners in a US partnership engaged in a US trade or business?

Yes, if the partnership is. The partnership's business is attributed to each partner.

Does using a US marketplace or independent agent create a US trade or business?

Using independent agents acting in the ordinary course of their own business generally does not on its own. Inventory held in the US is a grey area that needs a fact-specific review.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IRS Publication 519: U.S. Tax Guide for Aliens
  2. Internal Revenue Code section 864(b): trade or business within the United States
  3. Internal Revenue Code section 875: partnerships
  4. IRS: Form 8833, Treaty-Based Return Position Disclosure
  5. IRS: Instructions for Form 1040-NR (2025)

Rules and fees change. If you are reading this long after September 30, 2026, confirm the figures with the source before you rely on them.

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This guide is general information. It is not tax or legal advice for your situation.