The most common and most expensive misunderstanding here is that a company with no revenue has nothing to file. A Delaware C-Corp owned by a non-US person has obligations from incorporation, and the penalties for missing them are fixed amounts rather than percentages of a tax bill that does not exist.
What is actually due
Assuming a Delaware C-Corp with foreign ownership and no US employees, the recurring obligations are:
| Filing | What it is | Typical timing |
|---|---|---|
| Form 1120 | Federal corporate income tax return | Annually, by the filing deadline for the tax year |
| Form 5472 with 1120 | Disclosure of reportable transactions with a foreign related party | With the 1120 |
| Delaware franchise tax and annual report | A state obligation independent of income | Annually, by 1 March |
| State income tax | Only where the company has nexus | Varies by state |
| FBAR | If US persons have signature authority over foreign accounts | Annually |
Form 5472 is the one that catches people. It applies to a US corporation with a 25% or greater foreign shareholder that had any reportable transaction with a related party. Founder loans, capital contributions and payments to a founder’s own overseas entity are all reportable. The statutory penalty for failing to file is substantial, applies per form, and is not reduced because no tax was owed.
Zero revenue does not mean zero filing. It means the penalties are the only number on the return.
3 things that catch founders out
- Delaware franchise tax uses two calculation methods. The default method produces alarming figures for companies with a large number of authorised shares. The alternative method usually produces a far smaller number. The state will not choose the cheaper one for you.
- Nexus is not where you incorporated. Delaware incorporation does not mean Delaware is the only state you owe. Employees, contractors, offices or in some cases sales volume can create obligations elsewhere.
- Transfer pricing applies at small scale. If your US entity pays a development company you also own overseas, that price has to be defensible. It is a real requirement, not one reserved for multinationals.
What it costs
Our tax filing and planning service starts at $1,450, covering federal, state and local filing where required, with returns prepared and signed by a licensed CPA firm we work with. Multi-state and foreign-owned entities sit above that base depending on the number of states and the complexity of related-party transactions.
The comparison worth making is not against a cheaper filing service. It is against the penalty for a missed 5472, which exceeds the cost of several years of correct filing.
Who signs it, stated plainly
We are not a licensed CPA firm. Returns on this service are prepared and signed by NexusWorks LLC, a US CPA firm we work with. We do the preparation, reconciliation and planning work; the signature and the professional responsibility for it sit with a licensed firm. We say this before you engage, not after.
Nothing here is tax advice for your specific situation. Foreign ownership structures vary enough that the general position above may not be the position you are in.
What to have ready
- Certificate of incorporation, EIN letter and the current cap table.
- A reconciled trial balance for the tax year. This is the item that most often delays a filing.
- A list of every transaction with a related party, including founder loans and capital contributions.
- Details of any US employees or contractors, and the states they worked in.
If you are already late
File anyway, and file soon. Penalties for several of these accrue or apply per period, and voluntarily correcting a position is treated differently from being found. The first conversation should be about the exposure, not about the return.