Foreign Business

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A foreign business is a business formed, registered, operated, or managed outside the United States. For U.S. expats, a foreign business can include a sole proprietorship, corporation, partnership, disregarded entity, branch, or other non-U.S. business structure.

Why it matters for U.S. expats

Owning or running a foreign business can create U.S. tax and reporting requirements even when the business is registered abroad, earns only foreign income, or pays tax in another country. The U.S. treatment depends on the business structure, ownership percentage, income type, bank accounts, payroll, and whether the business triggers forms such as Schedule C, Schedule SE, Form 5471, Form 8858, Form 8865, Form 8992, FBAR, or Form 8938.

Common questions

1. Do U.S. expats have to report a foreign business?

Yes. U.S. citizens and green card holders must report worldwide income, including income from a foreign business, and may also need to file international information returns for the business itself.

2. Is a foreign sole proprietorship reported differently from a foreign company?

Yes. A foreign sole proprietorship is often reported on Schedule C, while a foreign corporation, partnership, disregarded entity, or branch may require separate international reporting forms.

3. What forms are used to report a foreign business?

The right forms depend on the structure. Common forms include Schedule C, Schedule SE, Form 5471, Form 8858, Form 8865, Form 8992, FBAR, and Form 8938.

4. When does Form 5471 apply to a foreign business?

Form 5471 can apply when a U.S. person is an officer, director, or shareholder of certain foreign corporations. It is common for U.S. expats who own or control a foreign company.

5. When does Form 8865 apply to a foreign business?

Form 8865 can apply when a U.S. person owns, controls, transfers property to, or has certain changes in ownership of a foreign partnership.

6. When does Form 8858 apply to a foreign business?

Form 8858 can apply when a U.S. person owns a foreign disregarded entity or operates through a foreign branch.

7. Can a foreign business create GILTI or Subpart F income?

Yes. A foreign corporation owned by U.S. shareholders can create GILTI, Subpart F income, or other U.S. tax issues, especially when the company is a controlled foreign corporation.

8. Can the Foreign Earned Income Exclusion apply to foreign business income?

Yes, if the income is earned income from services and the taxpayer qualifies. The exclusion does not apply to corporate profits that are not treated as the taxpayer’s earned income.

9. Do U.S. expats owe self-employment tax on foreign business income?

Yes, if the income is self-employment income and no totalization agreement or other exception removes the U.S. self-employment tax obligation.

10. Do foreign business bank accounts need to be reported?

Yes, if the U.S. person has financial interest in or signature authority over the account and the FBAR threshold is met. Form 8938 may also apply if the relevant asset thresholds are met.

Related forms

• Schedule C: Profit or Loss From Business
• Schedule SE: Self-Employment Tax
• Form 5471: Reporting foreign corporations
• Form 8992: Reporting GILTI
• Form 8858: Foreign disregarded entities and foreign branches
• Form 8865: Foreign partnerships
• FinCEN Form 114: FBAR reporting

When to get help

Professional guidance is important when:

• You own, operate, or are setting up a business outside the United States.
• You are unsure whether the business is treated as a sole proprietorship, corporation, partnership, disregarded entity, or branch for U.S. tax purposes.
• You own shares in a foreign company or control a foreign corporation.
• You have a foreign partnership, foreign disregarded entity, or foreign branch.
• You need to file Form 5471, Form 8858, Form 8865, Form 8992, FBAR, or Form 8938.
• You pay tax in another country and want to claim the Foreign Tax Credit.
• You need to understand self-employment tax, totalization agreements, payroll, or local social security contributions.

Bright!Tax can review your foreign business structure, identify the required U.S. forms, and prepare the business and individual tax reporting correctly. Get started with Bright!Tax.

Related Bright!Tax guides

• Foreign companies and U.S. tax reporting for expats
• GILTI tax explained for U.S. expat business owners

Official sources

• IRS: U.S. citizens and resident aliens abroad
• IRS: Self-employment tax for businesses abroad
• IRS: About Form 5471
• IRS: About Form 8858
• IRS: About Form 8865

Reviewed by

Katelynn Minott, CPA & CEO

Last reviewed

July 2026