What types of foreigners can own
a U.S. S-Corporation?
The short answer is yes, a “foreigner” can own an S-Corp (also known as an S-Corporation), but it depends on what type of foreigner.
If you look on the main S-Corporation page of the IRS website, they briefly state, “To qualify for S-Corporation status, the corporation must meet the following requirements: May not be partnerships, corporations or non-resident alien shareholders.”
This is not very helpful since not all foreigners understand what a non-resident alien is, and the “who can own S-Corp” could be expanded on.
Note: An S-Corporation owner is the same thing as an S-Corporation shareholder.
Non-resident alien (aka non-US resident)
A foreigner that is a non-resident alien cannot own an S-Corp.
As per the IRS, a non-resident alien is an individual who is not a US citizen or a US resident alien.
Note: Another word used for non-resident alien is non-US resident.
US resident alien
A foreigner that is a US resident alien can own an S-Corp.
As per the IRS, a US resident alien is an individual that is not a US citizen or US national and who meets either “the green card test” or “the substantial presence test” for each calendar year.
Keep in mind: You will need to maintain your US Resident Alien Status for many years. Meaning, it’s not a one-time requirement to in order to be an S-Corporation owner. You must always be a US Resident Alien in order to keep the S-Corporation in compliance with IRS rules. If you don’t maintain this status, the IRS will not honor your S-Corporation election.
The following people can own an S-Corporation:
- US citizens
- US residents
The following people can’t own an S-Corporation:
- non-resident aliens (non-US residents)
20 comments on “Can a Foreigner Own an S-Corp?”
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.
I am on h4 ead and been in us since many years on multiple visas. I was in US for entire year last year and continue to be. Can I open a llc and apply for s-corp? I read a comment above irs denied their s corp application. Why would that be?
Hi Matt, thank you for this article. I applied for s corp election and irs sent me a letter stating I wasn’t accepted because of the shareholder (me) is a nonresident alien. So, I understand a foreigner can own an s corp after reading your article. Did I have to file something else/other form to demonstrate “the substantial presence test”? I filed my taxes as self-employed for a few years and then 2 years ago I registered by single member llc and file taxes as well. I hope you can read my comment. I have asked some tax preparers but they keep telling me s corp is only for us citizens and permanent resident card holders. Thank you so much for your help. I’m glad I found your website.
Hi Matt, hope you are well.
My question is :
Is SECA (15.3%) the only tax paid by LLC business owner or there are some other taxes like federal income tax etc also to be paid in plain LLC ? If yes what are those taxes other than self employment tax?
Hi Matt, I am legal alien (us resident) and currently run my business as a sole proprietor. I am in the process of creating a LLC this month. Because travel business is very low, I cannot yet comply with the requirement of an S-Corp to pay myself a salary from the profit as we might not have any. Can I still create the S-Corporation in a following year?
Your responds is much appreciated.
Happy New Year! Ilja
Hi Ilja, yes, you don’t have to elect S-Corp tax treatment right away. You make the election at any time in the future. Hope that helps.
Short and simple, I like it! Thank you
You’re welcome :)
Can a US citizen who is a resident internationally own an S-Corp? If so, how to the tax distributions work if the non resident pays higher taxes abroad?
Hi Joe, yes, a US citizen can own an S-Corporation, regardless of where they reside. Exactly how you’re taxed depends on a number of factors. We recommend speaking with an accountant who works with expatriates.
Just want some clarification,
So if I am a foreigner but lives in the uS for the entire year and satisfy the substantial presence test, I can file as a S Corp? Thanks.
Hi Anon, you need to be considered a US Resident Alien for all the years you want to own an S-Corporation. It’s not possible to pass the substantial presence test for just one year, and keep the S-Corporation in compliance for years after that if you don’t maintain your US Resident Alien status. If you don’t maintain this status, the IRS will not honor your S-Corporation election.
Thanks for the response.
So let’s say I’m on a student visa and been in the Us for two years the entire time, I should be able to file as a S Corp? And my s Corp status would be revoked once I’m out of the country?
Hi Anon, yes, correct. The S-Corp election is only valid for as long as you are considered a US resident for tax purposes. Also keep in mind, LLC electing S-Corp taxation is more complicated to setup, maintain, and close down. So you may want to consider the advantages and disadvantages for having an LLC taxed as an S-Corp for a short period of time. If you decide to go this route, you’ll want to have the LLC revoke S-Corp election after you are no longer considered a US resident for tax purposes. Said another way, there are a lot of details involved here and we recommend speaking with an accountant (or a few).
I am on H4 EAD. Can I be S corp owner?
Hi Nps, you are not a US resident unless you meet “the green card test” or “the substantial presence test”. Just having an H4 Employment Authorization Document (EAD) doesn’t automatically make you a US resident for tax purposes. Said another way, if you are a non-US resident, you cannot own an S-Corporation. Hope that helps.
Can a US Citizen, and two non-US Citizen/Foreigners who reside outside the US form an S-Corp?
Hi Yasser, no, non-US resident/non-resident aliens cannot be S-Corp owners. Hope that helps.
as an resident alien and owner of an LLC s-corp, can I switch my LLC s-corp to a regular LLC to be able to keep it if I were to leave the US?
Hi Damian, if you are talking about reverting a Single-Member LLC back to a disregarded entity, then yes, that can be done. You can find information about that here: LLC revoking S-Corp election with IRS. Hope that helps.
Thanks Matt, I appreciate it!