US LLC from Pakistan: SBP Rules, Banks and Taxes, Step by Step

0:00Two founders: who needs a US company?

Two founders. Sana, in Lahore, builds websites for clients in America. Hamza, in Karachi, is building software he wants to sell by card, all over the world. Both have been told the same thing: get a US company. For one of them, that's good advice. For the other, it means paperwork in two countries every year, with nothing to gain. And the one who does need it will find the road from Pakistan works differently from what most videos show.

We're BaseAcross. We set up US companies for founders outside America. Let's take that road one stop at a time.

0:39Freelancer in Pakistan: you may not need one (PSEB 0.25%)

Start with Sana. Foreign clients pay her for IT work, and Pakistani banks already handle that. As a freelancer, she can keep part of each payment in a dollar account. If she's registered with the Pakistan Software Export Board, her bank deducts a very low final tax on that income, as long as she files her return and meets the other conditions. A US company wouldn't lower that. It would add a US filing every year, and more to report at home.

So Sana doesn't need one. Hamza is different. He needs card payments through Stripe, and US customers who want to sign with a US company. That's a reason. For an owner-run business like his, a Wyoming LLC is the usual answer. If you're raising from investors, they'll usually want a Delaware C-Corp instead.

1:30Can you fund a US company from Pakistan? The SBP rules

The first stop is the one most guides drive straight past: money leaving Pakistan. The State Bank of Pakistan gives individuals a general permission to invest abroad, but it's narrow. It covers things like buying listed shares, or shares from an employer. Owning and funding your own private US company isn't on that list. There is a formal route, through one bank, with tax-paid money and an investor on the Active Taxpayer List, and anything outside it goes to the State Bank itself.

So Hamza does what many founders do. He doesn't send money in. The company funds itself from its own revenue. Even the formation fees are a payment abroad, so he asks his bank's foreign exchange desk how it will report them, before he pays anything.

2:21Forming the LLC and an EIN without an SSN

The American part is quick. Hamza picks a name. The company needs a registered agent in its state, an address for legal papers. It isn't his business address. Once the state approves the filing, the company exists. Before he signs the operating agreement, he checks every name against his passport. Then comes the US tax number, the EIN. With no social security number, the application goes on a paper form to the IRS.

His NTN isn't part of it, and it doesn't replace it either.

2:55Which US bank works from Pakistan?

Now the hard part. A US company needs a bank account, and the US fintech banks most videos recommend won't open one for a founder who lives in Pakistan. Some look at where you live. Some look at your passport too. So Hamza plans the bank before anything else. He starts with a provider that serves Pakistan and pays out to Pakistani banks, and checks that it will open an account in his company's name.

Stripe doesn't list Pakistan. But a US company with an EIN and a US bank account can apply for a US Stripe account. Stripe reviews the business and the person behind it, and it can say no. One habit helps every application: the same name, the same address, and the same description of the business, everywhere.

3:45Bringing money home: fee or profit, PSEB, Form 5472

When money comes home, what it is matters. A fee for Hamza's work and a share of the company's profit are taxed differently, so he records which each payment is. Say the company pays him four thousand dollars for a month's work. If that counts as freelance export income, all of it can stay in his dollar account. With PSEB registration, the bank deducts ten dollars. Without it, forty.

And the company records the payment, because the IRS will want to see it. A share of profit comes home through the bank too, with a certificate filed through his bank.

4:23What the FBR and the IRS expect every year (116A, CFC)

Now the calendar. Both countries want to hear from Hamza every year, even when not much happened. In America, a company with one foreign owner files an information return when money moves between the company and its owner. Money in, money out, or pay for his work can count, even in a year with no sales. And the penalty for missing it is large. In Pakistan, he's taxed on his income from anywhere, and a US bank account doesn't change that.

Once his foreign income or assets pass a set level, he also files a statement listing them. Missing it costs a share of that income or those assets, every year. Two more questions for his adviser. Could Pakistan tax the company's income under its controlled foreign company rule? And if he runs it entirely from Karachi, could the company itself count as Pakistani? Ask early, not after the first good year.

Then put every date, in both countries, on one calendar.

5:26US–Pakistan tax treaty: royalties at 0%

Some good news to finish. Pay for work Hamza does in Pakistan generally isn't US income in the first place. So a one-owner LLC with no office or staff in America often owes no US income tax on it. It still files. And Pakistan and the US have had a tax treaty since 1957. For creators earning royalties from videos or books, it can cut the US tax withheld to zero, if you claim the treaty.

5:57Three questions for your tax adviser

Before you order anything, take three questions to your tax adviser. Can I fund this company from Pakistan, or should it fund itself? How will the FBR treat its profit? And when do I need the foreign income and assets statement? The full guide, with every source we used, is linked below, along with the list for your adviser. And Sana? She never formed a company. That was the right call too.