A Virginia LLC pays no federal entity-level tax by default: a single-member LLC is a disregarded entity taxed on the owner's return, and a multi-member LLC is a partnership. Virginia adds personal income tax up to 5.75% on pass-through profit. An S-corporation election cuts self-employment tax once net income clears roughly $40,000-$60,000, and non-resident owners of a foreign-owned single-member LLC file Form 5472 with a pro-forma 1120 each year. Wyoming and New Mexico charge no state income tax, which is the main tax difference from Virginia.
A Virginia LLC pays no federal entity-level tax by default; profit passes through to the owners. A single-member LLC is a disregarded entity taxed on Schedule C of the owner's 1040, and a multi-member LLC is a partnership that files Form 1065 and issues K-1s. This pass-through treatment is automatic on formation, with no election required. The owners report their share of profit on their personal returns and pay tax at individual rates. An LLC changes this only by electing S-corporation or C-corporation treatment through Form 2553 or Form 8832 when that lowers the total tax bill. The default treatment fits most small LLCs because it avoids a second layer of tax and keeps filing simple. A single-member owner reports profit on Schedule C, and a multi-member LLC passes each member their share on a K-1. Moving to an S-corp or C-corp makes sense only once the tax math favors it.
Virginia charges personal income tax up to 5.75% on LLC profit that passes through to owners. The top 5.75% rate begins at $17,000 of taxable income, so it reaches most active owners. Because the LLC is a pass-through, this tax is paid on the owner's Virginia personal return rather than at the entity level. Virginia residents owe it on their full share of profit; non-residents owe it on income sourced to Virginia operations. Wyoming and New Mexico charge no state income tax at all, which is why tax-focused founders compare those states before choosing Virginia.
A Virginia LLC can elect S-corporation treatment by filing Form 2553, which splits income into a reasonable salary and distributions and cuts the 15.3% self-employment tax on the distribution portion. The election becomes worthwhile around $40,000-$60,000 of net annual income. Below that range, the payroll and compliance cost of running an S-corp outweighs the self-employment tax saved. Above it, the savings on the distribution portion grow with profit. The S-corp is a federal election; Virginia still taxes the pass-through income at up to 5.75% either way. Anonymousllc.co connects owners with US tax preparers to model the election. An S-corp also brings ongoing obligations: running payroll for the salary portion, filing Form 1120-S, and issuing a W-2. Those costs are why the election waits for steady profit above the $40,000-$60,000 range rather than being made at formation. A US tax preparer models the break-even before the LLC files Form 2553.
Default Virginia LLC owners pay 15.3% self-employment tax on net business income: 12.4% Social Security up to the annual wage base of $168,600 plus 2.9% Medicare with no cap. This is on top of federal and Virginia income tax. The self-employment tax funds Social Security and Medicare that an employer would otherwise split with an employee. Electing S-corp status via Form 2553 moves part of the profit into distributions that avoid the 15.3%, which is the main reason profitable LLCs make the election. The salary portion still carries payroll tax.
Non-resident owners of a Virginia LLC owe US tax only on income effectively connected to a US trade or business. A foreign-owned single-member LLC with no US-source effectively connected income files Form 5472 with a pro-forma 1120 but owes no US income tax. When the LLC does earn US effectively connected income, that income is subject to US income tax and the owner files accordingly. A multi-member foreign-owned LLC files Form 1065 and issues K-1s. Virginia state tax applies to income sourced to Virginia operations. Anonymousllc.co partners with US tax preparers who handle non-resident filings. The distinction that drives the bill is effectively connected income: profit earned from a US trade or business is taxed, while foreign-earned profit routed through a US LLC with no US trade or business is not. A US tax preparer confirms the classification each year, since it decides whether the Form 5472 filing stands alone or accompanies an income tax return.
Form 5472 is a required information return for any US disregarded entity with 25% or more foreign ownership. Most non-resident-owned single-member Virginia LLCs must file it each year alongside a pro-forma Form 1120. The form reports transactions between the LLC and its foreign owner, and it carries a substantial penalty for late or missed filing. It is an information return, not an income tax return: filing it does not by itself create a US income tax bill. Anonymousllc.co works with US tax preparers who prepare the Form 5472 and pro-forma 1120 for foreign-owned LLCs.
A multi-member Virginia LLC is taxed as a partnership by default: it files federal Form 1065 and issues a Schedule K-1 to each member. Members report their K-1 share on personal returns, taxed at Virginia rates up to 5.75%. There is no entity-level federal income tax on the partnership; the profit flows to the members. A multi-member LLC can instead elect S-corp status with Form 2553 and file Form 1120-S, or C-corp status with Form 8832. Each member's Virginia income tax depends on residency and the share of Virginia-sourced income.
Virginia's up-to-5.75% state income tax is the main tax difference from Wyoming and New Mexico, which charge no state income tax on LLC profit at all. Federal treatment is identical across all three states. A Wyoming or New Mexico LLC removes the state income tax line entirely, keeping only federal obligations. For a non-resident with no US effectively connected income, both of those states can mean no US income tax and only the Form 5472 information return. Founders who want a US LLC without state income tax form in Wyoming or New Mexico and foreign-qualify into Virginia only when local operations require it. The federal S-corp and Form 5472 rules apply identically whether the LLC sits in Virginia, Wyoming, or New Mexico, so the state choice turns on the income tax line and on privacy. A founder with Virginia customers and staff registers in Virginia; a founder who can base the entity anywhere leans toward the no-income-tax states.
Under the March 21, 2025 FinCEN interim final rule, domestic reporting companies are exempt from beneficial ownership information reporting, so most Virginia LLCs owe no BOI report. Foreign reporting companies formed outside the US remain obligated. A standard domestic Virginia LLC therefore has no BOI filing at present. Anonymousllc.co files BOI reports at $150 each only for foreign reporting companies that still owe them. The exemption reflects the 2025 interim final rule; the LLC's federal and Virginia income tax obligations are separate and unchanged.
Non-US residents who owe US personal income tax file with an ITIN, which Anonymousllc.co obtains for $299. The LLC itself uses an EIN, priced at $99 on its own, for its Form 5472 and pro-forma 1120. An owner with no US-source effectively connected income files only the EIN-based information return and does not need an ITIN. When US income tax is owed on the owner's share, the ITIN lets a non-resident file the personal return. Anonymousllc.co handles both the EIN by fax and the ITIN application without the owner visiting the United States.
5-minute WhatsApp intake. 5-10 day turnaround.