For agencies, studios and consultants
Bill U.S. clients like a U.S. vendor. Starting with the part nobody sells you honestly.
You run an agency outside the United States and your clients are in San Francisco, New York and Austin. Every formation company in this market will tell you a U.S. entity stops your client withholding 30% of your invoice. For work your team performs outside the U.S., there is generally nothing to withhold in the first place. Here is what a U.S. entity actually changes, what it costs you, and when it is not worth forming one.
- 4
- Withholding cases separated, not blurred into one warning
- 3 years
- Roughly how long a W-8BEN-E lasts — to the last day of the third succeeding calendar year
- 31 Aug 2026
- Every figure below re-checked
- 0%
- Withheld on services performed outside the U.S. — foreign source income, once your documentation is on file
- 30%
- Withheld when the W-8BEN-E is missing or expired, wherever the work happened
- $25,000
- Penalty for missing Form 5472 — the filing forming a U.S. LLC creates
- 10
- Primary government sources cited on this page
The straight answer
Will your U.S. client withhold 30% of your invoice? Usually not — and not for the reason you were sold.
This is the fear the category sells against, and it is mostly misplaced. Withholding under chapter 3 is a rule about U.S. source income, and the source of service income follows where the work was performed. That makes the answer depend entirely on which of these four situations you are actually in, which is why they are separated here rather than blurred into one warning.
| Your situation | Withheld | Why, and what to do about it |
|---|---|---|
| Your team is outside the U.S. and performs the work outside the U.S. | Nothing | The place the services are performed determines the source of the income, regardless of where the contract was made, the place of payment, or the residence of the payer. Work performed outside the United States is foreign source income, and chapter 3 withholding is a rule about U.S. source income. |
| Part of the engagement happens on U.S. soil — an on-site sprint, a shoot, a conference activation. | Up to 30% | The portion attributable to days worked in the U.S. is U.S. source income, and most U.S. source income received by a foreign person is subject to U.S. tax of 30%. The split is by days worked, not by invoice. |
| You never sent your client a W-8BEN-E, or the one on file has expired. | Up to 30%, wherever you worked | If you do not provide the form, the withholding agent may have to withhold at the 30% rate. A W-8BEN-E is generally valid only to the last day of the third succeeding calendar year, so a form signed in 2023 expired on 31 December 2026 whether anyone noticed or not. |
| You invoice through a U.S. entity and give the client a W-9 with a valid EIN. | Nothing | A company created or organized in the United States is a U.S. person and gives Form W-9, not a W-8. Backup withholding of 24% applies only if you fail to furnish a TIN, or the IRS notifies the payer that the one you gave is incorrect. |
Where this page stops
The honest trade
What a U.S. entity actually changes, including the two things it makes worse.
A U.S. company is a procurement instrument before it is a tax one. It replaces the paperwork your client's finance team has to handle, and it creates federal and state filings you did not owe before. Both halves are in the same table.
| What changes | Foreign business | U.S. LLC |
|---|---|---|
| The form your client's finance team collects | Form W-8BEN-E | Form W-9 |
| How long that form stays valid | To the last day of the third succeeding calendar year | Until your details change |
| What your client files about you at year end | Form 1042-S | Form 1099-NEC, at $2,000 or more for services — unless the LLC is treated as a C or S corporation, which is generally exempt |
| What you newly owe the IRS | Nothing, for work performed abroad | Form 5472 with a pro forma 1120, for a foreign-owned single-member LLC — $25,000 if you miss it |
| What you newly owe the state | Nothing | Delaware, $400 a year due 1 June and no annual report; Wyoming, an annual report and a licence tax from $60 |
Why form one anyway
Because a U.S. entity is a procurement instrument before it is a tax one.
Procurement stops being the long pole
A W-9 is one page a U.S. accounts-payable team processes every day. A W-8BEN-E runs to eight, carries a chapter 4 status someone has to classify, and expires. Which one your vendor record needs decides how many rounds onboarding takes.
Dollars land in a dollar account
You invoice in dollars and hold dollars, instead of converting on every payment at whatever rate the correspondent bank used that day. Prolify prepares the banking package; whether an account opens is the bank's decision.
One story, told the same way twice
The entity on the contract, the EIN on the W-9 and the account the wire lands in all match. When a client's finance team checks, there is nothing to reconcile.
You can contract inside the U.S.
A U.S. entity is what a U.S. subcontractor, payroll provider or software vendor expects to sign with. Prolify does not run payroll or prepare 1099s today; the entity is what makes those purchasable elsewhere.
Who this is for
Service businesses with U.S. revenue and a team somewhere else.
Marketing, design, development and growth agencies
Retainers and project work for U.S. clients, delivered by a team that sits somewhere else.
Solo consultants and fractional operators
A fractional CTO, CMO or head of growth invoicing U.S. companies directly, often several at once.
Production companies, studios and content shops
Video, audio, editorial and creative production billed to U.S. brands — where an on-site shoot can change the sourcing answer above.
Development shops taking U.S. subcontract work
Building for a U.S. agency that needs a vendor its own client will accept on paper.
Who this is not for
- ×Agencies whose clients are all outside the U.S. — A U.S. entity adds a federal filing and a state fee, and solves a procurement problem you do not have. Do not form one for the logo.
- ×Anyone already withheld against who wants it back — Reclaiming over-withheld tax is a return-filing matter, and this page does not explain it.
- ×Agencies that need U.S. payroll on day one — Prolify does not run payroll, register state employment accounts, or prepare 1099s. The entity makes those purchasable elsewhere; it does not supply them.
- ×Anyone seeking immigration or visa advice — Forming a U.S. company gives you no right to enter or work in the United States. Prolify does not advise on this, and neither does this page.
Scope
What Prolify handles for an agency.
Included means every formation plan covers it. Higher plan means Growth or Elite. Partner-led means Prolify coordinates a licensed third party. Not offered means exactly that — we would rather say so than sell you a waitlist. Plans are Starter, Growth, Elite, from $397one-time for the first year plus your state's filing fee.
LLC formation
IncludedDelaware, Wyoming, New Mexico or Florida — four states, not two. Which one turns on recurring cost, and on whether a client contract names a jurisdiction.
EIN, with no SSN required
IncludedThe IRS publishes four application routes and they are not equally open to you. An international applicant with no U.S. residence, place of business or office may apply by telephone; fax is open to any applicant, including a responsible party with no SSN or ITIN.
Registered agent and U.S. business address
IncludedYear one in the state you file in, plus a U.S. address for contracts and invoices. Mail scanning is not part of any plan.
Banking document package
IncludedThe documents assembled in the form providers ask for, for you to submit. Prolify does not submit or route bank applications, and no one can promise you an account.
Stripe readiness
IncludedA readiness checklist on every plan and a readiness review on higher plans. Approval remains Stripe's decision.
Compliance calendar
IncludedThe state and federal dates that actually apply to your entity, loaded from the start — so the company does not lapse mid-retainer.
Form 5472 workflow
Higher planThe information filing most foreign-owned single-member LLCs owe, and the one this page's readers have most often never heard of. On Growth and above, not on Starter.
Bookkeeping
Higher planSetup guidance on Growth. Prolify does not reconcile your platform fees or foreign exchange for you as part of a formation plan.
Tax filing
Partner-ledTax and bookkeeping support, on Elite.
Contractor payments and 1099 preparation
Not offeredNot built, and not on a waitlist. If you pay U.S. subcontractors today you will need a payroll or AP provider for it.
Reclaiming tax already withheld
Not offeredA return-filing matter.
Payroll and state employment registration
Not offeredNot built. The entity makes it purchasable elsewhere.
Straight answers
The questions agencies actually ask, answered with the rule attached.
My U.S. client asked for a W-9. What do I send?
Invoicing as a foreign business, you cannot send one — a W-9 certifies that you are a U.S. person, which the instructions define as an individual who is a U.S. citizen or resident alien, or a partnership, corporation, company or association created or organized in the United States. A foreign person is advised to use the appropriate Form W-8 instead. Once you invoice through a U.S. LLC, that LLC is a U.S. person and the W-9 is the right form.
Will forming a U.S. company make me owe U.S. tax?
Forming the company does not move where your services are performed, and the place they are performed generally determines the source of the income. What it does change is the FILING: a foreign-owned U.S. disregarded entity is treated as an entity separate from its owner and classified as a corporation for the purposes of section 6038A, and files Form 5472 with a pro forma Form 1120 whether or not tax is due. Whether tax is due is a question for a licensed preparer with your facts.
What happens if I skip the Form 5472 filing?
A penalty of $25,000 is assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed. It is the most expensive thing on this page, and it is a consequence of forming the entity rather than a reason to form it.
Delaware or Wyoming?
A recurring-cost decision more than a prestige one. A Delaware LLC owes $400 a year, due 1 June, and files no annual report. Wyoming charges $100 to file, then an annual report and a licence tax from $60. Prolify also files in New Mexico and Florida. Choose Delaware when a client contract or a future investor names it; otherwise the cheaper state does the same job.
Will my client still file something about me?
Yes, and it changes. Paying a foreign person, they use Form 1042-S. Paying your U.S. LLC for services, they file Form 1099-NEC once they have paid $2,000 or more in the year — unless the LLC is treated as a C or S corporation, which is generally exempt from that reporting. Neither is a tax you pay; both are visibility you now have.
Can I get an EIN without a U.S. Social Security Number?
Yes. The IRS instructions set out four routes and they are not equally available. The online route requires the responsible party to hold an SSN or ITIN. International applicants with no U.S. residence, place of business or office may apply by telephone. Fax is open to any applicant, including a responsible party with no SSN or ITIN, and generally takes about four business days.
My team flies to the client for a workshop. Does that break anything?
It changes the arithmetic rather than breaking it. Where services are performed partly in and partly outside the U.S., the U.S. source amount is the total pay multiplied by the fraction of days services were performed in the U.S. Keep the day count; it is the evidence for the split.
Do I have to close my company at home?
Prolify does not advise on that and this page will not guess. Many agencies run both — the local company employs the team, the U.S. company holds the U.S. client contracts. How the two should charge each other is a transfer-pricing question for a licensed adviser in both countries.
Next
Answer one question at a time, free.
Estimate what a U.S. payer would withhold
Work the sourcing and documentation questions against your own engagement.
Check whether Form 5472 applies to you
The test for a foreign-owned U.S. disregarded entity.
Compare the four states Prolify files in
Filing fee, recurring obligation and annual report, side by side.
Build a U.S.-format invoice
The layout a U.S. accounts-payable team expects to receive.
See every deadline the entity owes
Federal, state of formation, and anywhere else you touch.
Form the entity
The full process, the four states, and what each one costs.
Get paid like a U.S. vendor. Once you know it is worth it.
Formation, EIN with no SSN required, the banking document package and a compliance calendar that includes the filings the entity creates — from $397one-time for the first year, plus your state's filing fee.