US Payroll for Foreign-Owned Companies: A Setup Guide

Written by CA Sumit ChandwaniChartered Accountant & Founder · Reviewed by Minal Bihani, EA

Payroll is the most regulated thing a small US company does. Set it up once, correctly, and it runs quietly.

Before the first hire

• EIN — you have this from formation; it's also your payroll tax ID
• State registrations — withholding and unemployment insurance accounts in each state where an employee physically works
• Workers' comp — required in most states from employee one
• A payroll system — modern providers handle calculation, deposits and quarterly filings once the accounts exist

Employee vs contractor — the fork that decides everything

US contractors get a W-9 and a 1099-NEC; employees get a W-4, withholding, employer payroll taxes and a W-2. Control over how, when and where the work happens is what classifies them — not what the contract says. Foreign contractors working outside the US are simpler: W-8BEN, no US payroll.

Paying yourself as the foreign owner

It depends on structure. A disregarded LLC's owner takes draws, not salary — and each transfer is a Form 5472-reportable transaction. A C-corp can pay its owner a salary, but a non-resident owner working from outside the US is usually earning foreign-source income — often no US payroll at all, but a treaty and sourcing analysis worth doing once, properly.

The recurring filings

Quarterly 941s, annual 940 (FUTA), state returns, W-2s in January. Deposit schedules are strict and the penalties for late payroll deposits are some of the fastest-accruing in the code — this is why payroll is the last thing to run manually.

The bottom line

Register before hiring, classify honestly, automate deposits, and get owner pay structured once by someone who's seen your setup before. MOREOFTAX handles payroll setup and the filings around it for foreign-owned US companies.