Guide 41 · Federal tax, beyond 5472
Bookkeeping for a foreign-owned LLC: the records your CPA and your 5472 actually need
Foreign founders keep books for an audience of two: their CPA in April, and themselves every other month. The 5472 does not ask for your profit — it asks for your transactions with yourself, which is a different ledger than the one most bookkeeping software builds by default. This page specifies the records that matter, in the form the questions are actually asked.
On this page
The ledger the 5472 actually reads
Form 5472's core schedule lists reportable transactions between the company and its foreign owner and related parties: money you put in, money you took out, loans in either direction, property or services exchanged, rents and royalties. Your accounting software's profit-and-loss does not isolate these — a transfer from your personal account looks like income; a draw looks like an expense. The fix is structural, from the first month: dedicated accounts (or classes) for owner contributions, owner draws, and owner loans, so the year's 5472 schedule is a report you run, not an archaeology you commission. Our 5472 explainer lists the transaction categories in full.
The records, specified
- A capital account per owner: opening position, every contribution and draw dated and valued, closing position. For a single-member company this is one page; it is the page your CPA asks for first.
- Bank and payout reconciliations monthly: Stripe and marketplace payouts land net of fees and refunds; record gross sales, fees and refunds as separate lines so the gross ties to the 1099-K in January without a reconstruction.
- An intercompany/related-party log: if a home-country company invoices the US company (or the reverse), log it when it happens — amounts, currency, exchange rate used, and the document. Related-party pricing questions are answered from this log or not at all.
- FX discipline: the company's books live in USD; personal-side records in your home currency are translations, and the rate source should be written down once and used consistently.
The year-end pack
The pack that closes a year: year-end bank and processor statements; the payout reconciliation; the owner-transaction report (the 5472 schedule in draft); the capital account; the related-party log; contracts and invoices for the largest expenses; and every IRS or state notice received during the year, scanned. Assembled in January, this is an afternoon. Assembled in April from a shoebox of screenshots, it is a fee. Note what is absent: the IRS does not prescribe a bookkeeping system for a company this size — it prescribes that records substantiate what the returns report. Adequate records, kept contemporaneously, are the standard.
Two habits that decide everything
Two habits separate founders whose books serve them from founders whose books ambush them. First, no personal money through the company account beyond documented contributions and draws — commingling converts every question into a research project and weakens the liability separation the LLC exists to provide. Second, monthly, not annual: a fifteen-minute monthly close catches the mislabelled transfer while you still remember what it was. The company's operating agreement should say who keeps the books and where they live; for most founder companies the answer is a cloud ledger the CPA can read without asking.
Where Sethhost's role stops
Bookkeeping is not a Sethhost product and tax preparation is not either — the membership's role is the chassis the records hang on: the compliance calendar that puts the 5472 date in front of you with the records checklist attached, the document shelf where notices and statements accumulate during the year instead of during a panic, and the state-side filings whose acknowledgements belong in the same pack. Founders who want the books kept for them should hire that service by name — our doola comparison prices one platform's version honestly — rather than assume a formation bundle quietly includes it.
Verification. Checked 2026-11-12 against IRS.gov: the Form 5472 instructions (reportable transactions and record-keeping) and the IRS recordkeeping guidance for businesses.
Reading is step one. The paperwork is the rest.
Sethhost handles formation paperwork, the EIN workflow, registered agent service, your website, a US number, and a compliance calendar — one company, one bill. Hosted is $79 per month and formation is included in your first term; the state filing fee is always shown separately.