FBAR for Business: Company Accounts Abroad and Signers

Does a corporation or LLC file its own FBAR?

Yes. A corporation, LLC or partnership formed under US or state law is a US person, so it files its own FBAR (FinCEN Form 114) when its foreign financial accounts together exceed $10,000 at any time in the calendar year (31 CFR 1010.350; FinCEN). Where the founders live, how the company is taxed, and whether the account earned anything do not change that (IRS).

One account can mean several FBARs:

A case is not simple when the account sits with a payment provider, when years have already been missed, when a founder lives abroad, or when the company owns a subsidiary abroad. Gather, for each account: the name on it, account number, the institution's name and address, account type, highest balance each year, and who can instruct the institution to move money. Add each person's citizenship or residence and percentage owned.

Which company accounts count: foreign bank, payment or multi-currency, brokerage?

An account counts when it is a financial account maintained with a financial institution located outside the US. That includes bank deposit and checking accounts, brokerage and securities accounts, accounts with a person accepting deposits as a financial agency, cash-value insurance, and publicly offered mutual funds (31 CFR 1010.350(c)).

Location decides, as the FBAR instructions show: an account at a US bank's branch abroad is foreign, and an account at a foreign bank's branch inside the US is not. The account's currency is not the test.

Payment and multi-currency accounts need a check. FinCEN has published no rule naming payment services. Read the account terms to find which legal entity holds the balance and where it is located. A balance held by a provider's institution abroad may be a foreign account; one held by a US institution generally is not. If the terms are unclear, treat it as a judgment call, not a safe exclusion.

How is the FBAR threshold measured across the company's accounts?

Add the highest balance of every foreign account during the calendar year. If the total exceeds $10,000, the company reports every account, including the small ones (FBAR instructions).

• Value each account separately, at the greatest balance during the year. Statements may be used if they fairly reflect that peak.
• Convert a foreign currency balance using the Treasury rate for the last day of the calendar year, and round up to the next whole dollar.
• Use the calendar year, even if the company's tax year ends in another month.
• An individual adds the company accounts they can sign on, or have a financial interest in by owning more than 50% of the company, to their own foreign accounts. A small company account can push a founder's own total over the line.

Do officers and employees who can sign on the company account file an FBAR too?

Usually yes, if they are US citizens or residents. Signature authority means the power of an individual, alone or with another person, to control money in the account by instructing the institution directly (31 CFR 1010.350(f)). Someone who can initiate or approve transfers has it; someone who can only view statements does not.

The exceptions cover officers and employees of supervised banks, registered financial firms, and companies with stock listed on a US exchange or registered with the SEC. A private startup is usually none of these, so its US-person signers whose foreign accounts total more than $10,000 file their own FBAR listing the company's account. A signer does not need to keep personal records for an employer's account; the company keeps them (IRS).

Does a founder who owns more than half the company report its accounts?

Yes. A US person who owns, directly or indirectly, more than 50% of a corporation's vote or value, or of a partnership's profits or capital, has a financial interest in the entity's foreign accounts (31 CFR 1010.350(e)(2)(ii)). That founder reports those accounts on their own FBAR, whether or not they can sign.

Owners at or below that level report only the accounts they can sign on. Their own accounts abroad are covered in reporting foreign accounts.

What if the founder or officer lives outside the US?

The company still files, because a US-formed entity is a US person wherever its owners are. A founder or officer who is not a US citizen or resident has no FBAR duty for the company's account.

A US citizen living abroad is still a US person and files as a signer or majority owner. A visa holder may count as a US resident under the tax residency tests (FBAR instructions), and a tax treaty does not change that for the FBAR (IRS Publication 5569). Check each signer's status every year. A foreign-owned corporation's other yearly filings, such as Form 5472, are covered in foreign-owned C corporation filing.

Does a single-member LLC that is disregarded for income tax still file?

Yes. The FBAR instructions say an entity disregarded for income tax must still file if otherwise required. It checks "Fiduciary or other" and enters "limited liability company (D.E.)" (FBAR instructions). Its owner, if a US person, also has a financial interest in the LLC's accounts.

A foreign-owned single-member LLC's other yearly filings are covered in foreign-owned single-member LLC filing.

When is a business FBAR due, and how does the company file?

A business FBAR is due April 15 after the calendar year reported, with an automatic extension to October 15; no request is needed (FinCEN instructions). It is filed electronically through FinCEN's BSA E-Filing System, separately from the income tax return (IRS).

Individuals can file without registering. An institution, including a company or a preparer filing for a client, must register for a BSA E-Filing account (FinCEN; FinCEN filer types). A company that authorizes someone to file for it signs FinCEN Form 114a and keeps it.

A US company owning more than 50% of another US entity may file one consolidated FBAR covering both. A US company owning more than that share of a subsidiary abroad has a financial interest in the subsidiary's accounts; see US parent of a foreign operating company. For the company's other dates, see Delaware C corporation taxes for startups.

Does the company also file Form 8938?

Rarely, for an operating startup. A domestic corporation or partnership files Form 8938 only if it is a specified domestic entity, and its foreign financial assets exceed $50,000 on the last day of the tax year or $75,000 at any time (Form 8938 instructions).

It is a specified domestic entity only if both are true (26 CFR 1.6038D-6):

• One US citizen or resident owns, directly, indirectly or through family, at least 80% of its vote or value, or of a partnership's capital or profits, on the last day of the tax year.
• At least 50% of its gross income is passive, or at least that share of its assets produce or are held to produce passive income.

Interest counts as passive income. A pre-revenue company whose only income is interest on raised cash, with one founder and family owning at least 80%, can meet both tests; check it each year. Form 8938 goes with the income tax return and does not replace the FBAR.

What are the FBAR penalties for a business, and which records do we keep?

The penalty for a non-willful failure is up to $16,536 per report (31 CFR 1010.821; Bittner v. United States). No non-willful penalty applies if the failure had reasonable cause and the balance was properly reported. A willful failure can cost the greater of $165,353 or 50% of the balance (31 U.S.C. 5321). The penalty can reach any person who violates the rule or causes a violation, so the company, each signer who fails to file, and an officer who causes the company's failure can each face it.

Keep, for each account, the name on it, its number, the institution's name and address, its type, and its highest value for the year. Keep them for 5 years from April 15 after the year reported, or from the filing date if later (31 CFR 1010.420; FBAR instructions). If FBARs were missed in earlier years, see catching up on missed foreign reporting.

Example

These examples are illustrative; figures are in US dollars, converted at the Treasury year-end rate.

Euro account abroad, US-citizen CEO signs

A Delaware corporation opens a euro account at a bank abroad to pay its overseas team. The account peaks at $16,000. The company files an FBAR. The CEO, a US citizen who owns 30% and can approve transfers, files her own FBAR reporting signature authority over the account. If she owned 60%, she would report it as a financial interest instead.

Founder abroad with a local account in the company's name

A founder who lives abroad and is not a US citizen or resident opens a local account in the Delaware company's name. It peaks at about $15,000. The company files an FBAR. The founder does not, even though he owns 100% and is the only signer.

Two small accounts

A US LLC has two accounts abroad that peak at $6,000 and $5,000. Together they reach $11,000, over $10,000, so the LLC reports both accounts.

Different for you?

• A founder has personal accounts abroad: see reporting foreign accounts.
• The company or a signer missed FBARs in past years: see catching up on missed foreign reporting and get FBAR help.
• The accounts belong to a subsidiary formed abroad: see US parent of a foreign operating company.
• The company is foreign-owned and needs Form 5472: see foreign-owned C corporation filing or foreign-owned single-member LLC filing.
• The account pays contractors abroad: see paying contractors abroad.
• You are unsure whether a payment account is foreign, or who must sign and file: get FBAR help.