2026 Tax and Accounting Guide for Software Developers and Entrepreneurs Establishing Companies in the USA
Opening an LLC in America is a process that can be completed online in a few days for a few hundred dollars. For Turkish software developers, game developers, e-commerce sellers, and content creators, the real cost doesn’t come at the time of establishment, but in the 12 months after establishment: annual returns, state reports, withholding […]
Opening an LLC in America is a process that can be completed online in a few days for a few hundred dollars. For Turkish software developers, game developers, e-commerce sellers, and content creators, the real cost doesn’t come at the time of establishment, but in the 12 months after establishment: annual returns, state reports, withholding forms, sales tax records, and — the most frequently overlooked item — Form 5472 filing, which is mandatory for single-shareholder foreign-owned companies.
In this guide, we explain the structure that an entrepreneur doing business in the technology sector in the USA will encounter in their first year, step by step: company type selection, tax identification numbers, filing schedule, with holding tax on platform payments, sales tax, and rules changing with the prestige of 2026.
LLC or C-Corporation? What makes a difference for technology startups?
This is the first and most important decision for every company founded in the US. Choosing the wrong structure will come back to haunt you two years later, whether in investment type or sale.
| Criteria | LLC | C-Corporation |
The practical distinction is this:
If you are receiving your income directly, choose LLC; if you plan to grow the company’s value and sell shares, choose C-Corp. For an independent mobile developer selling in-app products, LLC is often sufficient, while for a SaaS team targeting seed investment, Delaware C-Corp is almost a necessary choice.
State selection also comes into play here. Delaware stands out due to investor habits, while Wyoming and New Mexico are preferred for their low maintenance costs, and Florida and Texas for their lack of state income tax. However, it’s important to remember that separate registration (foreign qualification) may be required in every state where there is a physical office, employee, or warehouse.
EIN, ITIN, SSN: What does each one do?
The three numbers are often confused. The distinction is clear:
- EIN (Employer Identification Number): The company’s tax identification number. Obtained with the SS-4 form; founders who do not live in the US can also obtain it without an SSN. Required for bank accounts, Stripe, Amazon Seller, and platform contracts.
- ITIN (Individual Taxpayer Identification Number): For individuals who are not eligible to obtain an SSN. Obtained with the W-7 form, usually along with a tax return. In a joint LLC, this is a requirement for foreign partners or those filing individual tax returns who obtain a K-1.
- SSN (Social Security Number): Issued only to individuals with a work permit in the USA.
Common misconception: Assuming that obtaining an EIN (Electronic Tax Identification Number) also completes the personal tax identification process. These are two different processes, and ITIN applications can take weeks.
The most significant mistake: Form 5472 and a $25,000 fine
This is the most common trap for those establishing companies in the USA from Turkey.
A single-shareholder LLC with foreign ownership is required to file a tax return in the US, even if it does not pay taxes.
According to regulations in effect since 2017, these types of companies are valued as corporations for reporting purposes and are obligated to submit
Form 5472 along with pro-forma Form 1120 every year. The form reports money transfers between the company and its owner (including capital injection, profit withdrawal, and lending).
The penalty for not filing this return starts at $25,000, even if the company has not generated any income.
The assumption that “I opened the company but never used it, so I don’t need to do anything” is the most common and costly misconception of Turkish-capital companies established in the US. The table changes in joint LLCs: Form 1065 is submitted, K-1 is issued to each partner, and a separate withholding tax liability arises on the effective related income distributed to foreign partners.
Software development expenses: Critical distinction after 2025
The most important change directly affecting technology startups is here. With the regulation that came into effect in July 2025, research and development and software development expenses
made within the US can be directly expensed in the year they are incurred.
The five-year spread application, which was mandatory between 2022-2024, has been removed for domestic expenses and this regulation has been made permanent. However, it should be noted that:
R&D expenses made outside the US are still amortized over 15 years.
The meaning of this is concrete for Turkish entrepreneurs. If you have a company in Delaware but your software group is in Istanbul, the cost of the code you cannot write from your US tax base in the same year; It is spread over 15 years. There is a significant difference in cash flow between doing the same work with a contractor based in the US and with a group in Türkiye. This is an item that needs to be modeled from the very beginning when establishing the company structure.
App Store, Steam, YouTube: Withholding tax on platform payments
This concerns everyone who earns income from US-based platforms. Apple, Google Play, Steam, YouTube, Upwork, and similar platforms are obligated to apply a default
30% withholding tax
on payments originating from the US. The way to reduce this rate is to submit the form in its true form:
If you receive income as an individual:
- W-8BEN
- If you receive income through a company:
W-8BEN-E
Under the double taxation avoidance agreement in force between Turkey and the USA, the withholding tax rate on copyright and license payments can be reduced to the agreed rates. However, for this, the agreement clause must be explicitly referenced in the form and the necessary tax identification information must be entered. Many developers who fill out the form incompletely pay a refundable withholding tax for years without realizing it.
Sales tax: May also apply if you sell software
In the USA, sales tax is not federal but operates at the state level, and since the Wayfair decision in 2018, the physical presence rule has not been required. Remote sellers who exceed a reasonable sales volume in a state are considered to have established an economic nexus
in that state and are required to register and pay taxes. The common threshold is around $100,000 annually, with some states also applying a transaction volume criterion.
On the SaaS side, the situation is more complex: some states tax cloud software subscriptions, while others consider them services and exempt them. On marketplaces like Amazon, Etsy, and Shopify, the platform collects a portion of the tax under “marketplace facilitator” rules — but this does not eliminate the seller’s registration and reporting obligations in all cases.
What is the status of BOI reporting in 2026?
The BOI (actual beneficiary disclosure) obligation, which came into effect at the beginning of 2024 and covered almost all US companies, was significantly narrowed in March 2025. FinCEN’s latest provisional rule ended the definition of “reporting company” only with businesses incorporated under foreign legislation and registered in a US state; all companies incorporated in the US and their actual beneficiaries were exempted from the reporting obligation.
In practice:
BOI reporting is not required for an LLC you incorporated in Delaware or Wyoming.
If you registered a company incorporated in Turkey as a branch in the US, the obligation continues. This rule is still provisional and FinCEN has not published the final version; furthermore, bills aimed at making the permanent exemption are on the agenda in Congress. In short, it’s worthwhile to review this topic annually.
And now, a state level has come into play: New York has implemented its own transparency regulation for LLCs incorporated outside the US, effective January 1, 2026.
Annual Calendar: What do you need to submit and when?
| For whom | Typical deadline | |
Don’t forget the Turkish side
Establishing a company in the US does not eliminate your obligations in Turkey. A person considered a full taxpayer in Türkiye is also obligated to declare their worldwide income in Türkiye. Double taxation avoidance agreements between the two countries offer mechanisms to prevent double taxation on the same income, but these systems do not operate automatically — they require accurate declaration and offsetting.
The most common result for entrepreneurs who do not plan both sides together is either filing a correct declaration in the US but under-declaring it in Turkey, or vice versa, paying taxes twice on the same income.
Frequently Asked Questions
Do I need to live in the US to establish a company in the US?
No. A person residing in Türkiye can establish an LLC or C-Corporation, obtain an EIN, and open a bank account in the company name. There are no visa or residency requirements.
Do I need to file a tax return if I have no income?
Yes. Especially in single-shareholder foreign-owned LLCs, filing Form 5472 and pro-forma Form 1120 is mandatory even if there is no income. The penalty for non-filing starts at $25,000.
Is an LLC always cheaper than a C-Corp?
In terms of running costs, mostly yes. However, for groups that will receive investment, issue stock options, or sell the company, the flexibility provided by the C-Corp structure more than compensates for this difference.
Can I form a company without an ITIN?
You can form a company and obtain an EIN. The ITIN becomes required in situations where you need to file a personal tax return (for example, when you obtain a K-1 from a joint-stock LLC).
Can I deduct my software development expenses one-to-one?
Yes, for development expenses incurred within the US. The development you conducted with your group in Türkiye is considered overseas R&D and will be amortized over 15 years.
I sell on Amazon, and the platform collects sales tax. Do I need to re-register?
It depends on the situation. Even if the marketplace collects a portion of the tax, if you sell through your own website or other channels, you may have registration and reporting obligations in the relevant states.
Do I need to submit a BOI report?
Currently, it is not required for a company established in the US. If you registered a company established in Turkey with the US, the obligation continues. Since the rule is in a temporary status, an annual audit is recommended.
What is the advantage of working with a Turkish-speaking firm for accounting?
A team familiar with the regulations of both sides can create a consistent structure between US and Turkish declarations. In addition, misunderstandings stemming from financial terminology are the most common source of problems.
Collaboration: TAM Accounting
The technical topics in this guide were prepared in collaboration with ShiftDelete.Net’s US accounting and tax partner TAM Accounting
. The abbreviation stands for “Trusted Accounting Mentor”.
The North Carolina-based firm serves all 50 US states and has a team structure focused on Turkish-speaking entrepreneurs. Its services include company formation, bookkeeping and accounting, payroll, tax planning and filing, international taxation (including FBAR/FATCA), IRS representation, QuickBooks consulting, and CFO consulting. Their client groups include software companies, e-commerce sellers (Amazon, Walmart, Etsy, Shopify), freelancers, real estate investors, and non-US business owners.
TAM Accounting Inc.
Address: 5000 Centregreen Way, Suite 500, Cary, NC 27513, USA Phone: +1 (540) 429-5555 Web: tamaccounting.com Free initial consultation: Schedule an appointment
LLC or C-Corp in the USA? Form 5472 penalty, software development expenses, sales tax and BOI reporting… 2026 US tax guide for Turkish entrepreneurs.
