Running a Korean Business While Living in the U.S.
미국 거주 중 한국 사업 운영 — 실무 체크리스트 2026

Overview — The Business Doesn't Stop Being Yours 사업체는 미국 이주 후에도 그대로 본인 것

A Korean national who already runs a business in Korea — a sole proprietorship, a freelance practice, an online store, or a 법인 — and then becomes a U.S. tax resident does not leave that business behind for tax purposes. The IRS treats the Korean business as part of worldwide taxable income from the residency start date forward, regardless of where customers, employees, or bank accounts are located.

Ownership Thresholds — 10% vs. 50%, Clarified 소유 비율 기준 — 10%와 50% 정확한 의미

The 10% and 50% thresholds answer two different questions, and a single owner who holds 100% of a Korean corporation triggers both simultaneously — not sequentially as ownership "grows."

Sole Proprietorship / Freelance / Platform Income 개인사업자 · 프리랜서 · 플랫폼 소득

• All forms of individually-operated Korean business income — 개인사업자 registration, informal freelance work, Naver Smart Store sales, Coupang seller income, YouTube ad revenue from a Korean-registered channel — are reported identically: Schedule C (Profit or Loss From Business) plus Schedule SE (Self-Employment Tax).
• The platform or payment processor does not change the analysis. Income deposited into a Korean bank account from a Korean platform is fully reportable on Schedule C — the deposit location and currency are irrelevant to U.S. taxability once the taxpayer is a U.S. resident.
• Korean income tax (종합소득세) is creditable via Form 1116 (general basket); Korean VAT (부가세) is never creditable (Section 7).

Avoiding Double Social Insurance — Totalization Agreement 사회보장 이중부담 방지 — 한미 총계화협정

The U.S.–Korea Totalization Agreement (effective April 1, 2001) is not a rare or hard-to-access exception — it is an established procedure available to any Korean national paying into 국민연금 for self-employment activity while also subject to U.S. self-employment tax on the same income.

Korean Corporation — Form 5471 and the Disregarded Alternative 한국 법인 — Form 5471과 디스리가드 대안

• 10%+ ownership of a Korean 법인 requires Form 5471 under one or more of the five filer categories — most commonly Category 4 (control) and Category 5 (10%+ CFC shareholder) for a majority or sole owner.
• If the corporation is a CFC, GILTI/NCTI applies — taxing the U.S. shareholder's portion of the corporation's tested income currently, whether or not any dividend was paid. This requires Form 8992 in addition to Form 5471.
• The check-the-box election (Form 8832) can convert the Korean entity to disregarded status for U.S. tax purposes if the entity type qualifies as an "eligible entity" under Treasury rules — replacing Form 5471/GILTI exposure with the simpler Form 8858 regime. This depends on the specific Korean entity form (유한회사 generally qualifies more readily than 주식회사) and should be evaluated with a CPA before or shortly after establishing U.S. tax residency.
• Korean corporate filings continue independently in Korea regardless of the U.S. classification election — the check-the-box election affects only U.S. tax treatment, not Korean corporate law, registration, or Korean tax obligations.

Accidental U.S. Permanent Establishment 의도하지 않은 미국 고정사업장

Businesses where the owner's day-to-day involvement is essential to service delivery (consulting, content creation, direct sales negotiation) carry higher PE risk when the owner relocates to the U.S. than businesses where Korean-based employees or systems handle operations independently of the owner's location.

Foreign Tax Credit and Korean VAT 외국납부세액공제와 한국 부가세

Business owners assembling FTC documentation should pull the income tax payment records specifically from their Korean 종합소득세 filing — not the combined "taxes paid" total that may appear in bookkeeping software, which often nets together VAT remittances, social insurance, and income tax into a single figure.

Korean Expense Rules vs. U.S. Rules 한국 사업비 규정 vs. 미국 규정

8-Step Filing Process 8단계 신고 절차

Documents to Gather Each Year 매년 준비할 서류

• 사업자등록증 — Korean business registration certificate (confirms structure and registration date)
• 종합소득세 신고서 — annual Korean comprehensive income tax filing (separate from VAT — needed for FTC)
• 부가세 신고서 — VAT filing (kept separately; confirms which payments are VAT, not creditable)
• 적용증명서 (Certificate of Coverage) — if claiming the Totalization Agreement SE tax exception
• Korean bank/business account statements — showing maximum balances during the year for FBAR/FATCA
• Platform income statements — Naver, Coupang, YouTube, or other platform annual income summaries
• Expense receipts — organized to apply U.S. deductibility rules, not just Korean rules
• Korean corporate financial statements(if applicable) — for Form 5471/8858 preparation

5 Fully Computed Examples 실제 계산 사례 5개

Common Mistakes 자주 발생하는 오류

• 1 Assuming a Korean business with no U.S. customers or U.S. employees is outside U.S. tax jurisdiction. The owner's U.S. tax residency — not the business's customer base or employee location — determines U.S. reporting obligations.
• 2 Thinking the 10% and 50% CFC thresholds apply only to larger, multi-investor companies. A single founder who owns 100% of a Korean corporation triggers both the Form 5471 filing requirement (10%+) and CFC/GILTI-NCTI status (50%+ combined U.S. ownership) simultaneously, at formation.
• 3 Not applying for a Certificate of Coverage (적용증명서) when eligible for the Totalization Agreement SE tax exception. Without this documentation attached to the U.S. return, the IRS assesses full 15.3% SE tax even when the Korean National Pension Service would have issued the certificate on request.
• 4 Crediting Korean VAT (부가세) as a Foreign Tax Credit. VAT is a consumption tax, never creditable on Form 1116 — only the Korean income tax (종합소득세) and its local surtax qualify.
• 5 Continuing to actively run a Korean business from a U.S. home office without evaluating PE risk. Regular, substantive U.S.-based involvement in service delivery or contract negotiation for a Korean business can create an unintended U.S. permanent establishment, exposing the business to direct U.S. corporate-level taxation.
• 6 Not evaluating the check-the-box election for a wholly-owned Korean corporation. Leaving a 100%-owned Korean entity at its default corporate classification generates Form 5471/GILTI-NCTI exposure every year; a timely disregarded entity election can replace this with the simpler Form 8858 regime if the entity type qualifies.
• 7 Mixing income tax FTC relief with SE tax relief. The Foreign Tax Credit offsets U.S. income tax; the Totalization Agreement offsets U.S. SE tax. They address different taxes through different mechanisms and require separate analysis.
• 8 Not reporting Korean business bank accounts on FBAR because they are "business," not "personal," accounts. The $10,000 aggregate FBAR threshold applies to all foreign financial accounts in which the U.S. person has a financial interest or signature authority — business accounts are not exempt.

Hanmi CPA Insight