Does hiring a US-based employee turn my LLC's profits into ECI for me personally?
I'm a Spanish resident and my US LLC sells consulting and software services worldwide. While I worked alone from Spain, my understanding was that the income was foreign-source services income with no US tax for me, just the annual Form 5472 paperwork. We're now hiring a full-time operations manager who lives in the US and will run client delivery from there. Several people have hinted this 'changes everything' for my own taxes. Does one employee really do that? What would I have to file — and is it different if I someday move my LLC under my Spanish company instead of owning it personally?
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