Can my foreign LLC hold balances in multiple currencies? How do multi-currency accounts work?

There is no U.S. legal restriction preventing a U.S. LLC from holding bank balances denominated in currencies other than USD. Many businesses with international operations maintain multi-currency accounts.

However, most U.S. banks (including Mercury and Relay) only offer USD accounts. To hold balances in EUR, JPY, GBP, and other currencies, you'll need to use a multi-currency platform like Wise Business, which allows you to hold balances in 40+ currencies under a single account.

Wise Business provides your LLC with local account details in multiple currencies. This means you get:

- A U.S. routing/account number for receiving USD - A European IBAN for receiving EUR - A UK sort code/account number for receiving GBP - Local account details for AUD, SGD, and other supported currencies - Japanese recipients can send via local bank transfer to your JPY balance

When a European client pays you in EUR, the funds land directly in your EUR balance without any conversion. You can then hold those EUR until you need them — for paying European contractors, covering European expenses, or converting to USD at a time when the exchange rate is favorable.

Conversion between currencies within Wise uses the mid-market exchange rate with a transparent fee (typically 0.4-0.8% depending on the currency pair).

For U.S. tax purposes, your LLC's functional currency is USD (unless you've elected otherwise, which is rare for U.S.-formed LLCs). This means:

1. All income must ultimately be reported in USD on your tax filings, regardless of what currency you received it in. 2. When you convert foreign currency to USD, any gain or loss from exchange rate fluctuations is a foreign currency gain or loss under IRC Section 988. These are generally treated as ordinary income or loss. 3. Even if you hold EUR and don't convert to USD, you must report the USD-equivalent value of income at the time you earned it (typically the exchange rate on the invoice date or payment date).

For practical purposes, if you receive a EUR 10,000 payment when the exchange rate is 1 EUR = 1.08 USD, you report $10,800 in income. If you later convert the EUR to USD when the rate is 1.10, the additional $200 is a foreign currency gain.

Keep records of exchange rates on the dates you receive payments and on the dates you convert currencies.

Holding foreign currency balances may trigger additional reporting requirements:

1. FBAR (FinCEN Report 114) — if the aggregate value of your foreign financial accounts exceeds $10,000 at any point during the year, you must file an FBAR. Wise Business accounts may be considered "foreign" financial accounts for FBAR purposes since Wise is not a U.S. bank, even though it provides U.S. account details. This is an area of ambiguity — consult a tax professional.

2. FATCA (Form 8938) — U.S. persons must report specified foreign financial assets exceeding certain thresholds. However, this generally applies to U.S. citizens and residents, not non-resident aliens. As a non-resident foreign LLC owner, FATCA Form 8938 typically does not apply to you.

3. Form 5472 — if your LLC holds foreign currency that was received from or will be sent to the foreign owner, these movements are reportable transactions on Form 5472 regardless of the currency denomination.

1. Keep your primary operating balance in USD — use Mercury or Relay for your main business account. 2. Use Wise for receiving and holding foreign currencies — set up local receiving details for each currency you commonly receive. 3. Convert to USD on a regular schedule — rather than trying to time the market, convert foreign currency to USD weekly or monthly. This averages out exchange rate fluctuations. 4. Document exchange rates — save the exchange rate confirmation from Wise or your bank for every conversion. You'll need these for tax reporting. 5. Track foreign currency gains and losses — maintain a simple spreadsheet tracking: date received, currency amount, USD equivalent at receipt, date converted, USD received, and gain/loss.