AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A US company usually pays a co-founder who lives and works in Nigeria either as a contractor, with a Form W-8BEN on file, or, if the co-founder is an LLC member, through guaranteed payments and profit shares reported on K-1s. IRS Publication 515 says most US-source income paid to a foreign person is taxed at 30%, and with no US-Nigeria treaty there is no reduced rate, so where the work is done matters. The co-founder reports the income in Nigeria.
Paying a co-founder in Lagos is not like paying a US employee. The method depends on whether they own part of the company, what the company is for tax purposes, and where they physically do the work. Get this right early, because changing it after a year of payments means corrected forms on both sides. This is information, not tax advice.
Three ways to pay
| Route | When it fits | US paperwork |
|---|---|---|
| Contractor fees | Co-founder is not an owner, or company is a corporation and they invoice for services | Form W-8BEN from the co-founder; keep invoices |
| Guaranteed payments and profit share | Co-founder is a member of an LLC taxed as a partnership | Partnership return, K-1, section 1446 withholding forms |
| Salary as an employee | Co-founder works in the US with work authorisation | W-4, payroll, W-2; ITIN cannot replace an SSN for employment |
Contractor payments and Form W-8BEN
IRS Publication 515 (2026) lists Form W-8BEN as the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting for individuals. Ask the co-founder to complete it before the first payment and keep it on file; use Form W-8BEN-E if they invoice through their own Nigerian company.
The key question is whether the payment is US-source income. Publication 515 says most types of US-source income received by a foreign person are subject to 30% US tax, reduced only by a treaty, and the IRS treaty list has no treaty with Nigeria. Publication 515 has a section on services performed outside the United States; read it with your preparer to settle whether pay for work done in Nigeria is US-source. Work done at a desk in Lagos is in a different position from work done during a three-week trip to Houston. Keep a simple record of days worked in the US.
See paying a Nigerian contractor with a W-8BEN for the form itself.
If the co-founder owns part of an LLC
In a two-member LLC taxed as a partnership, the IRS says partners are not employees: they do not get a W-2, and distributions or guaranteed payments are reported on the partnership return and Schedule K-1. The LLC must also apply section 1446 withholding on effectively connected income allocated to a foreign partner, at 37% for an individual, whether or not cash is paid out. See structures with a Nigerian co-founder.
Equity instead of cash
Early-stage founders often pay little cash and more equity. Write it down: the percentage, vesting over time, and what happens if someone leaves. Equity is not free of tax in either country, and timing rules differ; see equity for Nigeria-based staff.
The Nigerian side
Income tax on individuals resident in Nigeria is collected by the state internal revenue service where they live, according to PwC's Nigeria summary. A co-founder paid as a contractor reports the fees on their own return; one paid through their Nigerian company has that company report it. PwC's withholding summary shows Nigerian payers deduct withholding tax on professional fees, but a US company paying from abroad is not usually in a position to deduct and remit Nigerian tax, so the co-founder should plan to pay it.
A worked example
As an example only: a Delaware C corporation pays its Lagos-based co-founder $3,000 a month as a contractor for product work done entirely in Nigeria. The company keeps a W-8BEN, invoices and a log showing no US workdays. If the co-founder spends 10 working days in the US one year, the company and its preparer should look again at whether the pay for those days is US-source and how it is handled.
Records to keep for every payment
- The signed W-8BEN or W-8BEN-E, renewed when the form expires or details change.
- A short written agreement setting out services, fees, currency and payment dates.
- Invoices from the co-founder, dated and numbered.
- Proof of each payment, with the exchange rate if paid in naira.
- A log of any working days spent in the US.
- Board or member approvals for any change in pay or equity.
These records answer the questions an accountant, an investor in due diligence or the IRS will ask later. Gathering them a year after the fact, across two countries and two currencies, is far harder than keeping them as you go.
What to check first
- Is the co-founder an owner? Of what type of entity?
- Where is the work physically done, and are US trips logged?
- Is a W-8BEN or W-8BEN-E on file before the first payment?
- Does the co-founder have a plan to report the income in Nigeria?
Where Pryme fits
A Pryme Business Account can pay a co-founder in naira from USD, with Swap showing the rate and fee before you approve. The payroll tools and the Finance agent prepare each payment for a named person to approve.
Questions people ask
Do I need a W-8BEN for a Nigerian contractor?
Yes, keep one on file. Publication 515 lists W-8BEN as the certificate of foreign status for individuals; use W-8BEN-E for a company.
Is there US withholding on payments to someone in Nigeria?
Publication 515 says most US-source income paid to a foreign person is taxed at 30%, and there is no US-Nigeria treaty. Pay for work done outside the US is treated differently; confirm with a preparer.
Can an LLC member get a salary?
In an LLC taxed as a partnership, the IRS says partners are not employees; they receive guaranteed payments and profit shares reported on a K-1.
Does my co-founder pay tax in Nigeria?
Yes, as a resident they report it to their state internal revenue service, which collects tax on resident individuals.
Sources
- IRS: Publication 515 (2026), Withholding of tax on nonresident aliens and foreign entities · accessed Oct 2026
- IRS: Paying yourself · accessed Oct 2026
- IRS: Partnership withholding (section 1446) · accessed Oct 2026
- IRS: United States income tax treaties A to Z · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria individual tax administration · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.