Questions about Offhore

[Lucky]

Have a question about offshore.

Every answer is appreciated.

If a foreign offshore company is opened in the USA (let's say Delaware), and it sells its products to the American residents through an on-line store located outside the USA (the online store handles payments), in this case does this company breaks the law? I mean in this case is this company doing business with the American residents?

As far as I understand, please correct me if I am wrong , if a company does not do any business with the country of registration it is fine. But as soon as it does something that can be called "doing business" the company has to declare its profit from that operation and pay federal taxes, right?


Many Thanks,
Lucky

[Leksus]

Since you sell your products or services to US residents you will still have "effectively connected US income", which is taxable by feds. You company will have EIN (Employer Identification Number) and you will still have to fill your tax forms and other reports at the end of the year (till April 1st)

BUT if you can manage somehow to accept your payments not in the US bank, but let's say France or any other country, only THEN IMHO you can skip the US tax reporting, but still do this for your "hosted" country tax service. In this case you don't even need to register business in the USA.

[monster]

Let me share my thoughts.
As far as I know if you sell any products to american residents and have a company registered in USA that means you do conduct business in USA. Therefore you will have to pay taxes. I think Federal for sure, plus might be some other. I think they approach this question this way, if you registered an entity in USA means you want american presence. Presence for what? To conduct business.

I plan on opening an LLC soon. One memeber from USA and another member from RUSSIA. I researched at www.irs.gov and found that my partner would have to pay 38.6% flat rate tax on all his share of income. But the thing about LLC is as I know you can allocate profits/losses as you see a fit. That makes it more flexible compared to S-corp.

Hopes it helps you in some way.


PS.

Does anyone have same setup up an running ? LLC where one member is US resident and another member is a resident of Russia? I would like to hear from anyone who is having same setup. Thanks

[Lucky]

I just want to clear things up for myself:

LLC pays $100 annual tax (in Delaware) + $$$ to a registered agent.
LLC does not pay federal taxes as a company, but every member pays individual taxes from his income, right?

So, if an individual is a resident of any other country except the United States he will pay his taxes in the country of his residence. And it doesn't matter people of what residence he is doing business with. Right?

Since LLC does not pay income tax It does not matter where its income come from as long as all members pay their individual taxes.

However, if we have a corporation, a company will have to pay its income tax. And here is one more question: From what operations? All or just those that took place in the United States. I know there are at least two types of corporations and one of them can be opened by non residents.

Thanks,
Lucky

BTW, a friend of mine opened a LLC a few years ago. When he contacted IRS they refused to give him the company's tax number since he lived outside the United States. So it's practically impossible to open an account in the American bank because they require that tax number.

[monster]

LLC pays $100 annual tax (in Delaware) + $$$ to a registered agent.
LLC does not pay federal taxes as a company, but every member pays individual taxes from his income, right?

Depends on a state. In north carolina it's 200$. LLC does not pay any taxes as a company. All income passes through members individual tax brackets.

So, if an individual is a resident of any other country except the United States he will pay his taxes in the country of his residence. And it doesn't matter people of what residence he is doing business with. Right?

You pay tax to USA, then you pay tax to the country of your residency.

Since LLC does not pay income tax It does not matter where its income come from as long as all members pay their individual taxes.

Well, I guess you gonna have to have contracts etc, paper work on your income incase you get audited by IRS.

However, if we have a corporation, a company will have to pay its income tax. And here is one more question: From what operations? All or just those that took place in the United States. I know there are at least two types of corporations and one of them can be opened by non residents.

You can't open any corporation if you are not a resident of USA. There're only two types of business corps S-corp, C-corp. S-corp taxation is more close to llc. C-corp is pays its own taxes.

BTW, a friend of mine opened a LLC a few years ago. When he contacted IRS they refused to give him the company's tax number since he lived outside the United States. So it's practically impossible to open an account in the American bank because they require that tax number.

This is interesting...I would guess they have to give tax id..but who knows...

[Lucky]

You pay tax to USA, then you pay tax to the country of your residency.

I am sorry don't get it: what tax I need to pay to USA except that annuall fee to the state secretary and my individual taxes to the country of my residence.

Sorry about these questions but in my understanding there are only types of payment in case LLC: annuall fee and income tax.


Thanks,
Lucky

[monster]

You pay tax to USA, then you pay tax to the country of your residency.

I am sorry don't get it: what tax I need to pay to USA except that annuall fee to the state secretary and my individual taxes to the country of my residence.

Sorry about these questions but in my understanding there are only types of payment in case LLC: annuall fee and income tax.


Thanks,
Lucky

Yes, you are right. Income tax. Income tax = fed.tax + state tax+ social security tax+ medicare tax+ unemployment tax.