Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: What's the best way for foreigners to incorporate in the States?

news.ycombinator.com

Post reply on HN
Print view View original

21–30 of 31 posts

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#21

Post by [deleted] »

tpinto wrote: post #19
philiphodgen wrote: post #17

The legal part of this is trivial. Form a corporation somewhere. Delaware. Meh. (It is actually slightly more complex than that, but not MUCH more complex). The tax side of this is nontrivial. You sound like you are doing this because you have problems extracting money from your customers. In other words, you have a business process problem. If at all possible I would suggest finding a business process solution to yo…

Thanks a lot, Phil. That's a good piece of advice. The Authorize.net was just an example where we felt like we couldn't relate to everyone else in the industry when searching for a solution for that problem. Now, we've solved that and "replaced" Authorize.net for one of the european companies that do pretty much the same. So, my post wasn't focused on that specific problem, but on incorporating in the US, mostly beca…

[deleted]

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#22

Post by ovi256 »

tpinto wrote: post #19
philiphodgen wrote: post #17

The legal part of this is trivial. Form a corporation somewhere. Delaware. Meh. (It is actually slightly more complex than that, but not MUCH more complex). The tax side of this is nontrivial. You sound like you are doing this because you have problems extracting money from your customers. In other words, you have a business process problem. If at all possible I would suggest finding a business process solution to yo…

Thanks a lot, Phil. That's a good piece of advice. The Authorize.net was just an example where we felt like we couldn't relate to everyone else in the industry when searching for a solution for that problem. Now, we've solved that and "replaced" Authorize.net for one of the european companies that do pretty much the same. So, my post wasn't focused on that specific problem, but on incorporating in the US, mostly beca…

Can you name the European company that makes the same thing as Authorize.net ? I've been looking for one forever.

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#23

Post by ojbyrne »

philiphodgen wrote: post #17

The legal part of this is trivial. Form a corporation somewhere. Delaware. Meh. (It is actually slightly more complex than that, but not MUCH more complex). The tax side of this is nontrivial. You sound like you are doing this because you have problems extracting money from your customers. In other words, you have a business process problem. If at all possible I would suggest finding a business process solution to yo…

So I don't really know how this would work, but isn't this whole approach predicated on the idea that US corporate tax rates are higher than Portugal corporate tax rates (which on the face of it seems unlikely)? If the opposite is the case, and it's advantageous to the business to build up a US presence, wouldn't it be better to have as much income as possible taxed as US corporate income, and repatriate as little as possible to Portugal?

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#24

Post by cmer »

patrickaljord wrote: post #15
cmer wrote: post #12

Earlier quoted context omitted.

This has been very tricky for me. I know a few banks will do it but a) I forgot whom, b) the ones who did were all very inconvenient for me (ie: far). If I remember correctly, Wachovia was one of them. I decided to try a few banks in upstate New York since it's not too far from here. I've been turned down by a few, namely Key Bank and Citizens Bank. I ended up opening an account with RBC Bank in Virginia Beach, VA wh…

Thanks a lot. Does it matter if the company is in Delaware and its corporate bank account is in Florida or in another state? Do I have to pay taxes in Florida if my company is in Delaware?

It doesnt matter if your bank account is not in Delaware. About taxes, I think it'll be different from state to state so I can't tell you.

FYI, I bought 100,000 shares of my own company for $200 when I started. Forgot to mention this in my previous comment.

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#25

Post by cmer »

philiphodgen wrote: post #17

The legal part of this is trivial. Form a corporation somewhere. Delaware. Meh. (It is actually slightly more complex than that, but not MUCH more complex). The tax side of this is nontrivial. You sound like you are doing this because you have problems extracting money from your customers. In other words, you have a business process problem. If at all possible I would suggest finding a business process solution to yo…

US LLCs are usually a pain in the ass for non US residents. At least, it is for Canadians and I was strongly adviced not to do that by my tax specialist. C Corp is the way to go for non residents afaik.

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#26

Post by philiphodgen »

ojbyrne wrote: post #23
philiphodgen wrote: post #17

The legal part of this is trivial. Form a corporation somewhere. Delaware. Meh. (It is actually slightly more complex than that, but not MUCH more complex). The tax side of this is nontrivial. You sound like you are doing this because you have problems extracting money from your customers. In other words, you have a business process problem. If at all possible I would suggest finding a business process solution to yo…

So I don't really know how this would work, but isn't this whole approach predicated on the idea that US corporate tax rates are higher than Portugal corporate tax rates (which on the face of it seems unlikely)? If the opposite is the case, and it's advantageous to the business to build up a US presence, wouldn't it be better to have as much income as possible taxed as US corporate income, and repatriate as little as…

Yes you want profits to be earned in the lower tax-rate jurisdiction. What you describe is the typical tax strategy: direct profit to the lower-rate country then leave it there.

The economic value is in deferral of tax. A dollar of tax paid next year has a lower present value than a dollar of tax paid today.

You need a lot of deferred tax to make this cost effective. If you are postponing the payment of $100,000 of tax that means you have $100,000 of extra cash in the bank that would have gone to the tax man. What can you do with it? Earn 1% in a bank? Whee! That won't pay for much of Phil's legal fees. :-)

It is a game for big companies.

For most companies, keep it simple is the strategy. Deferral won't generate a big enough economic benefit.

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#27

Post by philiphodgen »

cmer wrote: post #25
philiphodgen wrote: post #17

The legal part of this is trivial. Form a corporation somewhere. Delaware. Meh. (It is actually slightly more complex than that, but not MUCH more complex). The tax side of this is nontrivial. You sound like you are doing this because you have problems extracting money from your customers. In other words, you have a business process problem. If at all possible I would suggest finding a business process solution to yo…

US LLCs are usually a pain in the ass for non US residents. At least, it is for Canadians and I was strongly adviced not to do that by my tax specialist. C Corp is the way to go for non residents afaik.

CRA says LLCs are taxed like corporations. The IRS says they are disregarded or taxed as partnerships (I.e., passthrough). This mismatch causes great pain. :-)

A lot of times this mismatch (an entity is treated as a corporation in one country and something else in another country) can be used for fun and profit. These are called "hybrid entities" and they bedevil the government.

I like that. :-)

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#28

Post by ojbyrne »

philiphodgen wrote: post #26
ojbyrne wrote: post #23

Earlier quoted context omitted.

So I don't really know how this would work, but isn't this whole approach predicated on the idea that US corporate tax rates are higher than Portugal corporate tax rates (which on the face of it seems unlikely)? If the opposite is the case, and it's advantageous to the business to build up a US presence, wouldn't it be better to have as much income as possible taxed as US corporate income, and repatriate as little as…

Yes you want profits to be earned in the lower tax-rate jurisdiction. What you describe is the typical tax strategy: direct profit to the lower-rate country then leave it there. The economic value is in deferral of tax. A dollar of tax paid next year has a lower present value than a dollar of tax paid today. You need a lot of deferred tax to make this cost effective. If you are postponing the payment of $100,000 of t…

Thanks for humoring me. I took 2 tax courses a very long time ago (got A's in both of them). But I suspected my knowledge wasn't very practical.

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#29

Post by 8ren »

If it's just for accepting US currency, you could try http://worldpay.com. It's expensive to setup, and they charge about 4.5% of the transaction, and you have to wait a month after the transaction to get your money... but US customers can and do make purchases via it for us (in Australia).

But most will also happily wire the money. We're selling to enterprise customers mainly (banks etc), so it may be a different situation to you. Actually, I suspect the main reason some of our customers prefer credit card is to circumvent internal purchasing procedures.

Have customers told you precisely what their problem is? (or, can you identify them and ask them?) There may be a simpler solution that incorporating in the States (though I've heard that's helpful to being acquired, that doesn't sound like a concern in the present instance).

Re: Ask HN: What's the best way for foreigners to incorporate in the States?

#30

Post by sebi »

tpinto wrote: post #19
philiphodgen wrote: post #17

The legal part of this is trivial. Form a corporation somewhere. Delaware. Meh. (It is actually slightly more complex than that, but not MUCH more complex). The tax side of this is nontrivial. You sound like you are doing this because you have problems extracting money from your customers. In other words, you have a business process problem. If at all possible I would suggest finding a business process solution to yo…

Thanks a lot, Phil. That's a good piece of advice. The Authorize.net was just an example where we felt like we couldn't relate to everyone else in the industry when searching for a solution for that problem. Now, we've solved that and "replaced" Authorize.net for one of the european companies that do pretty much the same. So, my post wasn't focused on that specific problem, but on incorporating in the US, mostly beca…

what European company is that?
Post reply on HN