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Bitcoin accidentally solved my startup's international banking problem

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Re: Bitcoin accidentally solved my startup's international banking problem

#21

Post by conformal »

dobbsbob wrote: post #16
csomar wrote: post #13

How is it legal for someone based in the US to setup a UK company to run his business? Isn't this a recipe to get the IRS to investigate this as a tax evasion scheme? I mean if it's possible, then every online business should incorporate in HongKong and avoid Taxes, VAT and several other complications that the IRS put.

It's legal as long as you report any income you make from it personally. There's nothing stopping you from incorporating in the Seychelles, and getting a bank account in Latvia, Belize, or Panama/St Vincent. Just so long as you report foreign income paid out to yourself. The foreign corporation doesn't have to report anything (this might have changed, i'm not a lawyer). That's why you see all those shady collector co…

just to elaborate here: the OP will likely need to file subpart F income for his UK-based controlled foreign corporation (CFC). this means that any income he generates from the UK entity passes through to his US taxes.

additionally, he will need to file a TD 90-22.1 with the department of treasury by june 30th of the year after the account has more than USD 50K in it.

tax avoidance is a complex beast and simply incorporating a business in another jurisdiction does not in any way exempt you from US tax liability.

Re: Bitcoin accidentally solved my startup's international banking problem

#22

Post by conformal »

philiphodgen wrote: post #17
HalfPriceDigi wrote: post #12

Earlier quoted context omitted.

You have to keep in mind that a company is its own entity and since my startup was formed in the UK, it is a UK company that is governed by UK laws. The UK has no problem with non-resident company directors, but setting up a bank account for a company with a non-resident director is another story.

@HalfPriceDigi, don't forget to prepare and file Form 5471 for your UK company. Screw that up and it is an automatic $10,000 penalty. (Disclosure: international tax lawyer; have fought this battle with the IRS before). And yes. The banking problem is the hard problem to solve. In both directions. U.S. banks can be giant poopy-heads. Bank of America just closed the account of a foreign client of mine who had banked wi…

it's ridiculous that banks can just close your account without giving any explanation. i have had this happen a couple times and it's very irritating.

while i can appreciate that any business can choose to not do business with any 3rd party for whatever reason, the inability to bank can be crippling, especially if you get blacklisted by chexsystems et al.

Re: Bitcoin accidentally solved my startup's international banking problem

#23

Post by mahyarm »

HalfPriceDigi wrote: post #12
latj wrote: post #11

Earlier quoted context omitted.

I'm surprised there is no law prohibiting people from telecommuting from U.S. to bypass U.S. laws.

You have to keep in mind that a company is its own entity and since my startup was formed in the UK, it is a UK company that is governed by UK laws. The UK has no problem with non-resident company directors, but setting up a bank account for a company with a non-resident director is another story.

I would look at CFC laws:

https://en.wikipedia.org/wiki/Controlled_Foreign_Corporation

Re: Bitcoin accidentally solved my startup's international banking problem

#24

Post by HalfPriceDigi »

philiphodgen wrote: post #17
HalfPriceDigi wrote: post #12

Earlier quoted context omitted.

You have to keep in mind that a company is its own entity and since my startup was formed in the UK, it is a UK company that is governed by UK laws. The UK has no problem with non-resident company directors, but setting up a bank account for a company with a non-resident director is another story.

@HalfPriceDigi, don't forget to prepare and file Form 5471 for your UK company. Screw that up and it is an automatic $10,000 penalty. (Disclosure: international tax lawyer; have fought this battle with the IRS before). And yes. The banking problem is the hard problem to solve. In both directions. U.S. banks can be giant poopy-heads. Bank of America just closed the account of a foreign client of mine who had banked wi…

Thanks philiphodgen, I did not know about form 5471 and I've formed a few startup companies in the UK already - yikes! I should probably talk to a good, low-cost international tax lawyer...if you know of any... admin[at]halfpricedigital.co.uk

Re: Bitcoin accidentally solved my startup's international banking problem

#25

Post by sillysaurus2 »

conformal wrote: post #19
zorked wrote: post #10

Earlier quoted context omitted.

That's very nice, congratulations. Isn't there a way to work around the risk of chargebacks? Requiring an "insurance" deposit and passing charges on to your customers, or holding payment for some amount of time?

i've run a few other businesses in the past that had some serious credit card and paypal fraud problems. to give you an idea of how bad it can get, i have been charged back USD 30K in credit card charges by a single customer who was running an extremely creative fraud system. the secret service ending up getting him, which was vindicating, but you can't get blood from a stone... i'll have another think about it, but…

Would you mind describing his method of swindling you out of $30K? Surely it wasn't a single transaction... Was it a single credit card? Did he use multiple cards with different names? Or we're they all same name + same address?

Re: Bitcoin accidentally solved my startup's international banking problem

#26

Post by dobbsbob »

HalfPriceDigi wrote: post #20
dobbsbob wrote: post #14

Rietumu Bank in Latvia will take any corporation anywhere except blacklisted states. In fact you can apply online you don't even have to visit in person. This guy could've also used Okpay, or dropped in a payment gateway like Global Payments or Stripe and had them pay out to his Okpay bank wire SWIFT code. For a while as an experiment, I decided to see how easy it would be to break the Argentina ban on foreign exchan…

Hey dobbsbob, thanks for your comment! Great info! I did try getting a Latvian bank account but even their banks seem to have clamped down on opening accounts for non-EU residents due to money laundering laws - at least in my experience. As for payment gateways, I wanted to stick to well-known gateways like PayPal and Skrill that consumers would already have accounts with. I'm sure that walking into a bank in Europe…

Payment gateways all take Skrill or Paypal. Just find one that doesn't charge a minimum fee per month (there's a few left that don't). You sign contracts directly with Paypal and the gateway accepts the payment, then drop it in your Okpay or Latvian account.

I also live around a few Chinese banks that opened in my country. Got an Alipay account through them in a couple of minutes by walking inside and depositing $1000 and showing corporate papers. Alipay is Chinese paypal equivalent but no chargebacks (well.. hard to do chargebacks).

There's also companies like The Currency Cloud. Although I'm not sure if this is against their rules but I used them to receive gateway payments as well.

Also I'm not an American, maybe that's why you had problems. Guess things have changed with the new very strict laws

Re: Bitcoin accidentally solved my startup's international banking problem

#27

Post by conformal »

sillysaurus2 wrote: post #25
conformal wrote: post #19

Earlier quoted context omitted.

i've run a few other businesses in the past that had some serious credit card and paypal fraud problems. to give you an idea of how bad it can get, i have been charged back USD 30K in credit card charges by a single customer who was running an extremely creative fraud system. the secret service ending up getting him, which was vindicating, but you can't get blood from a stone... i'll have another think about it, but…

Would you mind describing his method of swindling you out of $30K? Surely it wasn't a single transaction... Was it a single credit card? Did he use multiple cards with different names? Or we're they all same name + same address?

he was using many cards with many addresses and billing names. i didn't have a system in place to catch this behavior at the time, and it was totally on me for not having proper countermeasures in place.

iirc there were like 15 different billing addresses and card numbers in a few month period. once i saw that i knew i was going to get fucked on chargebacks.

his fraud scheme was so creative i'm not going to describe it here, for wont of someone decided to imitate it.

Re: Bitcoin accidentally solved my startup's international banking problem

#28

Post by dobbsbob »

conformal wrote: post #18
dobbsbob wrote: post #14

Rietumu Bank in Latvia will take any corporation anywhere except blacklisted states. In fact you can apply online you don't even have to visit in person. This guy could've also used Okpay, or dropped in a payment gateway like Global Payments or Stripe and had them pay out to his Okpay bank wire SWIFT code. For a while as an experiment, I decided to see how easy it would be to break the Argentina ban on foreign exchan…

you're quite the payment wizard, dobbsbob. can you comment on the kind of fees you ended up generating when you were experimenting in Argentina? i expect that fees would be different depending on the direction you went from ARS. a bank account in an hour? opening a bitcoin business account in the US takes easily 1.5 hours, if not twice that.

Fees all depend on volume of course, so you have to weasel around with sales guys to lock them down. For Inpay I was paying 7% or so fees, and it was free to receive wires in my Okpay account because I am an exchanger with them. To become an exchanger you just buy $1,000 worth of Okpay and fill out the application/send in passport copies. Now all internal transfers, and bank fees are free.

If you want a surreal experience open a bank account in Belarus. A bulletproof limo picks you up at the airport and you go directly to the bank and receive your unlimited debit card and privacy statement they will never give your info to anybody no matter what, unless you commit crimes in Belarus. Azerbaijan is the same thing.

I'm surprised there isn't a gigantic European exchange using a Belorussian bank account. Could accept all the US wires you want and they wouldn't respond to angry requests from NY state to seize your funds because you don't have a MSB license. Of course you could end up kidnapped though for extraordinary rendition back to the US like they did all those Russians who ran gambling payment gateways :P

Re: Bitcoin accidentally solved my startup's international banking problem

#29

Post by [deleted] »

conformal wrote: post #4

your scenario sounds like an ideal use case for a service we recently released, Coinvoice ( https://coinvoice.com/ ). Coinvoice allows you to invoice in USD and receive Bitcoin (BTC) without forcing your customers to use BTC. i have myself had a number of issues with banks in the past and can speak to the irritation it can cause when you're trying to do business. Bitcoin is a great way to get around banks that are un…

[deleted]

Re: Bitcoin accidentally solved my startup's international banking problem

#30

Post by mschuster91 »

dobbsbob wrote: post #28
conformal wrote: post #18

Earlier quoted context omitted.

you're quite the payment wizard, dobbsbob. can you comment on the kind of fees you ended up generating when you were experimenting in Argentina? i expect that fees would be different depending on the direction you went from ARS. a bank account in an hour? opening a bitcoin business account in the US takes easily 1.5 hours, if not twice that.

Fees all depend on volume of course, so you have to weasel around with sales guys to lock them down. For Inpay I was paying 7% or so fees, and it was free to receive wires in my Okpay account because I am an exchanger with them. To become an exchanger you just buy $1,000 worth of Okpay and fill out the application/send in passport copies. Now all internal transfers, and bank fees are free. If you want a surreal exper…

Interesting. Can you share the name of that bank and the minimum requirements of opening an account in Belarus?
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