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Why you might not want to incorporate in the USA

thenitai.com

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Re: Why you might not want to incorporate in the USA

#81

Post by iamwithnail »

nitai wrote: post #73
hackerboos wrote: post #70

Earlier quoted context omitted.

Capital. Capital. Capital. The US has investors, angels and funds that are willing to take chances and put money into startups. You simply don't have that here in Europe.

Exactly, one of the (major or even only?) reason to be in the US.

Maybe. Although there are some (very good) VCs and investors in Europe, especially in London. But it's often overlooked that actually, maybe you don't need a VC/Angel to run/setup your company. It mostly increases your risk, and I concur with Swombat's views on this: http://swombat.com/2013/12/27/investment-increases-risk

So given that you can (and people do) get serious cash outside the US, and everything you've said, Nitai, I'd be pushed to even think about the US as a venue for my next project, even if that was where the market was.

Re: Why you might not want to incorporate in the USA

#82

Post by beagle3 »

tankenmate wrote: post #31
mjolk wrote: post #18

> All of a sudden, we were forced to figure out, how much we actually sold in each of those states, where we hired people Not to be offensive, but differences in state rules should have been expected, given the name of the country. How hard do you think it would be to get a random sample of 50 people to decide on a movie? Now swap people with territories and movie with governance. This blog post is just ranting and w…

After having done business in many other countries you begin to realise that certain countries have a love affair with needless bureaucracy; the US and it's fragmented federation being one of them. Take Australia for example; even though it is a federation of states (and territories) like the US it has one uniform goods and sales tax that is consistent across the country. In fact states regularly come together to sha…

I agree the US has this bureaucracy / uniquness fetish among states.

But also, consider that Australia with 22M people compares with New York State, and is e.g. only 60% of the population of California. And inside a state, taxation is much more uniform.

(New York State is a good example if YOUR point, as New York City, Yonkers and a couple other cities have additional weird taxes you have to be aware of)

Re: Why you might not want to incorporate in the USA

#83

Post by nitai »

PeekPoke wrote: post #23
tckr wrote: post #17

Earlier quoted context omitted.

I see those links, too.

It's definitely the site. I have connected on my PC and see the links. Then connect via 3G on my SGS2 - no links. Connect to my LAN on the SGS2 - links appear. Blog Admin needs to check his site. EDIT: Ah... it's a WordPress site, 'nuff said.

I just went to a Starbucks and don't see those links. Can you please point that out further?

Re: Why you might not want to incorporate in the USA

#84

Post by beagle3 »

ryankask wrote: post #72
beagle3 wrote: post #58

And ... the article doesn't touch on it, but that goes triple on personal tax issues -- especially if you do not sever your ties to your previous states of residence. The US tax code, as evidenced by FBAR and FATCA, assumes that the only purpose of any financial transaction or account outside the US, is to hide money from the IRS. You have to report each and every "account", with contact details at the institution, e…

I moved to the UK a few years ago and I couldn't agree more that the IRS rules and regulations unfairly penalize "average" US citizens that live and operate abroad. FBAR, FATCA and if you start a business, form 5471 and friends. I got some quotes from a few accountants and I will likely have to pay thousands of dollars for assistance just to fill out informational forms and pay (maybe) a few hundred dollars in US tax…

I think that's the most ridiculous thing about it:

Whether you are an American who moved to a treaty country, or a treaty country resident who moved to the US, it is not likely that you'll have to pay a lot of US taxes if at all. (The treaties I am familiar with are quite reasonable). However, unless you are a tax professional yourself, you are going to be "taxed" by a professional to prepare all those papers that you must file.

I know someone who moved to the US, and whose tax filing on one year topped 150 pages of "informational data" despite not having to pay one cent.

I have never met a person who is in any way familiar with the US tax code who thinks it is makes any sense or is reasonable. Only people who never had to really deal with it think so.

Re: Why you might not want to incorporate in the USA

#86

Post by merrua »

dcc1 wrote: post #48
CalRobert wrote: post #39

I really don't understand this fetishization of the US for business. If you want to be sued into utter oblivion and live on the streets with a nonexistent social safety net I guess it's all right. I'm in Ireland and if you want to start a real business (not some rinkydink app that mysteriously needs €30 million in funding so you can fail more spectacularly) the climate seems quite good.

As someone who has been in business here since 2007, i would stop you right there! We have our share of a bureaucracy (example: took 6 months to get reply from Revenue as to what VAT to pay or not on sales of hosting packages, 23% sales tax (VAT) on customers from EU-28 was the answer eventually) and you quickly realise there are 3 types of companies here: 1. Large corporations setting up shops to launder money onto…

Ireland doesnt have sales price, do you mean VAT? Edit. Sorry you have it on brackets on the next line.

Re: Why you might not want to incorporate in the USA

#87

Post by mattlutze »

nitai wrote: post #73
hackerboos wrote: post #70

Earlier quoted context omitted.

Capital. Capital. Capital. The US has investors, angels and funds that are willing to take chances and put money into startups. You simply don't have that here in Europe.

Exactly, one of the (major or even only?) reason to be in the US.

Labor also moves relatively freely in the US. Here in Germany, I get the impression that an employee is incredibly "safe" compared to the US -- is it the same elsewhere in the EU?

This has the double effect of probably making any one community more resilient to small market movements, but I have a hunch it also suppresses the volume of desirable candidates in the unemployment pool.

I'd wager that a robust, high-turnover unemployment pool (i.e. one where desirable folks end up for short periods of time that is always churning) is a boon for a new company that needs highly desirable employees in its mix.

Re: Why you might not want to incorporate in the USA

#88

Post by bbanyc »

chrismcb wrote: post #57
clarkevans wrote: post #28

Earlier quoted context omitted.

Hiring an employee in another state may create a nexus in that state, and this may require you to file income tax in that state. For example, if you incorporate in Delaware, and then hire someone for >$50k in Texas, you may have to file company income taxes in Texas. Not that Texas income attributed to your company (or partners) will be much, but, computing and filing is best done by hiring an accountant.

But you would not have to incorporate in Texas. Which is at least one of the things the article implied.

You would have to file for "operating authority" for an out-of-state corporation, which typically involves similar fees and paperwork to incorporating in-state. I think that's what the article is referring to.

Re: Why you might not want to incorporate in the USA

#89

Post by beagle3 »

mjolk wrote: post #60
tankenmate wrote: post #31

Earlier quoted context omitted.

After having done business in many other countries you begin to realise that certain countries have a love affair with needless bureaucracy; the US and it's fragmented federation being one of them. Take Australia for example; even though it is a federation of states (and territories) like the US it has one uniform goods and sales tax that is consistent across the country. In fact states regularly come together to sha…

While this thread is bound to fill with anecdotes... > Tourists are already turned off from coming to the US because of the TSA issues. I'd love to agree with you, but there's that pesky reality that disagrees with your claim: http://cityroom.blogs.nytimes.com/2012/12/31/a-record-year-f... >Even countries like the UK with it's constituent nations and territories work hard at having a uniform and efficient system for…

> The paperwork really isn't hard.

Yes, it is. Many of my friends are business owners, most of them have some international business. I've been in touch with a variety of tax professionals in different countries through the years.

In the last 10 years or so, I've seen more than one business or partnership outside the US state in its charter that "shareholder may not be a US tax payer, and may not sell his shares to one, and will sell his shares to someone who is not if he becomes one", because of how complicated it makes things.

If you think US paperwork is sane or is not hard, it is probably because you did not have enough exposure to it, or alternatively, not had exposure to a saner system.

Objectively: US Federal Tax code is >71,000 pages (as of 2009 when I checked - probably longer now). And it applies to every american. NYS tax code is some 15,000 more pages; if you are doing significant business in NYS, that's about 10 times as many details to be aware of than in any other country that I'm aware of.

Re: Why you might not want to incorporate in the USA

#90

Post by mattlutze »

chrismcb wrote: post #57
clarkevans wrote: post #28

Earlier quoted context omitted.

Hiring an employee in another state may create a nexus in that state, and this may require you to file income tax in that state. For example, if you incorporate in Delaware, and then hire someone for >$50k in Texas, you may have to file company income taxes in Texas. Not that Texas income attributed to your company (or partners) will be much, but, computing and filing is best done by hiring an accountant.

But you would not have to incorporate in Texas. Which is at least one of the things the article implied.

Most states requires a Foreign Corporation registration, or something to that effect. So, if you incorporate in Delaware, but live and perform services for that corporation in say Tennessee, the corporation would need to be registered in Tennessee as a foreign corporation (i.e. one not originally incorporated there) and pay a small registration fee.

Not a lawyer, but I think that's it, outside of paying the appropriate employment taxes and fees to the employee's state of residence/operation.

I'm guessing this is what the article's author is referring to, but the way he explains it sounds like someone advised him to incorporate wholly owned subsidies in the states where he had employees, which would be both unnecessary and more expensive.

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