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Why you might not want to incorporate in the USA

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

#171

Post by Systemic33 »

workhere-io wrote: post #114
Systemic33 wrote: post #110

Earlier quoted context omitted.

And god forbid, the 180% registration tax on vehicles (basicly any type of vehicle becomes twice as expensive) PS. Electric vehicles are an exception, making the Tesla very cheap in terms of premium cars (think Mercedes-Benz S class, BMW 7-series)

True, but note that public transportation is much better, and riding your bicycle is easier. Denmark has one of the lowest daily commute times in the OECD countries according to the graph on http://www.theatlanticcities.com/commute/2011/10/american-co... Basicly any type of vehicle becomes twice as expensive No, not vehicles used for business. The high taxes are on personal cars.

I've lived in Sweden for 6 years, and the danish public transport is pretty much the same, while I think Stockholm's is better. My point is that good public transport is not an argument for having ludicruos taxes. Sweden does exceptionally well and doesn't require a 180% reg. tax.

Vehicles used for business is cheaper, still significantly more expensive than vehicles in Sweden.

Let's check with the Volkswagen Golf, a very ordinary car We'll choose Golf Comfortline (5d.) 1,4 TSI BMT - 122 HP with Automatic incl. VAT:

VW Golf DK (Private):318.495,- DKK (59.5k USD)

VW Golf SWE (Private):173.795,- DKK (32.5k USD)

VW Golf DK (Company): 206.608,- DKK (38.6k USD)

VW GOLF SWE (Company): Same as private

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

#172

Post by philiphodgen »

mildtrepidation wrote: post #164
philiphodgen wrote: post #134

I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…

Thanks for doing this! I'm an American planning to live in Japan for 1-2 years starting later this year (I'll be studying the language and working for my existing small US business). I won't be working for (or, likely, doing any business with) Japanese companies. I assumed I'd be best off hiring an accountant who could take care of whatever inane forms come with paying taxes in this situation (I do also pay quarterly…

The magic form you need to remember is Form 2555. This is the "foreign earned income exclusion" form. The first "close to $100,000" (the amount changes annually for inflation) of income you earn abroad is free of income tax in the USA.

The hard part is knowing whether you qualify for this or not. You need to be physically out of the USA for 330/365 days in a 12 month period (not a calendar year--this is stupidly overly complicated and tricky), or be a "bona fide resident" of the other country. Look at the instructions on the form to help you here. Most people fail on this point, and this is the first vector of attack by the government to try and tax you.

CAUTION CAUTION CAUTION. I see any number of Americans abroad who work as self-employed independent contractors. Oh, hypothetically, software engineers living in Thailand and working. They successfully spend 330 days out of the USA. They use Form 2555 to eliminate income tax on their Schedule C self-employment income.

But Form 2555 _does_ _not_ _eliminate_ the self-employment tax -- the equivalent of Social Security tax for self-employed people. See Schedule SE.

Sorry for using all caps and fakey-fake underlining to emphasize this problem. It happens all the time. I saw it yesterday. You think you have no tax liability and you end up owing $16,000 for self-employment tax. Not fun. At all.

The next magic form to remember is Form 1116. This is the foreign tax credit. If you earn a dollar of income in Japan and pay Japanese income tax on it, Uncle Sam will give you credit on your U.S. tax return for the Japanese income tax you paid.

This is usually the better way for Americans abroad to go when they live in high-tax countries. This is why Americans in Europe pay many thousands of dollars to have a tax return prepared but never give Uncle Sam a nickel of tax.

If you are an American abroad working for a foreign employer, you don't have to pay U.S. Social Security. You should look at the totalization agreement between the USA and Japan to see if you can eliminate the need to contribute to the Japanese old age pension schemes since you aren't going to retire and die in Japan.

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

#173

Post by throwaway_yy2Di »

Symmetry wrote: post #156
throwaway_yy2Di wrote: post #119

Earlier quoted context omitted.

How does that translate to software startups? I haven't seen many on HN, for whatever that means.

I'd be very cautious about running a software startup in Denmark. If you succeed great, but Denmark doesn't have the sort of easy bankruptcy laws the US has and you have to pay your employees 6 months wages if you go under. So if your startup fails you might be in debt for the rest of your life.

Denmark has some of the shortest bankruptcies in Europe:

http://www.economist.com/node/21559618

(middle of the article, graph titled "Life Sentences")

https://news.ycombinator.com/item?id=4589291

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

#174

Post by GFK_of_xmaspast »

loumf wrote: post #126
arbuge wrote: post #113

Earlier quoted context omitted.

There's some truth to it. Patent trolls are doing alot of the former (you don't hear from most of their victims, by design), and the latter is undisputably true unless you're over the age when social security payments and medicare coverage kick in.

> the latter is undisputably true unless you're over the age Medicaid and unemployment do not depend on age. ACA provides healthcare insurance subsidies based on income, not age. SNAP and other programs exist as well. The US safety net is perhaps inadequate, but not "undisputably" "nonexistent".

Did you see the thread about the 35yo dying of cancer currently ongoing.

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

#175

Post by philiphodgen »

ma2rten wrote: post #170
philiphodgen wrote: post #134

I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…

I have a loosely related question, which I hope you might consider as well. I am a startup employee in the US with stock options on a standard 4 year vesting schedule. I am not an American citizen. In my home country, if I exercise the stock options I would not be liable for taxes. Can I avoid paying taxes, if I move outside of the US for that tax year where I excise my startup options?

Generally the U.S. tax system likes to tax options based on whatever makes the most money for the U.S. tax system. :-)

Until I know more about the specific stock option program you have, you should assume that the U.S. will want to tax you if (1) the option grant occurred while you were employed in the USA; or (2) the options vested while you were employed in the USA; or (3) both; or (4) you saw a picture of a U.S. tourist landmark on television when you were 8 years old. I'm just kidding about #4.

The date of exercise of options -- and where you are living when you exercise the options -- is usually unimportant.

Meta point. The people who REALLY care about taxation of options are the people who run the company you work for. Your employer is going to bend over backwards to sacrifice you to the Almighty Tax Gods if it is going to protect the company from potential tax liability, even if it costs you money. Just sayin'. This is what I've seen.

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

#176

Post by philiphodgen »

Dogamondo wrote: post #152
philiphodgen wrote: post #134

I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…

Wow I'm really interested in this, but your reply from the get-go offers nothing. Why not actually deliver something meaningful for the HN audience off the bat instead of passing yourself off as an AMA celebrity while not really contributing to any of the points that the OP has made?

So now that you've had an hour to see me in action, answering questions, what's your question?

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

#177

Post by mildtrepidation »

philiphodgen wrote: post #172
mildtrepidation wrote: post #164

Earlier quoted context omitted.

Thanks for doing this! I'm an American planning to live in Japan for 1-2 years starting later this year (I'll be studying the language and working for my existing small US business). I won't be working for (or, likely, doing any business with) Japanese companies. I assumed I'd be best off hiring an accountant who could take care of whatever inane forms come with paying taxes in this situation (I do also pay quarterly…

The magic form you need to remember is Form 2555. This is the "foreign earned income exclusion" form. The first "close to $100,000" (the amount changes annually for inflation) of income you earn abroad is free of income tax in the USA. The hard part is knowing whether you qualify for this or not. You need to be physically out of the USA for 330/365 days in a 12 month period (not a calendar year--this is stupidly over…

Thanks very much! To be clear, my company is incorporated in the US, and we don't and won't have an office or subsidiary in Japan. On the off chance we do end up with Japanese clients, I'd anticipate them paying the American company, and not me directly.

I'll definitely save this information and look into it so I have some context and questions when I finally end up working with a tax preparer.

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

#178

Post by wavesounds »

philiphodgen wrote: post #134

I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…

Seeing as there are more lawyers than ever with more influence in Washington than ever, do lawyers have any motivation to fix this system? It seems to me with taxes, patents, immigration, regulation, healthcare and criminal justice the laws are purposefully hard to follow precisely because the lawyers who wrote them like it that way. Do you believe there are too many lawyers in this country (we have the highest per capita in the world by far http://wiki.answers.com/Q/What_country_in_the_world_has_most... ) and if so what can we do as a tech community do to replace most of them with simple laws and web applications?

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

#179

Post by publicfig »

nitai wrote: post #118
oesmith wrote: post #105

Earlier quoted context omitted.

Google Webmaster Tools' "Fetch as googlebot" feature is useful in debugging these problems. See http://www.mattcutts.com/blog/fetch-as-googlebot-tool-hacked...

Awesome. Thanks. Should be good now. Though, will test some more.

Definitely still showing up for me.

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

#180

Post by Florin_Andrei »

mattlutze wrote: post #87
nitai wrote: post #73

Earlier quoted context omitted.

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-turno…

> Labor also moves relatively freely in the US.

Well, this is interesting.

It is true that it's much easier to get fired in the US. It is also true that social mobility is less, compared to many other rich countries.

Easier to get fired + less social mobility = yay, freedom.

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