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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

#231

Post by beagle3 »

sschueller wrote: post #205
nitai wrote: post #101

Earlier quoted context omitted.

Additionally, the US is one of the few countries that punish their citizens with US tax even when they don't live in the US anymore...

Wasn't part of the reason people wanted independence from the British to avoid paying the king's taxes?

They refused to pay without representation. But US expats can actually vote from abroad.

(Not that the votes seem to matter - you get to choose which faction of the military-industrial faction gets a salary this year, but not anything of consequence)

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

#232

Post by toomuchtodo »

philiphodgen wrote: post #214
mbesto wrote: post #196

Earlier quoted context omitted.

US Citizen here! Unfortunately, it won't end! First, you have to fill out personal taxes every year for foreign income, regardless of whether you live in the US or not. All income globally is treated in the eyes of the IRS as income. Second, you have to declare FBAR if you hold foreign accounts of over $10,000. Third, you have to "open your books" for any foreign corporations you are the director (or have ownership)…

Yes, mbesto is right. Acquiring a second citizenship will not relieve you from the full boat of U.S. tax laws. No matter where you live, no matter how many other passports you carry, if you have the magic blue passport with the eagle on it, you are a U.S. taxpayer.

Thanks for the response. I was interested in renouncing my citizenship once I've obtained citizenship elsewhere; I should have included that in my post.

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

#233

Post by raverbashing »

philiphodgen wrote: post #211
wiradikusuma wrote: post #188

Earlier quoted context omitted.

This is probably the most stupid question you ever heard: I'm from Indonesia, working in Malaysia. Mid of last year I incorporated a C-Corp in Delaware. The reason is so I can use Stripe to accept CC payments. Apparently to open bank account in the US, I need to be there in person, so I'm now stuck with a "sleeping" company (because I don't have time to go to US just to open a bank account, not to mention the expense…

My experience with this is yes that you need to be in the USA to open the bank account for the US corporation. It MAY be possible to work something out if you deal with one of the multinational banks like Citi or HSBC but don't count on it. To keep this sleeping corporation alive: 1. File the paperwork in Delaware every year and pay the fees there. 2. File a Form 1120 (the corporate income tax return) with zero incom…

The requirement for being present in the US to open a bank account comes IIRC from the Patriotic Act

The multinational banks won't help you with this.

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

#234

Post by nedwin »

wiradikusuma wrote: post #188
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…

This is probably the most stupid question you ever heard: I'm from Indonesia, working in Malaysia. Mid of last year I incorporated a C-Corp in Delaware. The reason is so I can use Stripe to accept CC payments. Apparently to open bank account in the US, I need to be there in person, so I'm now stuck with a "sleeping" company (because I don't have time to go to US just to open a bank account, not to mention the expense…

I managed to open a US account with HSBC without being in the US but it was incredibly painful.

It involved getting a solid introduction to a client manager and relentlessly following him up over the course of 2 months to make it happen.

Incredibly painful when we were waiting for an account to put our investment capital into. If I had to do it again I would likely fly out - so long as I could tack on some business development in the process.

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

#235

Post by alexeisadeski3 »

mjolk wrote: post #66
alexeisadeski3 wrote: post #41

Whilst I do not wish the hell that is American business regulation on anyone, I am at least happy to see some Europeans realizing that America does in fact have more onerous regulation, all things considered, than nice nations like Denmark. Scott Sumner of Bentley University, in Boston, has written on this topic quite a bit. Sumner, in fact, considers Denmark the most free market oriented non-postage-stamp nation on…

>"than nice nations like Denmark." Qualify what you mean by "nice."

I've also provided three links...

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

#236

Post by scotty79 »

toomuchtodo wrote: post #232
philiphodgen wrote: post #214

Earlier quoted context omitted.

Yes, mbesto is right. Acquiring a second citizenship will not relieve you from the full boat of U.S. tax laws. No matter where you live, no matter how many other passports you carry, if you have the magic blue passport with the eagle on it, you are a U.S. taxpayer.

Thanks for the response. I was interested in renouncing my citizenship once I've obtained citizenship elsewhere; I should have included that in my post.

I heard that to renounce your citizenship you need to pay some one time tax on cash and valuables you own.

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

#237

Post by mahyarm »

philiphodgen wrote: post #213
apa-sl wrote: post #207

Earlier quoted context omitted.

We're running a startup incorporated in European Union and planning to incorporate c-corp in Delaware as our mother company. C-corp will simply buy-out 100% shares in our European company which will be still hiring our employees (located and working in Europe). From what we've checked we shouldn't have any hassle (event the c-corp bank account will be opened in European bank) or are we missing something?

Do not transfer IP to the US mother ship before you have thought it out. You can transfer IP into the USA but once you have done that all of the profit generated from that IP worldwide will be subject to US tax. And if you ever want to transfer the IP out of the USA it will be treated as a sale. The worst I ever saw was one of those online poker sites. To move out of the USA they had to move their IP to a new foreign…

So where should the non-us company be registered if you want to avoid IP headaches? Canada? Ireland? BVI?

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

#238

Post by slowdown »

philiphodgen wrote: post #211
wiradikusuma wrote: post #188

Earlier quoted context omitted.

This is probably the most stupid question you ever heard: I'm from Indonesia, working in Malaysia. Mid of last year I incorporated a C-Corp in Delaware. The reason is so I can use Stripe to accept CC payments. Apparently to open bank account in the US, I need to be there in person, so I'm now stuck with a "sleeping" company (because I don't have time to go to US just to open a bank account, not to mention the expense…

My experience with this is yes that you need to be in the USA to open the bank account for the US corporation. It MAY be possible to work something out if you deal with one of the multinational banks like Citi or HSBC but don't count on it. To keep this sleeping corporation alive: 1. File the paperwork in Delaware every year and pay the fees there. 2. File a Form 1120 (the corporate income tax return) with zero incom…

My CPA opened me a bank account in the USA (he's from USA too) without me having to visit the states, is this legal? Or is there any risk to this approach?? I'm in the same case as the parent question you have answered :S

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

#239

Post by ghaff »

wathars wrote: post #227

So seeing all these problems, how are YC companies solving them or better yet how do they handle the whole process to avoid this? PG said they are incorporating in Delaware but their offices most probably are in CA. Shouldn't this be a problem being in different states? Or it applies only to foreign related companies? Thanks.

It's pretty common to incorporate in Delaware even if you have little or no physical nexus there, for a variety of reasons: http://www.newsworks.org/index.php/local/brandywine-to-broad.... This probably applies more to large companies though. I imagine there's some overhead relative to incorporating locally if you're a small business.

What constitutes a physical nexus can be a bit hard to define at the margins. (See e.g. Amazon's fights with a number of states.) But it usually means you're selling something there as opposed to just having employees. A physical nexus usually just relates to collecting sales taxes though. I've never heard of having to incorporate in additional states although maybe that's sometimes the case.

(I know that the small NH company I used to work for certainly didn't incorporate in additional states when they hired non-NH residents. They DID have to handle state withholding on payroll but that sort of thing is handled pretty transparently by payroll processing companies like ADP.)

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

#240

Post by alexeisadeski3 »

workhere-io wrote: post #74

As the article states, Denmark, while having high taxes, is very business-friendly: Very little bureaucracy, almost zero corruption, English-speaking population, relatively cheap apartments ($1,850 per month for a newly constructed two-bedroom apartment in central Copenhagen) and very low expenses of health care and firing people. Also, while wages are generally very high, they're not high compared to Silicon Valley…

Denmark has high taxes for the poor and middle class, relative to the US, but taxes on the rich aren't really much higher.
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