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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

#181

Post by ma2rten »

philiphodgen wrote: post #175
ma2rten wrote: post #170

Earlier quoted context omitted.

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. t…

Thanks, I guess in the back of my mind, I knew already it wouldn't be so easy.

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

#182

Post by vonmoltke »

GFK_of_xmaspast wrote: post #174
loumf wrote: post #126

Earlier quoted context omitted.

> 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.

I see nothing in that link about lack of care or social benefits leading to this. The most gold-plated safety net in the world cannot save someone from stage IV metastasized melanoma.

His example is irrelevant.

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

#183

Post by beachstartup »

slowdown wrote: post #146

Call me stupid, but the only reason why I incorporated an LLC in the States is because I wanted get access to the Stripe API for production (yeah, it's a huge compliment to the Stripe guys ;) The payment gateways in my country are shit..Also, the US account is only used for the payment gateway, all the IP of my software is owned by the company in my home country. You know, just so someone doesn't sue me for rounded c…

> incorporated an LLC in the States

LLC aren't incorporated, because they aren't corporations. they're companies. there's a big difference.

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

#184

Post by wh0car3s »

nitai wrote: post #115
mattlutze wrote: post #99

Earlier quoted context omitted.

If I may, it sounds like the hurdles encountered were: - Paperwork and fees/taxes in each state an employee works in. - Securing a work visa to enter and work in the US. But, it sounds like, if we were to swap places and Nitai lived in the US, trying to start a business in Europe, he'd be faced with - Paperwork and fees/taxes paid to each country his employees worked. - Securing a work visa to enter and work in the E…

This is NOT about PRO-Europe or PRO-USA. It is about how difficult the current government makes it to come to the US, build business and live there (as a European). I personally know one CEO who runs a 80 Mil./year company in the USA, has 250 employees (3/4 are US citizens) but only received a green card or allowance to stay longer then one year in the USA 10 years into the business. That said, you can't compare the…

I'll echo mattlutze and say that the EB visas are a great track to come here in the US.

Also, I'm a foreigner with a non-immigrant visa, but that didn't stop me from incorporating and I know that if I hire someone or did business in another state I'll have to register or incorporate in that state (I got that by my own research, if that wasn't given to you then you received bad counsel).

Not anyone can just come to Europe and just live there, In the countries you mentioned, I'll need a job offer before I can even start the process to get a work visa (I can't even visit Europe without a Schengen visa).

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

#185

Post by philiphodgen »

wavesounds wrote: post #178
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 c…

Laws are like sediment dropping to the bottom of the lake. Eventually there is no lake.

I see no appetite for the wholesale dredging needed to fix the problem. To the contrary -- everyone is looking for government to help. See Tesla's experience in New Jersey yesterday, for instance.

For what it is worth, what I see in the tech community (in only a few situations at the moment, admittedly) is people opting out by renouncing U.S. citizenship and establishing their companies in more amenable climates. This is one solution.

The other solution is to not be part of the problem. Don't be one of those people who want Auntie Sam to help you win some sort of competitive advantage, and resist efforts by people (like the car dealers against Tesla) who attempt to screw things up.

And if Gov. Christie attempts to run for President, remember Tesla. Vote well.

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

#186

Post by cylinder »

philiphodgen wrote: post #169
waldohatesyou wrote: post #155

Earlier quoted context omitted.

Hi, I just wanted to know if all companies not in the US have to go through the same process? For example, if I owned a company in Canada and wanted to incorporate in the US would I face the same difficulties as the company in the blog post?

The answer is yes. You will face some variation on the problems that OP described in his post. The level of paperwork and pain you will face depends on (1) where you are "doing business" (and that is a nuanced phrase); (2) what type of business you are doing; and (3) the humans who are doing the work -- U.S. residents or nonresidents. The problems arise from the multiple government entities that have the ability to i…

A big part of my "coming of age" was realizing the US is not some business, capitalist paradise, nor is it a "low tax" jurisdiction. If you live in most of the big centers, you pay as much tax as Europeans, and receive almost nothing in welfare benefits (whereas your European peer will receive tens of thousands of dollars, if not more, in government services over a lifetime). If I didn't have health insurance through my spouse's employer, I'd be paying $1,600/mo in student loan minimum payments and catastrophic plan health insurance (which will only get more expensive as I get older and have children). Add that on top of federal taxes, payroll taxes (self-employed, so I have to pay both sides), New York state and New York city taxes (NYC conveniently double-taxes S-corp earnings, btw), and I'm paying far more than any European would in my position.

Doing business is also a huge headache, with so many different taxes to navigate, on the federal, state, and local level. Payroll taxes are a joke. Why not just collect it along with FICA and earmark it at the government level? Because politics. They think, if you label the tax "Medicare" or "Social Security," they won't think of it as a tax but rather a savings account. Right.

And I'm a lawyer! I can't imagine how much precious capital is wasted on CPAs and attorneys by small business owners trying to start a business the right way.

More and more I realize that the US is actually quite mediocre at many things, especially governance, not exceptional. What we are is a huge homogeneous market, and that's where much of our wealth comes from.

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

#187

Post by thesz »

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…

You cannot get highly desirable employers from unemployment pool.

http://www.joelonsoftware.com/items/2005/01/27.html

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

#188

Post by wiradikusuma »

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 expenses).

I have paid the franchise tax through my registered agent. Is that all?

Extra bonus if you can give me direction to get out from this stupid situation.

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

#189

Post by halostatue »

philiphodgen wrote: post #160
halostatue wrote: post #151

Earlier quoted context omitted.

I'm an expat in Canada, and I'm considering shedding my U.S. citizenship over FBAR/FATCA. I don't really want to do so, however, as long as my parents are alive. I will probably do so very quickly after they pass because holding onto my citizenship is providing me no benefit other than being able to see them without hassle. What I am looking for now is someone who can help me catch up on my U.S. taxes (I'm a few year…

For catching up, your risk depends on your income and the kind of stuff going on in your life (owning businesses, etc.). Here are the category of choices: 1. Just prepare the tax returns and file them. Good for regular people; the likelihood of you owing any U.S. taxes is low. You have risks of penalties (undisclosed bank accounts = FinCen 114 form filled in online -- that's the biggest one). If you are a very small…

Email sent. I'm probably somewhere between 2 & 3 (my income has gone up fairly substantially over the last two years) but there are some complicating factors.

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

#190

Post by bduerst »

arbuge wrote: post #113
mjolk wrote: post #61

Earlier quoted context omitted.

>I really don't understand this fetishization of the US for business. The USA is a huge market. > 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. Oh come on. This is ridiculous even for hyperbole.

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.

There's an old adage in the U.S.: You're not a real business until someone tries to sue you.
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