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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

#201

Post by lstamour »

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…

Hmm. All I can offer is that I know of at least one instance where Canadians were able to open bank accounts in the US so long as the bank in question was Canadian-owned. It's not standard-practice so it usually involves being a good customer for the bank or having a special paid plan. Here's a thread where people had the same issue: https://forum.lowyat.net/topic/1300881/all

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

#202

Post by mbesto »

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…

Wait, do you have to do FBAR and FinCen 114?

EDIT - Oh doh! They're the same thing.

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

#203

Post by whyleyc »

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 this.

We are a UK-based company and want to have a US "presence" as we have found that charging US customers from a UK payment processor results in greater than expected numbers of declined payments due to the "international" element of the transaction [1]

Our plan was to get an EIN number for the business so that we can open a dollar bank account and register with a US payment processor to resolve this issue. We have no plans to hire in the US.

My two questions are:

(a) Is this a reasonable approach, or is there a better way ?

(b) What unforeseen implications (tax, bureaucratic or otherwise) might we be opening ourselves up to by doing this ?

[1] https://blog.recurly.com/2013/12/international-decline-rates...

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

#204

Post by gambiting »

Systemic33 wrote: post #171
workhere-io wrote: post #114

Earlier quoted context omitted.

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…

Jesus christ, and I was getting upset about the 18.7% tax on cars with engines over 2.0L displacement here in Poland......

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

#205

Post by sschueller »

nitai wrote: post #101
beagle3 wrote: post #84

Earlier quoted context omitted.

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 yo…

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?

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

#206

Post by apa-sl »

jdimov wrote: post #2

Spot-on. Also, don't get me started on mobile internet and broadband. Every time I go to America it's like going to a 3rd world country.

True. I was VERY surprised by the quality of mobile internet (and mobile phone connection in general) when I was in San Francisco and around Silicon Valley). Here in Poland I've got 4g connection practically everywhere in bigger cities (15-20mbits download 3-6mbits upload, ping ~50-70ms tested several times) and in SF I was sometimes struggling to get some decent signal...

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

#207

Post by apa-sl »

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…

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?

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

#208

Post by [deleted] »

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…

[deleted]

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

#209

Post by philiphodgen »

whyleyc wrote: post #203
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 this. We are a UK-based company and want to have a US "presence" as we have found that charging US customers from a UK payment processor results in greater than expected numbers of declined payments due to the "international" element of the transaction [1] Our plan was to get an EIN number for the business so that we can open a dollar bank account and register with a US payment processor to resolve this is…

Your approach is sane. Here is what I would do: start from the back end. You know the saying "When Mama's happy, everybody's happy"? Your payment processor is Mama.

Talk to your payment processor and see what they want, then do that. My guess is that they will want a U.S. business entity of some kind, with a U.S. tax ID number. Then they will want to believe :-) that this is more than a mere Post Office Box arrangement where money flows through a pipe. They'll want a physical address at a bare minimum.

Once you are convinced that your payment processor will work with you, then you set up the company in the U.S.

For tax purposes you treat this company as a processing agent. It is essentially a bookkeeper. Operate it and manage the net profit of this U.S. corporation so it shows a slight profit.

E.g., your UK corporation pays the US corporation a 3% override on payments processed. The US corporation uses this money for its overhead and whatever is left over is taxable net profit. The net profit is likely to be small so the tax cost is palatable.

Again, this is more a "make Mama happy" problem than it is a tax problem. Your criteria for a good solution are (1) payment processor happy; (2) paperwork and overhead and brain damage and distraction minimized; (3) tax cost.

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

#210

Post by cinquemb »

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…

Thank you for taking the time to answer questions here. Reading all the information you have posted so far makes me glad to be apart of this thing we call the internet.

Now my question:

- Me and a friend started a company in the US two years ago (both US citizens), and we run a consumer web app and in the near future will also provide SaaS. We just started to generate revenue 2 months ago and I was wondering how difficult it would be to incorporate again but in a more friendly place tax wise - What are our options to that?

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