I am a US and Algerian citizen living in the United States. I am considering forming, with an Algerian citizen living in Algeria (let's call him Yacine), the following two companies:
1) Goofer Software (not the real name) that will own a web applications that will be developed by Yacine (currently a sophomore student), and an existing website that I own that is expected to generate $5,000 to $10,000 a year in gross income for a couple of years before we put it out of its misery. The ownership will be 50-50. 50% me, 50% Yacine. I am hoping to found Goofer Software in Spring 2026, before the development of the web applications starts, so that Yacine will sign an assignment of IP before he starts development of the web applications.
2) Goofer SAAS (not the real name), to be formed in 2030, to offer a SAAS service based on one of the Goofer Software web applications. Ownership 50-50.
The customers for Goofer SAAS will be in the United States. I expect the gross revenues from Goofer SAAS to be between $10,000 a year and $100,000 a year. That's because it will be serving a very tiny niche market that is already well served by several desktop applications (but, to my knowlege, no SAAS).
My main concern is losing customer data and being sued. I don't mind losing Goofer SAAS to a lawsuit (wink wink - it won't own any IP - Most likely, it will just own a used server and a relatively modest amount of money in the bank). But I don't want American lawyers piercing the coporate veil and going after my own assets. So, my current thinking is forming Goofer SAAS in Algeria, and running the web app from Algeria. Algeria doesn't tax exporting companies. If it wasn't for the fear of a potential lawsuit eventually coming after my assets, I would have located the server that would run the web app in the Ile of Man. Tax free too, but without the strings attached to the tax exemption for exporting companies in Algeria. But I assume american customers are less likely to hire lawyers in Algeria to sue the company then to come after me personally than they would be in the Ile Of Man.
My question to you is this: where do you think I should form Goofer Software, the company holding the IP? One solution would be Algeria, to avoid any transfer pricing issues. But, I might be interested in living in Argentina, drawing a $3,000 a month combined salary from Goofer Software + Goofer SAAS, and it would be very difficult (if not impossible) to get money from Goofer Software from Algeria to Argentina.
Given the modest amounts of money involved, low costs are of paramount importance. The main reason for two companies instead of just one is not to lose the web applications if and when Goofer SAAS screws up and loses customer data. Of course, I will do my best to make sure that doesn't happen. But I have no experience in SAAS, and Yacine has no experience in anything.
Corporate taxes are not much of an issue. That's because the vast majority of the amount of money that will come in Goofer Software will be paid out in expenses and salary. But wasting time in bookkeeping and accounting is a huge deal. So, I don't see much benefit from selecting a 1% corporate income tax rate vs. a 50% corporate income tax rate. But I see a huge benefit from selecting a 0% jurisdiction vs. a 1% jurdisdiction, if me living in Argentina doesn't negate that benefit. I am hoping to limit my management of Goofer Software to just below what would trigger corporate tax residency in Argentina.
Given the modest amount of money involved, I don't want to move into an expensive juridiction, such as the Cayman Islands or the United Arab Emirates, in order to save a relatively modest amount in taxes.
I don't want to form Goofer Software in the United States, as that would subject both the company and me to payroll taxes even if I am living outside the United States.
Your turn now: tell me the one to three jursidictions you would consider. And the one you would definitely avoid.
1) Goofer Software (not the real name) that will own a web applications that will be developed by Yacine (currently a sophomore student), and an existing website that I own that is expected to generate $5,000 to $10,000 a year in gross income for a couple of years before we put it out of its misery. The ownership will be 50-50. 50% me, 50% Yacine. I am hoping to found Goofer Software in Spring 2026, before the development of the web applications starts, so that Yacine will sign an assignment of IP before he starts development of the web applications.
2) Goofer SAAS (not the real name), to be formed in 2030, to offer a SAAS service based on one of the Goofer Software web applications. Ownership 50-50.
The customers for Goofer SAAS will be in the United States. I expect the gross revenues from Goofer SAAS to be between $10,000 a year and $100,000 a year. That's because it will be serving a very tiny niche market that is already well served by several desktop applications (but, to my knowlege, no SAAS).
My main concern is losing customer data and being sued. I don't mind losing Goofer SAAS to a lawsuit (wink wink - it won't own any IP - Most likely, it will just own a used server and a relatively modest amount of money in the bank). But I don't want American lawyers piercing the coporate veil and going after my own assets. So, my current thinking is forming Goofer SAAS in Algeria, and running the web app from Algeria. Algeria doesn't tax exporting companies. If it wasn't for the fear of a potential lawsuit eventually coming after my assets, I would have located the server that would run the web app in the Ile of Man. Tax free too, but without the strings attached to the tax exemption for exporting companies in Algeria. But I assume american customers are less likely to hire lawyers in Algeria to sue the company then to come after me personally than they would be in the Ile Of Man.
My question to you is this: where do you think I should form Goofer Software, the company holding the IP? One solution would be Algeria, to avoid any transfer pricing issues. But, I might be interested in living in Argentina, drawing a $3,000 a month combined salary from Goofer Software + Goofer SAAS, and it would be very difficult (if not impossible) to get money from Goofer Software from Algeria to Argentina.
Given the modest amounts of money involved, low costs are of paramount importance. The main reason for two companies instead of just one is not to lose the web applications if and when Goofer SAAS screws up and loses customer data. Of course, I will do my best to make sure that doesn't happen. But I have no experience in SAAS, and Yacine has no experience in anything.
Corporate taxes are not much of an issue. That's because the vast majority of the amount of money that will come in Goofer Software will be paid out in expenses and salary. But wasting time in bookkeeping and accounting is a huge deal. So, I don't see much benefit from selecting a 1% corporate income tax rate vs. a 50% corporate income tax rate. But I see a huge benefit from selecting a 0% jurisdiction vs. a 1% jurdisdiction, if me living in Argentina doesn't negate that benefit. I am hoping to limit my management of Goofer Software to just below what would trigger corporate tax residency in Argentina.
Given the modest amount of money involved, I don't want to move into an expensive juridiction, such as the Cayman Islands or the United Arab Emirates, in order to save a relatively modest amount in taxes.
I don't want to form Goofer Software in the United States, as that would subject both the company and me to payroll taxes even if I am living outside the United States.
Your turn now: tell me the one to three jursidictions you would consider. And the one you would definitely avoid.
