Best Setup for Junk Car Removal non-usa citizen

[nitehawk]

Hi everyone,

I'm currently exploring the best corporate setup for a business primarily focused on junk car removal in the United States. All our customers are 100% based in the USA, and I would greatly appreciate your recommendations and advice.

Current Setup and Requirements:

- Current Companies:
- LLC in Wyoming, USA
- Company in Dubai
- Company in Cyprus
- Primary Business Activity: Junk car removal
- Customer Base: 100% customers in the United States
- Key Requirements:
- Payment Processing: Need a wide range of payment processors capable of handling Visa, MasterCard, American Express, and Apple Pay transactions in the USA. Redundancy in payment processors is crucial due to the high volume of transactions.
- Tax Efficiency: Aim to achieve 0% taxes on profits, with automatic calculation and payment of any necessary state taxes in the USA.
- Banking: Funds should be able to flow directly into bank accounts outside the USA without incurring taxes.

Current Issues:

- Limited Payment Processors: With the Wyoming LLC, I've only been able to use Airwallex and Stripe, which does not provide sufficient redundancy for the volume of transactions we handle. I have companies in Dubai and Cyprus. I am currently a resident Dubai and I am a Canadian Citizen. So i dont have an american SSN which would have helped alot.

Desired Outcomes:

- Optimal Corporate Structure: Recommendations for the best corporate setup that meets the above requirements, potentially in Hong Kong, the UK, Europe, or Dubai or anywhere else.
- Wide Payment Processor Support: Access to a broad range of payment processors to ensure business continuity.
- Tax Efficiency: Structure that allows for 0% taxes on profits while ensuring compliance with US tax obligations for sales within the USA.

Any insights or suggestions would be highly appreciated. Thank you!

 

[Forester]

Just a comment:

nitehawk said:
- Tax Efficiency: Aim to achieve 0% taxes on profits, with automatic calculation and payment of any necessary state taxes in the USA.
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If your business activity is junk car removal with 100% US customers, then you are simply handling with some physical goods inside the US territory in favour of US persons.
So it is crystal clear that you are ETBUS and consequently liable for both state & federal taxes and I see no way how to avoid it (except of playing hide and seek with the IRS that is definitely not recommendable).
You can of course do some magic to minimize your profit but 0% is IMO unreachable.

nitehawk said:
- Tax Efficiency: Structure that allows for 0% taxes on profits while ensuring compliance with US tax obligations for sales within the USA.
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You are living in Dubai. TBMK, there is still 0% tax on personal income. Hence, after paying your US taxes, you can simply take the profit from your LLC and done.


So, in my perception, the case is reduced to managing some more payment processors which should be doable for a US LLC. If your Dubai residence and Canadian passport cause problems (this is possible), consider engaging a US director...

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[nitehawk]

Thank you for your reply. How do I engage a US director? Is there a service for this?

 

[Forester]

nitehawk said:
Thank you for your reply.
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You are welcome.

nitehawk said:
How do I engage a US director?
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I think it depends on role(s) that you want to assign to him. If you want see him managing your employees or contractors and making the decisions about the daily business, then engaging a HR agency is probably the best bet. If you want him just to serve as your intermediate / nominee to ease getting to more payment processors and managing them (and some similar tasks), you should go for some LLC incorporation agent who also offers the nominee director service...

nitehawk said:
Is there a service for this?
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Definitely 🙂
For the former case it's IMO relatively easy to find, for the latter it's more complicated but doable. (There are plenty of HR agencies. As using a nominee director is not so common in the US as in some other territories, the number of providers is limited but they exist /I can direct you to some reliable if you like/.)
Just be advised that as the junk cars removal is a sensitive business from certain point of view (environmental aspects, toxic waste etc.), I guess that any HR agency or incorporation agent would like to perform some due diligence of your business, to prevent the reputation risk etc.

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[nitehawk]

would it also be an option to use a a company outside of the usa? Would there be a alot of different processors that I could use?

 

[Forester]

nitehawk said:
would it also be an option to use a a company outside of the usa?
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Sure. But I do not see it as beneficial.

1) US customers are accustomed to make deals with US companies (generally, exceptions exist). A foreign company appears if not dubious then slightly uncommon for the majority of US people. And a foreign company running business in the US is liable to US taxes as well as the domestic company.

nitehawk said:
Would there be a alot of different processors that I could use?
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2) I do not consider myself being an experienced expert re: payment processing. Yet it seems to me that there are better options when searching for a payment processor at the US market than elsewhere. Take into account that using payment cards has probably the longest history right in the US and the market possibilities correspond to it, I guess.

Having said all the above, I only repeat that the US environment is more accustomed to companies (LLC included) with US directors than with foreign ones. Canada, as a neighboring country, is probably an exception, especially in states with Canadian expats. Then the only major problem, as you have already pointed out, is the eventual absence of a SSN which complicates many issues, banking and payment processing especially.

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[nitehawk]

🙂

Last edited: Jun 23, 2024

 

[CyprusLawyer101]

You can use your existing Cyprus company as payment agent. You should probably alsi be able to save a bit on taxes.

 

[nitehawk]

CyprusLawyer101 said:
You can use your existing Cyprus company as payment agent. You should probably alsi be able to save a bit on taxes.
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which processors are good for cyprus? and what about the Dubai company can it be used as a payment agent?

 

[Forester]

nitehawk said:
bro i dont know if you are just generating responses using chatgpt but you should just go back and delete what you wrote because it adds 0 value. You didnt answer any questions or solve any problems.
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I am not much happy that I am looking as stupid as chatgpt 🙂
But what has happened, happened. I was writing maybe too much politely 😉
Sorry for being not sufficiently clear:
to sum it up
”“ do a US business with a US company; you won't reach overall 0% tax anyway;
”“ you can use foreign company for payment processing as a payment agent but it's not much effective;
”“ the most effective step forward is to hire a US director having the SSN for the US LLC;
”“ @CyprusLawyer101 can definitely help you with the payment processing for your Cypriot company, if you really like to use it; I can help you with the US director if you like (to be exact, I can help you with the nominee agency but they are definitely able to engage a HR agency if you want more than a nominee).

Last edited: Jun 23, 2024
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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[CyprusLawyer101]

nitehawk said:
which processors are good for cyprus? and what about the Dubai company can it be used as a payment agent?
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There should be various options. I havent really understood your operation fully , you do junk car removal from US persons, but what you do with the cars ? And where is what you do take place?
I dont see any reason why your dubai co wouldn't work as a payment agent.

 

[nitehawk]

Forester said:
but it's not much effective
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What do you mean by this? it should be effective so long as the customer has the option to pay by visa/mc/amex and applepay. If the fee is an extra 2-3% It doesnt bother me.

Forester said:
the most effective step forward is to hire a US director having the SSN for the US LLC;
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How do we do this? Does the US director need to be an owner? Is there any tax liability to this US director?

Forester said:
I am not much happy that I am looking as stupid as chatgpt
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sorry my man. i was just having a bad day, spent the weekend trying to get some payment processors for this and business debit card solutions. Its not easy to do business in the USA without an SSN. Kind of a pain and i dont know how solid my current setup is.

Last edited: Jun 23, 2024

 

[Forester]

nitehawk said:
What do you mean by this? it should be effective so long as the customer has the option to pay by visa/mc/amex and applepay. If the fee is an extra 2-3% It doesnt bother me.
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That it will not bring you so much added value to be worth it. IMO, you can find a sufficient number of another payment processors for the US LLC on the US market, it will be simpler and you will look better (in front of your US customers). @CyprusLawyer101 is probably right that you can save a little bit on taxes engaging a Cypriot company; but if you do not care about 2% it's an unnecessary wasting of your energy that you can devote to managing and growing your business...

nitehawk said:
How do we do this?
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Easily. I will direct you to a reliable agency and you will agree with them on all the conditions. (Or you can go for any other agency you find ”“ I am not running this as my business.) Be advised that any agency will probably like to perform some due diligence of your business, as mentioned above; but if your business is clean it should not be a problem.

nitehawk said:
Does the US director need to be an owner?
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No, why? On the contrary, I cannot imagine such a director wanting to be an owner...

nitehawk said:
Is there any tax liability to this US director?
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He/she is of course tax liable as it concerns his/her remuneration ”“ but generally it's their problem, not yours...

nitehawk said:
sorry my man. i was just having a bad day, spent the weekend trying to get some payment processors for this and business debit card solutions.
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🙂 OK. Forget about it. Apology is accepted.

nitehawk said:
Its not easy to do business in the USA without an SSN. Kind of a pain and i dont know how solid my current setup is.
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Yes, I understand. So, see above...

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If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[nitehawk]

Forester said:
Easily. I will direct you to a reliable agency and you will agree with them on all the conditions. (Or you can go for any other agency you find ”“ I am not running this as my business.) Be advised that any agency will probably like to perform some due diligence of your business, as mentioned above; but if your business is clean it should not be a problem.
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Ok. This seems like my best option. How about business address? I noticed some processors are asking for a physical address with a lease agreement and utility bill. Is there a service for this also or can we use the nominee directors address for this?

 

[Forester]

nitehawk said:
Ok. This seems like my best option. How about business address? I noticed some processors are asking for a physical address with a lease agreement and utility bill. Is there a service for this also
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Any reasonable incorporation / nominee director agency is able to manage this.

nitehawk said:
or can we use the nominee directors address for this?
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It's up to discussion for every particular case. Generally, it's not forbidden in any way, of course.

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[Sols]

Many payment processors ”” immediately, or upon reaching high enough volumes ”” will question corporate service provider addresses, and instead ask for the address where your operations actually take place.

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This is the probably the answer to your question.

 

[nitehawk]

Sols said:
instead ask for the address where your operations actually take place.
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So what is the best course of action to be prepared for this?

 

[Forester]

Sols said:
Many payment processors ”” immediately, or upon reaching high enough volumes ”” will question corporate service provider addresses,
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Sure. I agree completely.

Sols said:
and instead ask for the address where your operations actually take place.
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From what I have learned, they ask for some “unique” address, not an address where is 100+ companies located ”“ simply some place that looks like the operations are really managed from there. Do you agree?
And when I wrote “Any reasonable incorporation / nominee director agency is able to manage this.” I meant that such an agency would be able to offer an appropriate solution, it's just about the necessary costs...

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[Forester]

nitehawk said:
So what is the best course of action to be prepared for this?
Click to expand...

To have some lease agreement for a small office at a non-nonsense address. IMO. But it is more likely a question for @Sols 🙂

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[Sols]

nitehawk said:
So what is the best course of action to be prepared for this?
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I haven't read this thread in detail yet, so I'll answer this question mostly as-is.

The best option is to have your own place of business. Rent an office space somewhere if you don't already have one. The processor may ask for proof that you offer the services you say you do. In addition to showing invoices, agreements, receipts, and so on, be prepared to show pictures/videos of junk cars being removed.

Since you're dealing with physical goods and physical services, you are likely limited to processors in the US. Even if you get payment processing set up under your Cyprus or UAE company, there is a very high risk you'll be kicked out after the acquirer sees you're getting nearly 100% US cards/customers and have operations in US. Card processors in EU and UAE are licensed for merchants domiciled in EU and UAE. If a US merchant sets up a merchant account in EU or UAE, the processor risks fines and penalties from Visa/Mastercard.

Given that you're a Canadian citizen without a SSN and resident in Dubai, you might need to appoint a CEO or similar in the US and appoint that person to be a manager of the LLC. That will increase your substance and connection the US.

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This is the probably the answer to your question.