Client Case April 2015 - Open a US LLC, bank account and merchant account!

JohnLocke

OffshoreCorpTalk owner
Dec 29, 2008
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This is one of the most commong e-mails we get on a daily basis:


I've been approached by a few people from India to make a US LLC, get a high risk merchant account and with that account I'd need to make a business account too. One guy I'm seriously considering doing this with because we've talked for a month but I feel out of my depth here (never started a LLC, had a merchant acct, etc) and I'd be willing to pay someone for their advice before I hire a CPA and business lawyer and spend all kinds of money (though worth it if it keeps me from getting in trouble!) in advance.


Can people not from the US not start a LLC here? Why would he need me to do this? I know paypal and others don't deal with tech support calls (which is the service) but is there no other options for him to process payments?


He's been in business for 4 years and has a office in India and again he sells tech support. He said all sales will come from US and Canada. I'd make a LLC in WY though I'm MD because it's faster. He said he could be a partner in the LLC but not the Merchant acct or bank acct of course. We'd draw a contract saying I hired his call center and is paying for leads and that way I'm not liable for all the taxes, just the taxes I take as a salary.


60% goes to him, 15% goes to the rolling reserve, 4% for merchant fees, 6% will stay in the account for refunds at all times and 15% goes to me.


The Merchant account providers he wants to use because he has an in with them is VISA TPA PROGRAM (ISO-M) validated according to Visa. Is that good enough?


Is he trying to skirt some Indian banking laws? Could I get in federal trouble?


Thanks for any help whatsoever.

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CCLOGIC Ltd consultancy reply:


You are located in the USA right? the Indian guy want's you to open the LLC, bank account and merchant account and he want to use all of it for his business and for a share of 15%, is that correct?


If so.. forget it, you will get in big troubles and it is not allowed at all! Please confirm before I pin point a few more reasons for why this should be avoided at all costs and why I think he try to fraud you.

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Client response:


Yeah, all that would be in my name. He'd still have his tech support business and India and I'd be collecting payment on his US and Canada sales. He'd invoice me for 60% of sales per week and so on.


When I started in IM the idea was to make an LLC, sell websites and outsource the work to whoever wanted it via oDesk, paypal, here etc no matter where they were so to me, on the surface it seems to be the same idea. If you can enlighten me please do and thanks.

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CCLOGIC Ltd consultant:


There are several options here:


a) He may have been blacklisted by VISA / MC and on an TMF list, means he will not for the next 15 years be able to get any payment processing anywhere, not any entity where his name appears.


b) He is running a business with high chargeback rates and for that reason get huge penalties and fines regularly, they have to be paid by him or his company, if not he get's on the TMF list until paid.


c) He will never deliver any service or the service is of low quality, so he is caching in and leave you with the penalty and fines that may come, seen many times before not new.


d) He is stupid to leave a good business in the hands of someone he only know for 1 months!!! No one is that stupid.


The risk at your end is clear, you will have to pay for any penalty and fine that this guy is responsible for on behald of the service he is selling. He will just appear and you will never hear from him again, you will never be able to pay the fines and penalties that are waiting for you, they start at $5000 per insident and go up to $25.000! If you don't pay you will get on the TMF list and while you are in the USA it will also hurt your credit score!


Are you willing to go this route for 15% of maybe nothing?


Learn it once for all, anyone who share his merchant account is subject of huge penalties and fines, you are personally responsible for whatever there is going on, even if it is a company behind, your person will never get a merchant account again until everything is paid or for the next 15 years!

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