Foreign US LLC as C-Corp: Easier banking/Paypal/merchant processing?

[kranj99]

There's been some chatter on the difficulties in getting a paypal account for a foreign/non-US-resident‌ single member LLC. I was wondering if any one has experience in registering their foreign‍ owned LLC to be taxed as a C-Corp and if so has it been easier⁠ from a banking/paypal perspective? I am thinking something along the lines of setting up LLC-A⁤ as a holding company, with pass-through taxation and then set up a second LLC-B, that⁣ would be entirely owned by LLC-A. LLC-B would elect to be taxed as a c-corp⁢ though and not pass-through to LLC-A. LLC-B would essentially serve as a sort of payment︀ agent for LLC-A, collecting on behalf. I was further thinking maybe some sort of inter-company︁ billing where say LLC-A bills LLC-B for some sort of management fees so to keep︂ the taxable income of LLC-B to a minimum. I would declare LLC-A profits to my︃ home country of course.

Is this a dangerous approach? Any pitfalls to watch out for?︄

Thanks in advance

 

[JohnLocke]

I'm not sure about the legal perspective. However, where are you located and will you‌ be a manager / director of the company?

 

[Sols]

Being taxed as C Corp does not affect your chances of getting a bank account‌ or merchant account. That's not really something financial institutions take into consideration.

 

[kranj99]

Thanks for this. I was under the impression that banks (or paypal, rather)‍ often frown upon foreign owned pass-through LLC's but that they were more flexible with LLC's⁠ that are taxable as C-Corps (i.e. they feel less risk with this type of set⁤ up sort of thing).

 

[Sols]

It's not something that's going to make a⁤ difference. Economic substance (where you are based, where the operations take place, where customers are)⁣ and turnover are much, much more important.

The risk is not changed in any meaningful⁢ way by being taxable in the US. You pose a risk by having no connection︀ to the US, not by whether you pay taxes in the US or not.