LLC or CORP - Suggestions

[bejn]

Hello,
I have legal company in my country, however, my government increasing taxes up to 40% + additional fees at the end I need to pay around 50% which is an enormous amount for me, so I looking for a legal way to reduce taxes on 10-20% in total
It is possible with two exceptions:
1) To receive payment from the company outside of my country (USA?) but they can't know that I'm an owner.
2) To get paid for stocks.

I was planning to open LLC in the USA as I also want to extend my work (online only, no office, no employees) to USA customers but the problem here can be if tax officer in my country request contract with LLC company they will see the signature of the owner (me)
If I go with CORP its more complicated and question is it worth it?

Once more, I don't want to avoid taxes I just want to reduce it as much as possible.

Thanks

 

[Stefano3323]

If you are opening a LLC in Wyoming or Delaware, for example, your name will not be in the public documents, the UBO will be kept by the incorporation agent. You will create the LLC and after that submitting the form to IRS to decide how you want to be taxed (Private or C-corp).

However, if you as UBO are running the business in another country, you need to check with a tax advisory in your own jurisdiction because you might have to pay corporate taxes in your own country anyway.

Yes, an LLC will follow international accounting rules so you will be able to put everything as company expenses, which might reduce that 50% you currently have, but I'm not sure you will manage to remove that completely.

 

[buenosdias]

First, check if your country's tax laws. Do they tax worldwide income, or territorial income? Based on your tax rate, I'm guessing it's definitely not the latter. Also, there's a higher chance that they tax remitted income (again, check and verify), which means an LLC is out of the question, since the income will be yours, and not the company's, making you liable for the tax bill.

I'd say set up an IBC holding company in UAE, and pay zero taxes on your worldwide income, while using company funds to pay for almost everything (rent, etc.) Since it's an IBC, you can take excess money into another year, while with an LLC, you can't, because it's a disregarded entity.

But, just like I said, check and verify your tax laws, and get an idea of what you're working with.

 

[bejn]

Key point is: if I have more then one international client my taxes will be lower, right now I have one and I want to set up some "proxy" company who will "play" role of that second customer.
Current law is very confusing and nonsense and they don't plan to change it, also I cant ask tax officers about suggestions or law because they are old people from the communist era and they just follow letters on paper.
With a small amount of income (~3k USD monthly), I believe that they will not check the info of international companies, just contract.

@Stefano3323
I don't try to reduce all 50% as it's not possible, but to have 10-20% in total it would be nice.

@buenosdias
If I make a contract between LLC and my local company how LLC income will be mine?
IBC in UAE sounds nice but I don't have any info about that, I need to check.
Can you explain to me this "you can take excess money into another year, while with an LLC, you can't, because it's a disregarded entity" what you mean?

Thanks, guys.

 

[buenosdias]

bejn said:
Key point is: if I have more then one international client my taxes will be lower, right now I have one and I want to set up some "proxy" company who will "play" role of that second customer.
Current law is very confusing and nonsense and they don't plan to change it, also I cant ask tax officers about suggestions or law because they are old people from the communist era and they just follow letters on paper.
With a small amount of income (~3k USD monthly), I believe that they will not check the info of international companies, just contract.

@Stefano3323
I don't try to reduce all 50% as it's not possible, but to have 10-20% in total it would be nice.

@buenosdias
If I make a contract between LLC and my local company how LLC income will be mine?
IBC in UAE sounds nice but I don't have any info about that, I need to check.
Can you explain to me this "you can take excess money into another year, while with an LLC, you can't, because it's a disregarded entity" what you mean?

Thanks, guys.
Click to expand...

Let's say your net profit for 2019 was $100k. You have no more bills to pay, or any other expenses. Let's also assume that you can't take that 100k, without paying taxes, since you don't have any legit expenses to claim a tax exemption.

In an LLC, you WILL HAVE TO take the money out at the end of the fiscal year, no matter what. That means you'll be paying personal income taxes on it.

But, as a c-Corp, you can take the excess money in to the next fiscal year. If the Corp is UAE, the money sits there tax free, until you spend it.

There's a lot of accounting slang with this, but I don't remember them.

Don't ask tax officers. They're either morons, or trying to find tax avoidance schemes so they can work on breaking them. Instead ask a tax attorney. Don't go into specifics.

Be careful. If you have international clients, you might get a higher tax bill, depending on the jurisdictions involved.

You can remit the profits into your local company, and get taxed, or you can remit it to UAE company, and not get taxed. Use the UAE company as the holding company. You'll be able to claim most of your expenses, since they're not the IRS, and you're not supposed to pay taxes anyway. You could do this play with a HK company as well, but they're literally impossible to get.

Plus, with a UAE company (if the capital is enough) you'll get a residence permit on the house. Though you'll have to visit there every year to maintain it.

 

[bejn]

If I make a contract between LLC and my local company then I will not have any profit on LLC, I'm just worried about seeing me as UBO and be "related person" by tax officer.

UAE sounds nice, but how much it costs and how I can take money from UAE company for a living?

 

[Stefano3323]

It doesn't matter where the IBC is located. Everything goes down to the tax system of your country. Some countries might be cool with you having a holding outside, having a subsidiary in the country and just paying yourself via the subsidiary without touching the holding's money. Others, are not so happy and they will ask you to pay corporate taxes anyway as long as you are the UBO.

As long as you are planning of living in the country where you are currently located you need to check the tax system there, forget the part of trying to set up an IBC here or there, it doesn't really matter.

 

[speedster]

buenosdias said:
Let's say your net profit for 2019 was $100k. You have no more bills to pay, or any other expenses. Let's also assume that you can't take that 100k, without paying taxes, since you don't have any legit expenses to claim a tax exemption.

In an LLC, you WILL HAVE TO take the money out at the end of the fiscal year, no matter what. That means you'll be paying personal income taxes on it.

But, as a c-Corp, you can take the excess money in to the next fiscal year. If the Corp is UAE, the money sits there tax free, until you spend it.

There's a lot of accounting slang with this, but I don't remember them.

Don't ask tax officers. They're either morons, or trying to find tax avoidance schemes so they can work on breaking them. Instead ask a tax attorney. Don't go into specifics.

Be careful. If you have international clients, you might get a higher tax bill, depending on the jurisdictions involved.

You can remit the profits into your local company, and get taxed, or you can remit it to UAE company, and not get taxed. Use the UAE company as the holding company. You'll be able to claim most of your expenses, since they're not the IRS, and you're not supposed to pay taxes anyway. You could do this play with a HK company as well, but they're literally impossible to get.

Plus, with a UAE company (if the capital is enough) you'll get a residence permit on the house. Though you'll have to visit there every year to maintain it.
Click to expand...

Could you expand a bit on the HK company strategy and what you mean by "they're literally impossible to get"?

 

[buenosdias]

speedster said:
Could you expand a bit on the HK company strategy and what you mean by "they're literally impossible to get"?
Click to expand...

HK authorities aren't as tight-a*sed as the IRS. IRS doesn't want you cutting your tax bill by claiming business expenses. They ask you a lot of questions.

That doesn't happen in HK. It's easier to claim business expenses.

Hell, even tax evasion is not a crime in HK, provided the funds are clean in the first place.

But, it's very hard to open bank accounts in HK, and even sometimes companies as well. They say they have enough millionaires in there and they don't want more.

 

[speedster]

buenosdias said:
HK authorities aren't as tight-a*sed as the IRS. IRS doesn't want you cutting your tax bill by claiming business expenses. They ask you a lot of questions.

That doesn't happen in HK. It's easier to claim business expenses.

Hell, even tax evasion is not a crime in HK, provided the funds are clean in the first place.

But, it's very hard to open bank accounts in HK, and even sometimes companies as well. They say they have enough millionaires in there and they don't want more.
Click to expand...

Thanks for the reply. I have a brother living in HK and we're busy setting up a company together. I have absolutely no clue about the business environment there (apart from my reading up on it), so any comments from you guys is of great value. He is an HSBC Premier client - would that help in getting a company account open?

 

[buenosdias]

He may be able to act as an introducer, but unless you have a legit reason for being in HK, and for a bank account there, you'll fail.

 

[speedster]

buenosdias said:
He may be able to act as an introducer, but unless you have a legit reason for being in HK, and for a bank account there, you'll fail.
Click to expand...

He lives there. That not legit enough?

 

[buenosdias]

speedster said:
He lives there. That not legit enough?
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Just because he's their client doesn't mean they're gonna accept everyone he brings in. YOU have to be legit. The business have to be legit.

 

[speedster]

buenosdias said:
Just because he's their client doesn't mean they're gonna accept everyone he brings in. YOU have to be legit. The business have to be legit.
Click to expand...

Fair enough, but as a shareholder and managing director that should be enough reason for the company to be domiciled and bank there?

 

[bejn]

I talk with my accountant and he told me that I would pay taxes only when I try to get money on private account (employe taxes) + taxes for my company in the country, all outside is corp and its taxes are not related to me.
So I have two possibilities:
To have a contract between my two companies
or
To have only outside company and to pay shares, which is my last solution.

 

[fshore]

bejn said:
To have a contract between my two companies
Click to expand...

You'd have to consider related party documentation, both in USA and possible in your country.

bejn said:
to pay shares, which is my last solution.
Click to expand...

Can't understand your meaning here.

Also worth checking corporate residency rules. Almost all countries will consider a foreign company local tax resident when managed from their country.
And countries threats us llc differently. Some threat them as disregarded, and some as a corporation.

 

[bejn]

I was mean on paying dividends.

what you mean by

You'd have to consider related party documentation, both in USA and possible in your country."
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