What company structure to use

[Topcat]

The tax (or no tax) situation when you sell to US based customers, even without‌ any US citizenship and without physical presence in the US, really isn't clear cut!

From the IRS website: Effectively Connected Income (ECI) | Internal Revenue Service

• If you own and‍ operate a business in the United States selling services, products, or merchandise, you are, with⁠ certain exceptions, engaged in a trade or business in the United States. For example, profit⁤ from the sale in the United States of inventory property purchased either in this country⁣ or in a foreign country is effectively connected trade or business income.
  

To me it⁢ looks like it could be interpreted that a foreign owned US LLC is supposed to︀ pay US taxes. Man it's so complex. There's no perfect setup I'm sure of that.︁

I'm also concerned that wherever I'm asked for proof of residence somewhere (be that by︂ the IRS or Stripe or a bank), the only place I can "prove" residence is︃ in the UK using a UK bank statement, even though I don't live in the︄ UK and am long established as non resident non dom there. If I give my︅ parents UK address as my place of residence when asked about that during application for︆ US LLC EIN, or by Stripe or by a bank, if they then inform HMRC︇ that I told them I'm UK resident...potentially that opens a completely new can of worms,︈ right?

 

[Cloudbanck]

It says own and operate though, and you dont operate︂ it in the US. But yeah, it is a bit murky, but the standard interpretation︃ of the (murky) rules by the IRS and US courts is that as long as︄ you dont have an office or dependent agent in the US, and dont spend too︅ much time in the US, even if you sell to US clients, there is no︆ US tax.

Startfleet has the best walk through of this I think, see US LLC︇ for Non-US Residents (Foreigners) 2023 Guide , and espcially the quote from the Treasury Dept.︈ Office of Tax Policy

Yeah, you do not want‌ to give your UK address. Just rent a place in a third world country and‍ get a bill in your name, to have something. Or get residency in Paraguay or⁠ somewhere where it is easy.

 

[Sols]

It's a mess. AFAIK, IRS wants to⁠ simplify the US tax code but companies that provide tax software and tax advisory lobby⁤ against it.

Yes, being a permanent traveller without a︅ good place to call home (and be tax resident in) is some late 1990s hocus︆ pocus that doesn't work anymore if you want to scale up a business. People do︇ it, but they limit themselves.

Pick a place whose tax laws (and life in general)︈ are in line with your values, and make it your bonafide primary home and place︉ of economic interest. You can still travel around a lot, but having a good place︊ to call home will make running a business easier.

 

[Topcat]

Doing just that right now but‍ the monthly bill is in a foreign language and doesn't even say my name lol.⁠ This is easily fixed though

I've spent plenty of time in Thailand⁢ in recent years. Getting tax residence in Thailand however is much easier said than done︀ unless you want to pay a boat load of tax. Finding this place you suggest,︁ where the taxes are low or non-existent and the lifestyle suits you...easier said than done.︂

Any idea if︄ wave or quickbooks can be automated for accounting with Stripe and Paypal? So when a︅ customer makes a purchase, the accounting for that purchase is done automatically by connecting the︆ payment gateways up to the accounting software.

Not done this before lol

Looks like quickbooks︇ is now a payment gateway in its own right, potentially circumventing the need for Stripe.︈ Wow, all new to me lol

A little research and I can see Wave accounting︉ software can be connected up with Stripe, Paypal, bank accounts etc using Zapier, so it︊ looks like accounting can mostly be automated.

 

[Sols]

Some have integrations to PSPs and banks to more or less automate the whole flow.⁤ Try them out and see what works for you. The market is full of apps⁣ and services like Wave and Quickbooks. Xero is another big one with a lot of⁢ integrations.

 

[Topcat]

Thank you!!

-----
Alright, I am settled on a solution. Wyoming LLC formed via wyomingllcattorney.com‌ - they are a little more expensive than some of the other agents, but their‍ email support is better and reviews are better, so I guess you get what you⁠ pay for.

Bank account with Mercury

Payment gateway with Stripe, and paypal as a side⁤ option for customers if they want to use it

Accounting with quickbooks, wave or xero⁣ and I'll file the annual federal return and anything else that needs filing each year,⁢ myself.

Only thing I'm undecided on is whether to bother charging UK and EU customers︀ VAT. Given my relatively low sales volume, I'm angling towards not bothering, as I am︁ a very small fish, you could say, so I don't think any trouble would come︂ of it. Very unlikely.

Does anyone see any major holes in or see any major︃ issues with the above approach?

 

[jafo]

My two cents⁤ that I acquired with boots-on-the-ground-in-the-trenches-on-the-battlefield-scarred experience:

I was like you since 1997 for more than⁣ 2 decades. I travel at least 11 months out of the year. Most times, I⁢ won't return to the same place for three years or more. Read my bio.

The KISS OF DEATH wrapped & repackaged as "for my own good and to conform with︀ 'laws'":
I made the HORRIBLE mistake to entertain private bankers' cries to consult with attorneys,︁ accountants, and "consultants".
I became the cash cow for these state-sponsored vultures albeit during a︂ very short time. I "divorced" all those private bankers, attorneys, accountants, and consultants and blocked︃ them all!

Anything or anyone that decreases your wealth is destructive and is your mortal︄ enemy! 😡

Anything or anyone that increases your wealth is constructive and must be cherished &︅ loved. 😉

There is a saying in football (CR7 & Messi football): If you are winning,︆ don't change anything related to the team.

I'm going to stop here. Some things in︇ life are obvious!

Of course, Your Mileage May Vary. (YMMV) 😎

I know several people with US setups doing millions of dollars per month since the early︍ 2000s and as long as you don't become an "Andrew Tate", and you stay under︎ the radar, nobody cares.

Good luck!

 

[zzzzzz]

Is this UK specific thing - you can still have residential ties as long as you⁤ don't spend time in UK? In high tax EU countries you would be still considered⁣ tax resident (no permanent home abroad, using citizenship country address and tax residency, not cutting⁢ ties - residential ties still in country of citizenship...etc.).

I'm also thinking about Thailand tax residency. What problems︄ have you encountered? They have a remittance rule for foreign income (if brought in 1-year︅ after earning it, it's 0% tax), works OK with capital gains and dividends from what︆ I have read.

 

[Topcat]

Thank you for your help.

I am just now⁤ setting up my Wyoming LLC. However the agent is offering me the chance to set⁣ up an "LLC" or a "Close LLC". Both are same price.

Agent claims on their⁢ website: "If you are the only owner, or this is a family business, then we︀ generally recommend a Close LLC since they have reduced maintenance requirements."

I am the sole︁ owner. Non-US based, no presence in the US, no employees there etc. Even though they're︂ recommending setting up a Close LLC if I am the only owner (which I am),︃ I guess it's still better to just form the standard normal LLC, and not this︄ "Close LLC"?

I did some research on what a Close LLC is and it seems︅ they are difficult to dissolve should I wish to do that one day. So my︆ instinct is to just form the standard LLC but if anyone has a view on︇ this please let me know.

Many thanks

 

[zzzzzz]

@Topcat how much is going to be your total cost of setting up US LLC‌ and then annually with filing form 5472?

 

[Topcat]

Should be $200‍

 

[Ancova]

I use a great agent for US LLC Formation for our clients who want to‌ combine their UAE Business (which we opened) with a US LLC. They are called StartGlobal‍ and the cost is around 150 USD.

In one month everything is done, including corporate⁠ bank account.