Ask HN: Anyone running a US-based non-resident LLC?

https://news.ycombinator.com/item?id=354508

by mantas • 18 years ago

26 14 18 years ago

news.ycombinator.com

Is anyone running a US-based LLC with non-resident members? I'm thinking about registering it for my web venture. I did some research, but I cant find anything about few things..

Is it hard to do LLC book-keeping for web app on my own?

If I hire myself as a contractor in my home country, do I have to pay taxes on these incomes to US gov?

If I get paid from US-based company personally (not through company), do I have to pay taxes to US gov on these incomes?

If my company gets money from both US and non-US units, do I have to pay taxes to US gov for both or US units only?

Is it hard to run a US-based LLC from abroad in general? Paperwork etc.

Thanks!

pmjordan• 18 years ago

If I hire myself as a contractor in my home country, do I have to pay taxes on these incomes to US gov?

For personal income, your country will typically have a reciprocal agreement with the US so that you don't get double-taxed. Check with your local tax body for the exact details.

(Sorry, I know nothing about the other questions.)

boris2• 18 years ago

If I hire myself as a contractor in my home country, do I have to pay taxes on these incomes to US gov?

If I get paid from US-based company personally (not through company), do I have to pay taxes to US gov on these incomes?

You don't pay taxes to US gov unless any of the following two things are true: (1) you are a US resident (2) your income is produced in the US.

There is a precise definition of being a US resident for tax purposes but it basically boils down to you staying in the US for the majority of the time.

The production of income is a bit more tricky. It basically says that if you use US "infrastructure" to produce your income then you have to pay taxes. The common example of this situation would be rental income from a property in the US. An example when this does not apply would be sitting in front of a computer in another country and writing a web app.

SingAlong• 18 years ago

rental income from a property in the US

So if I'm hosting my app with a US hosting company, then does it apply?

boris2• 18 years ago

No, I don't think so. The income is not produced by merely hosting the app in the US. Instead, you most likely develop and maintain it, provide customer support, etc., all outside of the US.

ovi2562• 18 years ago

Glad to see the tax income questions have been answered. I would like to know more about the others though. Especially :

>Is it hard to run a US-based LLC from abroad in general? Paperwork etc.

Anyone?

Brushfire• 18 years ago

All Organizational forms in the US are state-level formations. That means this question is sort of difficult to answer. Some states are likely more friendly than others.

The process for citizens is generally:

- Form Organization At State Level (Secretary Of State)

- Apply For Federal EIN (Tax ID Number, IRS)

- Apply For Local Tax ID Number (State Dept of Revenue)

- File For Other Requirements -- such as local/state taxes/certificates/offices. Usually there is an employment agency you have to file with for Workers Comp.

Most states are going to need some sort of local address to form a domestic corporation/organization within their realm. You can register for business as a foreign corporation, but then you will need a local office. Again, all of this knowledge is highly state-specific, so YMMV.

Besides, you could always set it up with a UPS Store Mailbox that fwd's mail (at your cost) to your real international location.

I would also question why you need this. Do you have a specific purpose? I'm not saying you dont, I'm just curious.

ovi2562• 18 years ago

Yes, I'm starting (yet another) SaaS one man startup. I need a US LLC for:

* credibility - people (especially US citizens) trust you more. Why? My personal theory - they know they have someone to sue in the US if things go wrong.

* billing - most payment processors (authorize.net comes to mind) only work with US corporations. Bummer.

CalmQuiet• 17 years ago

Yes: know your state. Some are hassles more than others. Note that Delaware specializes in incorporations and has more corporations incorporated within it than any other state. ...so many people living in other states start small corps registered in Delaware. I'm not sure if those numbers (or all the benefits of Delaware) apply equally to LLCs, but I'd check it out.

mindaugas• 18 years ago

I wonder why do you need US based LLC?

If your business is web based you can run it from anywhere... :)

Just curious...

petercooper• 18 years ago

Perhaps the poster is looking to eventually move to the US with an L-1 visa (company transfer). I've certainly considered it.

It's one of only a few ways to make it into the US on a semi-permanent basis as a self employed person unless you're ridiculously famous or rich.

blurry2• 18 years ago

You've touched upon a large and complicated subject but here are couple things to get you started.

First off, you need to be very clear in your own mind about your venture vs. your consulting work.

Consulting is simple. There are three main reasons to form an LLC as a consultant: you can isolate yourself from liability; you can snag more work as some companies prefer to work corp-to-corp rather than with individuals; and finally, you can utilize various legal mechanisms (such as managing vs. passive partners for example) to minimize your tax liability.

It sounds like none of the above applies to you very much. It's too much hassle to sue someone in a foreign country, companies prefer corp-to-corp for reasons largely irrelevant to outsourced consultants (who for example cannot claim US unemployment benefits), there is not much legal maneuvering you can do with a one-person partnership, etc.

Your venture is a whole other beast. First, keep in mind that you need to foreign-qualify your LLC in every state where you do business. It's hard to know whether you will need to foreign-qualify since you did not provide much information as to the nature of your venture, but for example accepting orders in New York means you do business there and to foreign-qualify in NY will run you over $1,000 (and if you are transacting 100% virtually, I have a hard time understanding why you need a US-based LLC). Second, if you plan to raise capital or incentivize your talent via equity, it is much easier to do so with a corporation than with an LLC. Third, there are tax implications pertaining to drawing partner distributions vs. shareholder equity, etc.

As you can see, there are no quick answers and you need to provide much more detail about your plans. In any event, I really recommend that you get a preliminary 1-hour consult with a lawyer and an accountant. If you feel that you don't need to go that far at this stage, then you probably don't need an LLC either.

To your other questions, LLC paperwork could not be easier. Book keeping is easy too, you can use quickbooks online ($17/month) or clearcheckbook.com (donation). Have an accountant show you how to reconcile your bank account once per month, and you are all set.

mantas• 18 years ago

Thanks for all the answers!

My venture would be pay-as-you-go SaaS app. But I dont think I'd be profitable right away so I'll probably keep freelancing for some time. And I sometimes get paid via ScriptLance/eLance/etc, which are US-based..

Yes, the main reasons why I want US-based LLC is that it looks much more reliable for some americans. Also, it's very expensive to form a company in my home country (Lithuania).

Now the only very unclear thing is if renting servers in US and having customers with US billing address counts as US-based incomes.

Customers probably doesnt count as 'infrastructure'. But what about servers, payment processor etc?

Does anybody know a good (and not that expensive) lawyer to advice on all that stuff?

blurry2• 18 years ago

I would say that if your plan is to provide SaaS, don't worry about it until you hit profitability. At that point, if you must have a US entity, I recommend looking into Vermont virtual corporations/LLCs.

For consulting, you could look into a Nevada LLC (cheap and low paperwork requirements) but it's not necessary. Companies that are open to outsourcing to Lithuania already know they are not working with a US-based company, while companies that want a US-based LLC will most likely have a whole bunch of "due diligence" requirements that you can't meet anyway (such as number of years in business, number of employees, etc). Trust me, your big problem is going to be getting paid as promised, not your lack of a US entity.

22ndcombinator• 18 years ago

Which country are you based in? Its very important to know because local goverment might creat problem for you.

Ask HN: Anyone running a US-based non-resident LLC?

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