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I own a travel business that operates out of the Caribbean. To make doing business easier in the United States I have decided to form an LLC in America. I am not a U.S. citizen, and will be the only shareholder in the company. I initially narrowed down my options for incorporation to Florida (due to its vicinity), Nevada, Delaware, and Wyoming. I quickly crossed out Florida and Nevada due to their Seller of Travel Laws that I wasn't sure if I would have to comply with. I was drawn to Delaware and Wyoming's pro business policies and no Seller of Travel Law requirements, but I'm not sure which states provide better services for international citizens. So my questions are: (1) Which states are better for incorporating in for international citizens in my field of business. (2) Because I'm not a U.S. citizen, and all business transactions will be handled by our Caribbean Company will we have to file tax returns, and pay income tax on our profits, etc. What about EIN and TIN requirements?

Submitted: 322 days and 5 hours ago.
Category: Business Law
Value: $40
Status: CLOSED
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Bahamas

Already Tried:
I have not tried anything so far as I was concerned about possible repercussions, and tax implications.

Posted by PaulMJD 322 days and 5 hours ago.

Answer

1) Delaware has the most favorable corporate laws for international type companies, without a doubt, which is why so may corporations are registered there. Not only is it pro-business, it has easier formation and less fees.

2) If you incorporate in DE then the US LLC would issue a K-1 form for flow through taxes which would be then paid by all members in accordance with their percentage of membership, thus even as a foreign member, you would have to pay taxes as a foreign employee/member in the US. As far as the TIN, this is obtained online through the IRS and you would also need an EIN to file your tax return for your K-1 distributions. The LLC simply files a tax return that shows how much each member's share is that the member will need to pay taxes on.

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322 days and 5 hours ago.

Reply

I read somewhere that if the U.S. company is just a holding company and doesn't actually do any business in the United States (no exchange of funds take place in the United States, etc.), and if the members of that LLC are not American then you would be exempt from paying income taxes, and considering that Delaware has no corporate taxes the company would be exempt from that as well. All we would have to pay is the annual franchise fees.
Is this not the case?

Answer

I understood that your company would be doing business here, even though you would be "funnelling" money to your other corporation. A holding company is a company that owns other companies and does not sell or conduct any business and thus does not make any profits. What you are discussing, operating a US LLC to conduct business here, not to hold other businesses, and this will be causing you a big problem, especially since an LLC is a flow through entity and must issue K-1's to the members, thus you would have to claim the US LLC is the holding company for the Bahamian company.

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Expert: PaulMJD
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Answered: 1/6/2009

Attorney

Attorney Licensed in RI, MA and LA

322 days and 5 hours ago.

Reply

If forming an LLC as a Holding Company will create a problem, are there any other forms of company formation that would be better suited. I know U.S. Corporations must have a U.S. citizen on its board, that's why I chose to go with the LLC which could be owned by a Non-US Citizen (myself). How would I go about declaring the US LLC as a holding company for the Bahamian Company? I was planning on using one of the online incorporation services.

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