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MM
MM, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16
Experience:  CPA with several years experience in both domestic & international tax.
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Im starting a new small business. It will have a call center

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I'm starting a new small business. It will have a call center which can be anywhere in the world. Customers will be from the USA and will spend some money with us in the USA. But they will also travel overseas to our locations in Thailand and Costa Rica and spend more money there. I happen to live in Michigan. But there is no one else here but me. I can put the call center anywhere and our advertising will be over the web, we will use an accounting package run over the web. No physical building except where-ever we put the call center and that may be contracted out. Where should I incorporate to reduce taxes and does it matter where I put the call center from a tax standpoint? I would be willing to move if I can save a lot on taxes by not living in the USA.
Submitted: 3 years ago.
Category: Tax
Expert:  MM replied 3 years ago.
Chat Conversation Started
MM :

Hello,

MM :

I would appreciate further information to assist in answering your question. Firstly, what kind of business is it? Meaning is the call center going to make money for you or support the business making money via other means? This will provide insight regarding whether and how much you maybe taxed in the U.S.

Customer :

it's a referral business. i find people who have major dental needs. i refer them to a local dentist who does some of the work and then i refer them to an overseas dentist who will do much of the more expensive work cheaply. we may collect the money in advance and then pay the dentist after successful completion of the work. the call center will field calls, work with dentist to quote prices and possibly collect advance payments and then make payments to dentist. or we may have the dentist collect payment and pay us a commission.

MM :

Hi,

MM :

I saw the post. Thank you for providing the information.

MM :

In those facts, my suggestion would be the following: establish the call center overseas. Netherlands has a very favorable tax jurisdiction.

MM :

And then you can avoid being directly taxed upon that income in the states.

MM :

Please let me know if I can assist further or if you have any additional questions. I wish you the best of luck in your business venture.

Customer :

doesn't the usa tax all income whether earned overseas or not? this is an LLC so I assume all the earnings will flow back to me each year. don't i have to establish residency somewhere else to avoid the usa taxing my overseas earnings?

MM :

Hello- The U.S. does not tax business earnings overseas, which was the answer I referred to in my prior post. However, as an individual, if the income does flow to you, then you will be taxed as an individual.

Customer :

so in an LLC can I prevent that income from flowing back to me just by keeping it in a bank overseas and not distributing it to myself until I choose?

MM :

In terms of a business structure/corporate setting, perhaps you should do the following: create a foreign corporation to serve as a "blocker corporation." This blocker corporation will prevent the full-taxation of your business' earnings against you annually. Rather, you will be able to block-off the U.S. taxation of earnings, until you distribute a dividend to yourself.

Customer :

Okay, thanks

MM, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16
Experience: CPA with several years experience in both domestic & international tax.
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