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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I would like to ask a question for my friend. Hope someone

Resolved Question:

I would like to ask a question for my friend. Hope someone can help.

Her situation:
1. He is a Hong Kong citizen and resides in Hong Kong.
2. He has a Limited Company in Hong Kong selling cell phone accessories.
3. He is now thinking of selling cellphone accessories on Amazon.com using fulfillment centers in US.

Questions:
1. Amazon issues tax documents to sellers each each. Should he set up an LLC in US to sell on Amazon? Or should he use his personal name to sell on Amazon? Or should he use his Limited company's name to sell on Amazon? What are the pro and cons of each scenario?

2. Let's say he set up an LLC to sell on Amazon.com. Since he has no physical address is US, does it matter which state he sets up the LLC in? He heard that Wyoming is a good state to do online business for foreigners. Is it true?

3. And if he sets up an LLC in US, can his solely owned limited company in Hong Kong bill the LLC? That is, his LLC buys the cellphone accessories from his Limited Company in Hong Kong to sell in the US? Would that make accounting simpler since his limited company can bill the LLC once a year.

4. Also, what tax documents will he need to file taxes in US?

Thanks very much for your help.
Submitted: 1 year ago.
Category: Tax
Expert:  Lindie-mod replied 1 year ago.

Hi,
I'm a moderator for this topic. I've been working hard to find a Professional to assist you with your Tax, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Lindie
Expert:  Lev replied 1 year ago.
Hi and welcome to Just Answer!
1. Amazon issues tax documents to sellers each. Should he set up an LLC in US to sell on Amazon? Or should he use his personal name to sell on Amazon? Or should he use his Limited company's name to sell on Amazon? What are the pro and cons of each scenario?
Unless you select differently - for income tax purposes - a single member LLC is a disregarded entity - means - all income and expenses are treated as received and paid by the owner. So in this case - the LLC is simply ignored. Still the LLC is a separate legal entity separated from the owner - it may own properties (including real properties), provide some level of legal protection. The LLC may be liable for other taxes - for instance - sales tax, import/export duty, etc. The LLC may have a bank account and its own tax ID.
However - for income tax purposes - there is no difference.
2. Let's say he set up an LLC to sell on Amazon.com. Since he has no physical address is US, does it matter which state he sets up the LLC in? He heard that Wyoming is a good state to do online business for foreigners. Is it true?
Assuming he will not have any physical presence and will not use any facility in the US to fulfill his business operation - it doesn't matter in which state the LLC is registered.
There are several popular states to register the LLC - besides Wyoming - Delaware and Nevada.
3. And if he sets up an LLC in US, can his solely owned limited company in Hong Kong bill the LLC? That is, his LLC buys the cellphone accessories from his Limited Company in Hong Kong to sell in the US? Would that make accounting simpler since his limited company can bill the LLC once a year.
Yes - that is possible. But he would need to keep two books - for the Hong Kong LLC and for the US LLC. So I am not sure that would be simpler.

4. Also, what tax documents will he need to file taxes in US?
The US LLC is registered with state officials. He would need to file an annual report and pay annual fees to keel the LLC in good standing.
He might want to request the tax ID from the IRS.
Only if the LLC had income from US sources - he will need to file individual tax return as a nonresident reporting business activity.
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22704
Experience: Taxes, Immigration, Labor Relations
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