Have a Tax Question? Ask a Tax Expert
Hello, I have registered LLC with 2 partners in Delaware. I am not a US citizen or resident. ME and my brother who is 2nd partner live in Pakistan. My business is online retailing in home and garden industry. My business address is located at NY. I have few question.
I really appreciate your help. Thanks in advance.
Thank you for contacting me about your Tax issue. I will work hard to help you understand the issue clearly.
Sales tax is based on the location of your customer and your nexus. If you have a NY state address as your operating place of business or your official address, you will need to get a NY sales tax permit and collect and pay sales tax on taxable NY sales.
Each year, you will need to file a partnership tax return with the IRS (Form 1065).
An LLC with 2 or more members is automatically taxed as a partnership unless you made an election to the IRS to be taxed as a corporation.
You will also need to file an annual report to Delaware and New York.
Yes, both partners need to apply to the IRS for a tax ID number. In the case of individuals not eligible for a Social Security number, an ITIN is the assigned type of number.
Your business will also need to apply for an EIN for Employer ID Number. This is the number that identifies the LLC to the IRS. You will also use this number for the purposes of opening a US bank account.
Do I need to file income tax return for NY state too?
Yes My company has EIN number
Since you have an LLC that is NOT a sole proprietorship, you should NOT transact business through a personal bank account or the IRS will assume that you are either laundering money or that you are acting as a sole proprietor instead of as an LLC.
Yes, since you have a NY address, you will likely have to file a NY state return as a partnership. You will pay tax on NY state income.
Having a Delaware LLC really does not benefit you in any way unless you were a DE-based entity. Or, having a New York base of operations may cost you more thatn having a Delaware based address.
Can I change my company address to Delaware? Can it be possible?
I am certain it is possible and relatively simple to do.
At what tax rate both partner will charge tax for personal income derived from business?
will be charged
That is determined by your overall US based income. It is not a flat rate.
Since this is a partnership, income is passed down to the personal level and taxed at your personal rates
How can I get ITIN?
You can apply for an ITIN by filling out IRS form W-7 (www.irs.gov). You will need to take the form and your ID to the US Embassy if you are outside the US
Now If we change our address from NY to the Delaware where our company is registered then we only have to pay a fixed tax for our company
You will not have to pay or file tax reports in New York state unless you have significant NY state source income.
As we are dealing online and we just have an office address in NY,so what does it make?
An entity based in one state having a customer in another is not necessarily taxed on the income from the other state. There are exceptions when the level of income reaches a certain point. For example, you would have to file and pay California tax if you have significant income (over $50K) from that state's residents
does it make us liable to file company tax returns in NY state?
It likely does.
I think in that situation we only have to pay tax or a sale tax return for the merchandise we sell to NY residents?
Is it so?
because having an office address in NY state makes it a Nexsus for our business
But other than sales tax return the tax for the LLC we have to file and pay to Delaware state only
No. This is not sales tax which is based on taxable items paid by state residents. Income tax, when your company has its "base" in NY, is based on ALL NET income in the US
by "base",you mean having an office address there or to be registered with that state?
either one of the two?
Now if that is the case,
then as you know our company is registered with DE and office address in NY,
If we move our office address from NY to DE as well,then we are free from filing tax returns with NY state?
I asked that,as you know our LLC is registered with DE and have the office address of NY state,
Now if we change the address from NY to DE,then are we free from filling any type of taxes with the state of NY?
Please answer my questions when you come online..
Very well,that concludes my one concern. So, now I'll be moving my company address to Delaware as well.
For the second concern, do I have to open the business bank account in Delaware or I can open that in any other state?
Also our personal account if needed?
can you give some reference to who I contact to get ITIN. And thank you so much. You are very helpful and I got so much information from you. Thanks for helping in such a good manner.