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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10097
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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These questions are only. If you are not LEV then please

Customer Question

Hello,
These questions are only for LEV. If you are not LEV then please forward the questions to him. Thank you.
LEV I saw your previous answers and I hope you can help. Please I need someone, who knows well USA and Ireland taxes and laws.
I'd like to ask about US/IE taxes and company structure if possible.
Thank you
Submitted: 5 months ago.
Category: Tax
Customer: replied 5 months ago.
Hello,
These questions are only for LEV. If you are not LEV then please forward the questions to him. Thank you.
LEV I saw your previous answers and I hope you can help. Please I need someone, who knows well USA and Ireland taxes and laws.
I'd like to ask about US/IE taxes and company structure if possible.
Thank you
I'd like to ask few questions about taxes and company structure if possible.
First a little about me and my business:
I'm 46 years old single male, resident of Ireland. I'm also working in Dublin City Univercity. English is not my native language.
First phase of my business will be internet sales to US market and for this I've formed US LLC in Delaware few weeks ago. I also have Ltd company in Ireland.Now I want to set up proper company and tax structure, to have all taxes and income well organized on good foundation from the very beginning, to have peace of mind in future to do business many years. Please here I'd like to have your help and advise.My business plan is simple (drop ship) model, I'll have 2-4 specific websites, example for handbags, I will buy products I want to sell from wholesale suppliers(mostly from China at the beginning) for my money with wholesale prices, products will stay in suppliers warehouse, if customer makes order on my website with my prices, I'll tell to supplier to send out one of my items to the customer.
I will fund my account in US bank from my earned money from Ireland at the beginning. I'll send my money to US company account, then I'll buy products, pay for marketing campaigns and website outgoings, then I'll get money for sales and have profit, then I need to buy more products, turn it around as much as I can, then on some point I need to calculate income and outgoings, then pay taxes to US, then I need to bring profit home to Ireland, pay for my outgoings here in Ireland, calculate taxes for in ireland.My market and business will be in US only (all states). (I think best is to exclude Delaware.)
Key points:
* I'm Irish resident and I'm also working, from where my main income comes at the moment and from where I'm paying all taxes in Ireland.(in Ireland we have 20% personal income tax and over 33000€ a year it goes to 40%)
* Now I have set up LLC in Delaware as non US resident person on my own name for US eCommerce business.
* First phase In US I will open 2-4 eCommerce discount store websites under my US company for US customers. At the beginning my sales will not be very big around $10,000 a month and items for sale are around $5-$45 (accessories, clothing and so on).
* So in US I'll have only websites, marketing and moving products and money, all is done online. No warehouses, no physical office, or anything in US. Except Bank account and Virtual business address.
* I also own Irish Ltd. company for my EU startup eCommerce business.Now my questions are:
1. How is best to structure my company and taxes long term view in mind? Any information is helpful to get full picture together, how it must be tone?2. When, what taxes to where I need to pay and how much?3. Tax as LLC or Corporation, which one is better for this business model?4. Is it better to register the US LLC under Irish Ltd to optimize taxes?4. Does it matter in what state I will open Bank account, Virtual business address to avoid nexus? If it is important in what state is better to open virtual address and bank account?As I understand for US income I need to look next US taxes: corporate, personal, nexus, sales, withholding tax. In IE I need look for US income, Corporate and personal tax.
Simply put In US: IE:
Corporate tax US Personal tax US Corporate tax IE Personal(single)
50,000 15% 10% $9,275 12,5% 20% 0-33800
75,000 25% 15% $37,650 40% 33800
100,000 34% 25% $91,150
335,000 39% 28% $190,150
10,000,000 34% 33% $413,350
15,000,000 35% 35% $415,050
18,333,333 38% 39.6% $415,051+
18,333,333 35%I do not know am I on right path, at the moment I can see tree scenarios:Lets say, may taxable income is $100,000.Option 1.
Non US Irish COMPANY owns US Corporation or LLC Taxed as corporation in US no physical presence in US, I'll pay corporate tax in US and corporate tax in IE and personal tax in IE (there should be tax thready between US and IE. Do I need to pay US or IE corp tax or both? I think only IE corp tax.
So 100,000 - corp IE tax 12,5%$12,500 - pers IE tax 40%$35000 = I have $52,500 leftOption 2.
Non US Irish RESIDENT owns US Corporation or LLC Taxed as corporation in US no physical presence in US, I'll pay corporate tax in US and personal tax in IE
So 100,000 - corp us tax 39%$39,000 - pers IE tax 40%$24,400 = I have $36,600 leftOption 3.
Non US resident owns LLC Taxed as LLC in US no physical presence in US. I'll pay only personal tax in IE.
So 100,000 - pers IE tax 40%$40,000 = I have $60,000 left
Customer: replied 5 months ago.
Seems like, what I have at the moment is best way to go? Non US resident(me) owns US LLC taxed as LLC in US, no physical presence in US. I will need to pay only IE personal income tax. In US I need only declare my accounts to IRS, no tax need to be paid to US(also no withholding tax) I need only count sales tax in different states if I'll use US wholesale suppliers in future, as long I'm using China wholesale suppliers no need to worry for sales tax?
Now what forms I need to fill to US and what forms to IE?
How I can show my business expenses in US and IE(marketing campaigns, pay products, website expenses and so on), does they need to be on my LLC name or they may be on my own name (PayPal, bank cards and so on)?
How I'll show it if I will send my money at first from Ireland to US to start my business?
I think best is to take accountant in US who will calculate my expenses and sales tax, then rapport to IRS. Then, do I will get some paper from IRS, that my taxable income was like $60,000? Then I will take this paper to IE revenue and rapport as my foreign income and pay the 40% tax and everyone is happy :)
Can you recommend good cost effective accountant long term partner, who could be my registered agent and CPA for Delaware LLC, to do all that, what I need and help me if I'll have question in future?I really thank you for your time and patience. Please let me know what you think.With best wishes, from Ireland
Customer: replied 5 months ago.
Sorry I do not understand your website. I just saw that LEV was on line and answered to people yesterday and now when I'm logged in, he is retired??? http://my.justanswer.com/question/guest/c649802f91e642bb8829242875e9ed34 I just wanted to ask from him as he answered similar questions earlier. So what I'll do now?
Expert:  Lev replied 5 months ago.

Hi

I personally will review all your questions - but will be able to do so ONLY later tonight.
Sorry for delay.

Customer: replied 5 months ago.
Hi Lev,
No problem at all, thank you for letting me know. Please ask if you need more information.
Customer: replied 5 months ago.
Hi Lev,I'm sure you busy, just wanted to ask, when I could expect your advises?Thank you.
Customer: replied 5 months ago.
Hi, looks like here will be no reply? Thanks anyway, all the best.
Expert:  Robin D. replied 5 months ago.

Hello

If you are not physically in the US and you have no business location in the US then you would not be taxed in the US.

Your shipping into the US and not using any warehouse in the US means you have no sales tax either.

A single member LLC in the US passes all income to the member and is taxed on US sourced income.

Customer: replied 5 months ago.
Hi Robin, Thank you for answering to my questions. I have waiting the answers 5 days. I'm really happy, that someone tried to answer and gave some of her valuable time.
I understand, that my questions requires very broad knowledge and time to analyze the situation and options, to give me answers I need, how is best way to organize my business. If you have time and will to do that, then please could try to concentrate a little more to my questions and your answer. If not I completely understand, that you have many, many customers, who need your help and you can ignore my questions or pass them to someone. Thank you any way.
Expert:  Robin D. replied 5 months ago.

I saw that you had requested a specific expert but the site moderator asked me to respond.

If you are intent on having a registered US business then an LLC is a good way for you.

As I stated previously, a single member LLC is a disregarded entity in the US, that means it is not taxed but the individual is taxed. A non resident alien is only taxed on US sourced income. You are not in the US and not doing business in the US so you are not taxed in the US.

If you were not using a shipper in the US then the state sales tax is not applied either. You must have a nexus in a specific state in the US to be subject to sales tax collection and remittance.

You will be taxed in your own country where the actual business is located. Your expenses would be claimed for the business in your country filing.

Customer: replied 5 months ago.
Sorry but I know all this. I was looking for someone, who could analyze and tell me exactly how the 3 options will look like, pluses and minuses from tax point of view, then chose best one and then explain, how do make it real step by step. When, what forms to fill, how do show my expenses, bring income home to IE.
Even if we take only option 3. LLC taxed as LLC, owned as non us person(NOT COMPANY) like I have at the moment, I think I will need to fill my accounts to IRS I do not remember the form number. (I do not need to pay tax but I need to fill return). I do not know how do show my expenses in US/IE and what's next? Will I get some form/document from IRS what I can show in IE taxman. Or IRS will send some document to IE that this person has $6000 income from US please tax him. Because for US I'm LLC owner, who has expenses in US and in IE, but for IE I'm just person, who as foreign income.
I think it's should be something like this. LLC doing business, has expenses in US and IE, has profits from US. I must show them to IRS, but Taxes I'll pay in IE. Question is how do show the US and IE expenses and profits, I think all accounting should be done in US including IE expenses and money sent from IE. Because for IE I'm just a person, who getting foreign income. I mast pay IE tax only from foreign income, I can not show any expenses in IE anymore. I think all accounting must be done in US and I'll bring home only Taxable income. I may be wrong. I need someones advise, who has experience in both sides in US and in IE. Sorry for wasting your time, I'm just thinking here how it may be, but I need exact answers and solutions. I'm afraid I can not get them here, less here is someone, who has experience in situations like here.
Expert:  Lane replied 5 months ago.

Hi.

...

You ask for an answer, but then refute the answer.

...

As you have been told, if you choose the LLC, and are the only owner - called a "single member LLC" in LLC terminology (the only real option to avoid filing many forms with IRS) otherwise you'll be treated as a foreign corporation by IRS ... and you DO NOT WANT THAT... you do NOT have to FILE OR PAY.

...

Even after being told this you continue to say "Even if we take only option 3. LLC taxed as LLC, owned as non us person(NOT COMPANY) like I have at the moment, I think I will need to fill my accounts to IRS I do not remember the form number. (I do not need to pay tax but I need to fill return)."

...

That is not correct.

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You do NOT have to "fill forms or show expenses" UNLESS you have a physical presence in the US.

...

This is COMPLETELY (unless you start coming TO the US, or set up a office, warehouse or other Asset in the US, OR have employees in the US) between IE and you.... only.

...

No US reporting in this situation.

...

Lane

...

...

I have a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, on three continents, since 1986.

Customer: replied 5 months ago.
Dear Lane,
Thank you for explanation and your time. I'm so sorry if it takes for me so long to understand. I'm not here to waste anybody's time or offend anybody. I can see you have a lot of experience in this field, and it may be frustrating to you if people don't understand. But I'd like to draw attention to my original question, what was: ''I'd like to ask about US/IE taxes and company structure'' and there were at least 10 questions, to have solution and exact understanding, how this must be done.
If we take the question: Do I need to report or not? I understand you, that as LLC I do not need to report to IRS.
Please, could you advice full structure, (that's what I actually asked)? How must it be done?
Option 3. LLC taxed as LLC, owned by a non-us person(NOT COMPANY). I'm Irish resident(not a company), who owns single member US LLC (taxed as LLC) US sales ONLY. For the US I'm LLC/sole proprietor, who has EIN. For IE taxman I'm a just person(not a sole proprietor), who has foreign income.
I need to show somewhere my accounting, income and expenses and report personal tax. The question is, HOW, WHERE, HOW MUCH?
You say that's between IE and me...that in the US I do not need to fill and show anything, even no personal tax return. How I'll report my US LLC income, expenses and personal tax to IE then? How the tax treaty between US and IE works? I must just go to IE tax office and say: ''OK I got $3 from the US, please tax me.'' They will say: ''only $3, why not $10, where is your proof/documents?'' Do I need to show in IE my US LLC accounting or I'll just say the number, and everyone is happy, without any documents? It would be too easy! :)
That's why to me it just felt logical, that I'll do my accounting in the US, rapport my profit to IRS, then I'll get some paper or they will rapport it to IE. If you say it's not correct, then it's not. I still do not know how do show my IE expenses, US expenses, also money, what I invest in starting my US business. Or it does not matter, is it on LLC name or in my name?
That's, why I asked, that I need someone's advice, who has experience in both sides in the US and in IE . Someone, who has experience in situations like this, to get a full picture together.
All comments are welcome.
Expert:  Lane replied 5 months ago.

IE, just as US, taxes its citizens on all worldwide income. The fact that it may be sourced in the US is irrelevant ... And again, the US HAS NO JURISDICTION to tax a sole proprietor (or singlemember LLC, same thing for tax purposdes) if that person has no US presence and no US source income (US source income means that you are providing your service or selling your good while on US soil).

...

And ALSO as with a US citizen you need to file a tax return in IE to show that income.

...

And just as with the US (if you were a US citizen or had US source income - which you do not - with a sole proprietorship or single member LLC you'd file a tax return - form 1040 - and use that form's schedule C to report the income and expenses of your business with the profit- or loss - flowing to your 1040 return), you report in your income in IE on the personal form 11 and the business income schedule is a schedule D.

...

(I'm attaching the guide for filing taxes in IE)

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By the way, soole proprietor means that the person IS the business, there's no distinction ... again, OTHER than an additional schedule on the personal return to report your profits from your business.

Expert:  Lane replied 5 months ago.

Here's a company thnat will prepare your IE return for a VERY reasonable fee:

...

http://selfemployed.ie/

Expert:  Lane replied 4 months ago.

Hi,

...

I’m just checking back in to see how things are going.

...

Did my answer help?

...

Let me know…

...

Thanks

Lane

Customer: replied 4 months ago.
Hi, can someone comments on this? https://valisinternational.com/faq#t32n97
Do I have to file yearly Federal Income Tax returns in the US if I have a single-member LLC?
Yes. It has just recently come to our attention that the IRS has now made it clear that a US Tax return must be filed 'up the chain' for any disregarded entity. This means that if you are a non-resident alien and you don't have an ITIN then your LLC cannot be a disregarded entity even if you are the sole owner.
The IRS language states that an individual owner of a disregarded LLC must file a 1040 (that's a personal tax return in the USA), and although it states that a single corporate owner should account for the company in it's tax return as a division, they also say that that corporate owner must have an EIN and file a tax return in the USA, or if it's a single member LLC, then it's owner must file a tax return, etc..
So, no matter what the circumstance a tax return must be filed in the USA, though that doesn't necessarily translate into paying tax in the USA. After all, it's the profit that is taxed, and if no profit is left in the Delaware company, then no tax has to be paid, but a tax return still must be filed. It is common for a parent company to draw off all the potential profit in a subsidiary as management fees, leaving no profit in the subsidiary, and therefore no tax owing for it.
If someone tells you that you can have a disregarded entity anywhere in the USA and not have to file a tax return in the USA they are not up to date, and could get you into trouble. Come to us and we'll help you get setup right.
With this in mind most of our clients are forming Corporations as they are a more straight forward and understood company type around the world, and leave no question as to how they should be taxed. They also have a great paper-trail: tax returns from the US government to show the activities of the business that are acceptable everywhere.Is a Corp or an LLC better for me?
For 1 Owner:
If you are a Non-Resident Alien that doesn't file a personal federal Income tax return in the USA (no ITIN or SSN) then an LLC cannot be a disregarded Entity for you to personally own. So, since you would have to elect to be taxed as a Corporation anyway, why not just form a Corporation in the first place?
Double Taxation only exists if you leave the profit in the Delaware Corp. and payout the remaining profit (after tax) in dividends. If The Corp has no profit because it all gets spent as Management Fees then there is no profit in the Delaware company, and therefore no taxes are paid by it, so no double taxation. An LLC does this transfer of management fees naturally, but you can invoice a Corp for Management Fees and accomplish exactly the same situation.
If it were my choice I'd form a Corporation and draw off any potential profit in Management fees rather than form an LLC. In fact, that's exactly what we did (I'm Canadian), and what we do. I think that for foreigners, LLCs are now rendered pointless.
If the single owner of an LLC is a US Corporation, then the LLC can be a disregarded entity and it can be accounted for in the US Corporations tax return. So you can have an Umbrella Parent Corp, and many child LLCs under it and only file 1 tax return, for the Parent Corporation.
If you are a US Resident and have a SSN, then your LLC can be a disregarded entity, and you won't have to file a tax return for it, you just have to account for it in your personal tax return.
For Multiple Owners:
If you are a Non-Resident Alien, then the same applies as written above. A corporation makes more sense.
If you are a Resident with a SSN then you can file a Partnership Return for the LLC and Personal Income Tax Returns for the partnership payouts. Or you can elect to be taxed as a Corporation.

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