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Hello, I own solely a LLC, registered in Delaware, with

Hello, I own solely a LLC...
Hello,

I own solely a LLC, registered in Delaware, with a EIN.
When the LLC was opened, in 2005, i had to have a bank account, and as I was in New York by that time, my bank account is in NY. I'm a non US resident alien.
I've started my activity ( online business ) under the name of this LLC on 2009. The server for our websites are located in Texas, and some of them in France.
I have a PO BOX address, as well as a phone number in California, both related to this LLC.

>> I would like to know :

a. To which state i have to file LLC Annual return to ?

b. Which state should i file the State Sale Tax with ?

c. What forms should i use to do so ?

d. When should I file LLC Annual return, and pay my LLC's due to the IRS ?

f. What would be the more efficient solution for this case > DE registered company, selling online to all states in US and worldwide. Is it to have company address in DE, and a secondary address in CA, so business operated from DE, and tax paid to DE state ?

Thank you
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Answered in 12 hours by:
9/1/2009
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,146
Experience: Taxes, Immigration, Labor Relations
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a. To which state i have to file LLC Annual return to ?
so far - you need to file for Delaware where your LLC is registered.

if you are under jurisdiction of any other states - depends on if you have a nexus (physical presence) in any state. For instance - is you own the server located in Texas - you are under the Texas jurisdiction.

b. Which state should i file the State Sale Tax with ?
that depends on two factors - (1)you have a nexus (physical presence) in the state and (2) you provided taxable service or selling a taxable goods in that state.

from your explanation it is not clear where your business physically located and what goods or services are you selling.

c. What forms should i use to do so ?
we need to clarify previous issues before looking for a specific forms.

For Delaware - if you did not file for 2005-2009 - you most likely need to start again.


d. When should I file LLC Annual return, and pay my LLC's due to the IRS ?

Under default rules - the single member LLC is not taxable entity - all income and tax liability aroused from the LLC activities - are passed through to member and are reported on individual income tax return - depending on type of income - self-employment income, rental income, investment income, etc.

 

Please elaborate.

 

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,146
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Customer reply replied 8 years ago

Thank your for your quick response LEV,

a. To which state i have to file LLC Annual return to ?
>> Company is solely owned LLC, I am non resident alien. Residence in France.
My LLC is registered in DE, and I stated its address once registered in France.

The type of business is Online business selling goods and services (cell phones, electronics), to USA, Worldwide throught website.
Server of the website is in Texas.
A phone number attached to the company is a CA based phone number (with vonage).
A physical address for the LLC is in CA.
The LLC bank account now is in NY.

That's between DE / CA / TX / NY .
>> Where is the nexus (physical presence) considered at, and to consider your question about "where your business physically located" . Therefor which state i have to file LLC Annual return to ?

b. Which state should i file the State Sale Tax with ?
(1)you have a nexus (physical presence) in the state and :
>> I have one address related to this business in CA, used to forward mails and parcels.
(2) you provided taxable service or selling a taxable goods in that state.
>> We sell mobile phones and electronics, shipped mostly from China (and also sometimes from USA), directly to our US & worldwide customers. As we have an address in CA, stated in the website, we do charge 8.25 % CA state TAX to our CA customers, in order to transfer these fees to CA.

c. What forms should i use to do so ?
>> "For Delaware - if you did not file for 2005-2009 - you most likely need to start again."
The company was registered on Aug 2005, but i did not do business with since late 2008 / early 2009.
I was just paying the DE franchise TAX + Registered Agent since 2005. LLC is now in "Good standing". What means of start again, and what should I do now that I began using this LLC for business on early 2009.

d. When should I file LLC Annual return, and pay my LLC's due to the IRS ?
>> The LLC is under Default rules (as I did not fill up any form to specify a specific rule for it).
But since I am a non US resident Alien, and when I've registered my LLC on 2005, I stated its address in France (my residence country). Do I still have to pay for self-employment income, or any other type of income, as an individual (I do not have residence in USA but abroad, I have a valid B1/B2 visa, valid till 2017), or can I just pay a TAX according to the profit made by my LLC for the business (Revenues minus expenses).

e. If I can ask pls a clarification for this case about :

Federal TAX : When, which form(s), what to pay, and to whom i have to pay Taxes to ?
State TAX : When, which form(s), what to pay, and to whom i have to pay Taxes to ?

Thank you,

 

from your explanation - it is still unclear about your business physical presence...

-- does your business own the Texas server or you are using hosting services?

-- as you are selling goods and services (cell phones, electronics) - where these goods are located (from where they are shipped) and where services are produced?

-- where are your physical location? in the US or outside the US?

-- do you have any warehouses, employees, etc in the US? if - yes - in which states?

 

Delaware will not tax LLC income as long as LLC do not do any business in Delaware.

as the LLC is now in "Good standing" - originally you did not indicated that - you may continue to use it.

 

If you are on the B2 visa in the US - you are not allowed to do any work. That includes working for the LLC - and might be considered a violation of your visa terms.

 

Please elaborate.

 

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Customer reply replied 8 years ago

I was expecting a trext message , but finally checked the website and found out your reply. Thank you LEV.

 

-- it is still unclear about your business physical presence...

--> A address (PO Box) is related to the business. it serves for receiving bak statements, and forwarding parcels sometimes.

 

-- does your business own the Texas server or you are using hosting services?

--> we are using godaddy which claims its servers as Texas based

 

-- as you are selling goods and services (cell phones, electronics) - where these goods are located (from where they are shipped) and where services are produced?

--> Goods are located in China, and shipped from China. Services are produced in india.

 

-- where are your physical location? in the US or outside the US?

--> My personal physical location is in France, or in china or elsewhere. Some business trips within US, but it's not my country of residence.

 

-- do you have any warehouses, employees, etc in the US? if - yes - in which states?

--> No employees in the US, no warehouse except a PO BOX in CA.

 

--Delaware will not tax LLC income as long as LLC do not do any business in Delaware.

as the LLC is now in "Good standing" - originally you did not indicated that - you may continue to use it.

--> we have now a registered agent address. is this considered as a nexus in DE ?

And we've had till now maybe one or twi customers from DE, we have shipped them from China.

 

--If you are on the B2 visa in the US - you are not allowed to do any work. That includes working for the LLC - and might be considered a violation of your visa terms.

--> I am not working for the LLC as the job is done abroad in china and india.


Am I liable to Sales TAX in DE, or/and in CA ?
Am I liable to Fed Inc TAX ?

Thank you LEV

 

Based on your information - all LLC operations are abroad and there is no any activity in the US.

Having a mailing address or a registration in the US doesn't constitute business activities and doesn't constitute a nexus in the US.

Because Delaware doesn't tax the LLC that registered in the state but

 

Delaware has no sales tax and has no intangible personal property tax.

Delaware doesn't apply income tax and doesn't require a business license if the LLC does not do business in Delaware.

If your LLC sells anything to Delaware customers - that would be a different situations and LLC would be required to collect sales tax from such sales.

I do not see that your LLC has a nexus in any state and does not requited to register and doesn't required to collect sales tax.

However on the federal level - that is an US business entity. Generally - single member LLC is not a taxable entity and doesn't file a federal income tax return - all income and expenses are reported on member's individual tax return - and in most situations - considered self-employment income.

Generally - you would be required to file US tax return as a non-resident and report your self-employment income.

However - and there is always however... because you are a resident of France..

US has a tax treaty agreement with France - according to which:

Income that residents of France receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U.S. income tax if they do not have a fixed base regularly available to them in the United States for performing the services. If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base.

see for reference IRS publication 901 - http://www.irs.gov/pub/irs-pdf/p901.pdf

Let me know if you need any help.

 

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Customer reply replied 8 years ago
Hi LEV, Thank you .

Based on your information - all LLC operations are abroad and there is no any activity in the US.

--> But around 70% of our customer are based in US (we ship to US Shipping addresses). Though the job is done from abroad, but we deliver to US customers ?

How this would be considered, as yes/no activity in the US.

 

Having a mailing address or a registration in the US doesn't constitute business activities and doesn't constitute a nexus in the US.

 

Because Delaware doesn't tax the LLC that registered in the state but

Delaware has no sales tax and has no intangible personal property tax.

Delaware doesn't apply income tax and doesn't require a business license if the LLC does not do business in Delaware.

If your LLC sells anything to Delaware customers - that would be a different situations and LLC would be required to collect sales tax from such sales.

--> Let's say if among 600 customers, 3 of them were in Delaware with DE shipping address. According to the fact that DE charges a fee on gros revenue (and not a sale tax as any other state CA, NY..) . Do you think i have to pay a percentage to DE, over gross revenue for 600 sales, or only the 3 shipped to DE ?

I do not see that your LLC has a nexus in any state and does not requited to register and doesn't required to collect sales tax.


However on the federal level - that is an US business entity. Generally - single member LLC is not a taxable entity and doesn't file a federal income tax return - all income and expenses are reported on member's individual tax return - and in most situations - considered self-employment income.

Generally - you would be required to file US tax return as a non-resident and report your self-employment income.

--> So i would not have to file anything ?

However - and there is always however... because you are a resident of France..

US has a tax treaty agreement with France :

--> Is this valid for French citizens, or for france resident. or both. As i'm not a french citizen, but i'm a france resident.

--> But around 70% of our customer are based in US (we ship to US Shipping addresses). Though the job is done from abroad, but we deliver to US customers ?

If you do business on the customer site or physically deliver goods and /or services to the customer site - that will be your business in this state.

If you are using third party delivery service and physically do not perform any job in the state - there is no nexus.

--> Let's say if among 600 customers, 3 of them were in Delaware with DE shipping address. According to the fact that DE charges a fee on gross revenue (and not a sale tax as any other state CA, NY..) . Do you think i have to pay a percentage to DE, over gross revenue for 600 sales, or only the 3 shipped to DE ?

Delaware has no sales tax...but does have income.

There are a complicated rules to allocate your business activities as performed in Delaware and outside the Delaware - and there will be income tax liability to the state.

Advantage of using Delaware LLC or corporation if all business activities are outside the US - not to have any activity in the state.

If Delaware LLC sells to Delaware customers - that will constitute a nexus.

--> So i would not have to file anything ?

As this is US LLC with several partners - it should file federal partnership tax return.

For single member LLC - filing requirements are based on filing requirements of the owner.

--> Is this valid for French citizens, or for France resident. or both. As I'm not a French citizen, but I'm a France resident.

Please see the reference above - Income that residents of France - that means - residents for tax purposes - so your income is taxable in France and not taxable in US.

If for any reason - your income is not taxable in France - you are not a France resident for tax purposes and the tax treaty doesn't apply.

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Customer reply replied 8 years ago
-> Let's say if among 600 customers, 3 of them were in Delaware with DE shipping address. According to the fact that DE charges a fee on gross revenue (and not a sale tax as any other state CA, NY..) . Do you think i have to pay a percentage to DE, over gross revenue for 600 sales, or only the 3 shipped to DE ?

Delaware has no sales tax...but does have income.

There are a complicated rules to allocate your business activities as performed in Delaware and outside the Delaware - and there will be income tax liability to the state.

Advantage of using Delaware LLC or corporation if all business activities are outside the US - not to have any activity in the state.

If Delaware LLC sells to Delaware customers - that will constitute a nexus.

--> Would I be out of this situation in case i refund to all DE customers their payments, and cancel their orders (only 3 or 4 customers). And in the future to avoid this situation, never to ship to DE customers .

--> Is this valid for French citizens, or for France resident. or both. As I'm not a French citizen, but I'm a France resident.

Please see the reference above - Income that residents of France - that means - residents for tax purposes - so your income is taxable in France and not taxable in US.

If for any reason - your income is not taxable in France - you are not a France resident for tax purposes and the tax treaty doesn't apply.

--> Do I have to provide a proof for taxes in France ?

Thx LEV

--> Would I be out of this situation in case i refund to all DE customers their payments, and cancel their orders (only 3 or 4 customers). And in the future to avoid this situation, never to ship to DE customers .

Yes - that would be the best approach in your situation - to avoid any DE customers.

--> Do I have to provide a proof for taxes in France ?

You might need to provide certification to US payer that you are a resident of France in order to avoid mandatory withholding

You do not need to proof for taxes paid in France unless the LLC or you will be audited by the IRS. But you need to have it for your record.

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