Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

I want to open an LLC in Delaware for my business in Argentina,

related to receptive tourism. From...
I want to open an LLC in Delaware for my business in Argentina, related to receptive tourism. From what I can understand since I'm not a resident of the US and my business runs in Argentina I wouldn't have to pay almost not tax in the US (except the yearly franchise tax). But there are several things not clear:

1-Is my statement true and legal? I wouldn't have to pay tax on sales or income?
2-I plan to use the bank account linked with Paypal. If payments come from within the Us to my US Paypal Business account, do I pay any tax?
3-Is it neccesary for me to open an LLC or I would be better off with just a bank account?
4-What sort of papers will the IRS or Bank ask for? Will they ask for all my tax payments here in Argentina?
5-From what I''m telling you, is there a better option for my business that I'm not considering?
6-If I have a business bank account on Delaware and a Personal Bank account on Miami, if I transfer some funds to my personal account, do I pay any tax?
Show More
Show Less
Ask Your Own Tax Question
Answered in 7 minutes by:
7/22/2013
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,880
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified

Robin D :

Hello and thank you for using Just Answer,
The state of Delaware has been interesting for many nonresident aliens of the US and forming an LLC. As such the state offers this exact advise:


Citizens of countries other than the United States are often concerned with the tax consequences of owning an entity such as a limited liability company. A Delaware LLC that (1) carries on no business in the U.S., (2) derives no income from any sources within the U.S. and (3) has not elected to be treated for tax purposes as a corporation does not need to file a U.S. tax return or a Delaware tax return.


Under the current IRS "check-the-box" rules, a Delaware LLC that does not affirmatively elect to be treated for tax purposes as a corporation will be treated for federal tax purposes as a partnership. It will be treated as a partnership for Delaware tax purposes as well.


Under current Treasury Regulations, a partnership that carries on no business in the U.S. and derives no income from any source within the U.S. does not need to file a tax return. Delaware law currently provides that a partnership need file a return only if it has income from sources within the State of Delaware.


If the LLC has only one member, then for federal tax purposes the LLC is disregarded, and the sole member is taxed as a sole proprietor. Current Treasury Regulations provide that a nonresident alien who is not engaged in a U.S. business and who does not derive any income from any source within the U.S. does not have to file a tax return. Similarly, Delaware law currently provides that a nonresident alien having no income from sources within the State of Delaware does not have to file a Delaware return.

Robin D :

You do not have to form a US LLC in Delaware or any other state.

Robin D :

If payments come from a source in the US to a paypal account then paypal may issue you a 1099K, the iRS will expect you to report that income on a US tax return.

Robin D :

If you can forego a US LLC I would advise you do that.

Robin D :

If you have a business account and move money to a personal that will be an indication of payment.

Robin D :

You will need to file a US 1040NR return. You will be taxed on any and all US sourced income.

Customer:

I don't understand. You state that since I do not live in the US and I conduct my business elsewhere, I wouldn't have to pay taxes. Then why do you advise me not to open the LLC? If payments come within the US, that does qulify that I'm conducting business in the US? What is the percentage of tax that I would have to pay for either 1099K or 1040NR? And what would you recommend me if LLC is not a good option?

Robin D :

I advise not to because you do not want any liability to the US. Why open an LLC here and have to pay the franchise tax? Also Paypal is going to issue the 1099K (providing you reach the limit that requires it).

Customer:

As stated in my questions, I'm from Argentina. Here you are not allowed to open an account in us dollars or deal in us dollars. Our currency is not stable, so we save money in dollars. To me it is not a bad idea to open and LLC in Delaware, even if I have to pay taxes, depending on how much are they. How much is the estimate percentage to pay of 1099K and 1040 NR? and if you still think this is a bad idea, is because you actually know about something better. What would you recommend instead of the LLC?

Robin D :

PayPal will issue the LLC a 1099K if you receive more than $20,000 and 200 transactions through your business account in a year.

Customer:

That will happen then, because my income is way over that. But is Paypal the issue> In that case I could operate with another online payment company

Robin D :

Your reason makes since and the IRS will expect a 1040NR for US sourced income. The profits pass to you so if you are not physically in the US and have no set place of busine you would have no tax to pay

Customer:

Well then, what should I do?

Robin D :

Go ahead with your plans if you wish. Any document from paypal would be passed to you as a sole proprietor and you would file as not in the US.

Customer:

That is not a satisfying answer. First you say I shouldn't open the LLC and then for the same reasons you say I should? What is your reasoning? When you answered the first time you didn't notice I was not in the US?

Customer:

I do not want a magic answer, I'm asking for guidence.

Robin D :

You asked for my opinion on that. I normally do not give my personal opinion and I probably should not have in this case butyou asked.

Robin D :

The guidance I am giving you is to advise on possibilities

Customer:

Not your personal opinion, I asked your opinion as an accountant

Robin D :

If you wish to open the LLC (although you are not required to unless Paypal is pressing) then you can do that

Customer:

My projected income in a year is over 100 thousand dollars

Robin D :

My opinion professionally is stay as simple as possible. A US single member LLC is still just a sole proprietorship

Robin D :

Is all that going to be coming through Paypal

Customer:

At this time, Paypal is the sole online payment I use, but opening an LLC in the Us would allow me to have more options on that

Customer:

But yes, i would need to set one or two online payment systems at maximum

Robin D :

Ok one sec while I check on any IRS issues that could relate. All your business is actually in Argentina right, you have no office in teh US and do not come here?

Customer:

Exactly

Robin D :

Ok one sec then I was accessing some thing else on your situation, thanks

Customer:

Ok, i'll wait. Thanks

Robin D :

Thanks

Robin D :

You are best to stay as an LLC (especially if you need liability protection) because this keeps you as the true taxable entity. As you are not in the US and conduct no business in the US, you would not be taxed on your income. Moving the money between accounts would only require that you track your income. This is in case the IRS did request information from you.
If Paypal requires any info from you then showing that you are a Nonresident alien would protect you from reporting.
(Here is the part I was trying to find and so far have not completed that search) Will Paypal accept a W8 form from you so no reporting is needed by them.

Customer:

Ok, did not understand the last comment, you are still looking for more info?

Robin D :

Sorry, you see the W8 BEN is a form that is given to a US payer when the US payer sends US sourced money to a nonresident alien.

Robin D :

I was checking to see if PayPal would need that W8 BEN from you or not.

Robin D :

That is my only problem with this, the amounts going through PayPal

Customer:

Paypal is actually irrelevant, if the amounts that i handle are too big for it, I could use another online payment company

Customer:

From what you said I have certain doubts that I would like to clarify:

Robin D :

Ok

Customer:

1-If payment comes from somebody in the us to my account in the us, but i provide the service to them elsewhere (in Argentina), do I pay taxes on that sale?

Customer:

2-Wiring money from the LLC bank account to my personal account in the US, would that make pay any taxes? (I live in Argentina) And if it would make pay taxes, if for instance I would use an account elsewhere like Uruguay, would I pay taxes in the US?

Robin D :

Where does the sale originate? If the sale is through a conduit in the US (such as a website assigned to that LLC) then yes, the IRS is constantly redefining US sourced incoem.

Robin D :

income *sorry

Robin D :

Wiring money , no

Customer:

3-To make sure I'm a non resident, providing services outside the US, what documents may the IRS, bank or even paypal will ask for?

Customer:

1-How much would that tax be, percentage-wise?

Robin D :

Your physical location, any location of any office or place of business in the US (all these are US tax purposes). If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States.
You would have to show no physical presence in the US.

Customer:

1-What do you mean exactly by website assigned to the LLC?

Robin D :

The IRS is constantly looking to the internet and how it has changed the rules on where a service or product is offerd. They have even gone so far as to assign US presence to individuals that are in other countries but are working r"remotely" on the computer for US companies.

Customer:

If I have an LLC in Delaware US, and I sell a service online, but collect the money on a Paypal or US bank account linked to my LLC is that taxabale? doesn't even matter if the payment comes originally from turkey or any other country?

Robin D :

No not exactly. I would still lean toward the income not being US sourced (that is important).


Income, gain, or loss from the sale outside the United States, through the U.S. office or other fixed place of business, of:




  1. Stock in trade,




  2. Property that would be included in inventory if on hand at the end of the tax year, or




  3. Property held primarily for sale to customers in the ordinary course of business.



Robin D :

The US office section is what the IRS would have to show was your US source and if they can show that the website is under that then they could tax you. Of course the rates are lower because it would be effectively connected income. Effectively connected Income is at the same rates as US citizens, after allowable deductions.

Customer:

Ok

Customer:

The thing is that as said before, if the tx is not that much, it doesn't sound that bad to me

Robin D :

I know it seems like I took your subject and really muudied it for you but there is a lot to consider

Robin D :

It may not be but you should know everything

Robin D :

before you decide

Customer:

I know that, and that i the same reason why I'm very confused

Customer:

Or I was

Robin D :

I understand

Customer:

Now, 50% of my customers are from the US

Customer:

So, how much would the taxable percentage of the sale woudl i have to pay?

Customer:

And I would have to pay tax only on payments that are originated on the us, right? if someone would pay me from another country to my us bank account, i wouldn't pay taxes, right?

Robin D :

The rates are based on the income and we have no tax treaty with Argentina. .Effectively Connected Income, after allowable deductions, is taxed at graduated rates. These are the same rates that apply to U.S. citizens and residents.



  • 15% on taxable income over $8,925 to $36,250, plus

  • 25% on taxable income over $36,250 to $87,850, plus

  • 28% on taxable income over $87,850 to $183,250, plus

  • 33% on taxable income over $183,250 to $398,350, plus

  • 35% on taxable income over $398,350 to $400,000, plus

  • 39.6% on taxable income over $400,000.

Robin D :

Of course no Self Employment tax (that is important because that would have been in addition to the regular)

Customer:

What do you mean no self employment tax?

Robin D :

Self Employment tax is paid in the US by sole proprietors (single member LLC owners) but nonresident aliens do not pay that additional tax even on effectively connected income.

Customer:

Okay. And to make it very clear, effectively connected income is just for payments made from somebody in the us, right?

Robin D :

Yes.

Robin D :

Because you would be doing business in the US.

Customer:

To sum up:

Customer:

Opening the LLC would make me pay the franchise fee and I will have to pay taxes only on sells made to someone over the US. Regarding transferring money from my LLC bank account to a personal bank account in the US, there will be no tax to pay.

Customer:

is that correct?

Customer:

those would be all the things that i would have to pay

Robin D :

Yes

Customer:

Perfect. Now, is there any other kind of structure you would recommend for me to have in the US that offers more benefits than the LLC in Delaware?

Robin D :

No, because you cannot be in an S corp (nonresident alien not allowed) and C corps are taxed tax (once on the corp level and again to the shareholders)

Customer:

and tax wise, is the same if my LLC in Delaware is owned by another company in Argentina or if the LLC owns the company in Argentina?

Robin D :

The only other option would be no LLC at all and just sole proprietor. Yes the same because it all basically passes through to you. So if you own the Argentina company and it owns the LLC it is still you in the end.

Customer:

Understood.

Customer:

Last but not least, would you recommend any other stable and respectable country to have the offshore company and bank account, that would my business same or even better benefits?

Robin D :

I would not have any other option to offer. I am not a tax expert on another country and the intricacies that could be involved.

Customer:

Okay. If I were to choose on billing all my US customers in an account outside the US and all my non US customers in my account on the US, would that be fraud or valid?

Robin D :

Again, it is not where the customer is but where your company is "doing business" even if you billed only the non US customers then your company could still be seen as having effectively connected income if the income can be sourced to the US. Does the LLC constitute US nexus for the selling if the internet is based in the US?
Anothe rof my colleagues here brought up this same issue last year with someone.

Customer:

Okay. What about if my company have an account on the US, and I bill everyone on the bank account in the US and all my income would come through that account that is owned by a company in Argentina. That would be considered doing business in the US and I would have to pay taxes there?

Robin D :

It is not the billing it is where are they purchasing. How will the website be served in teh US or outside the US.

Customer:

What do you mean by served? I control my website and all the service in provided in Argentina

Robin D :

Then it would not be US sourced. Gain on sale of inventory is sourced to the place where title to the property changes hands. IRC 862(a)(6)

Robin D :

If this is a foreign web server it is not US .

Robin D :

I have a huge thunderstorm rolling in.

Robin D :

Not trying to hurry but................

Customer:

Okay, this will be the last question, but please be very clear. If I change my hosting of my website and all the services I provide are in Argentina. Then if I charge a person from the US for a service that they will consume in Argentina, would that make me pay taxes on that sale or not?

Robin D :

Not

Customer:

To make it even clearer, in this scenaerio I have an LLC in Delaware owned by my Argentina company, and the money that I charge is going to the LLC ban account in Delaware? Still I wouldn't pay taxes, right?

Robin D :

Correct

Customer:

Okay, that is it then. Thank you for your help.

Robin D :

You are most welcome

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,880
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
Robin D. and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 4 years ago

It would be the same for me to open an LLC in Delaware or Miami?

In the US, the IRS does not impose taxes on the LLC; LLC income is reported on the members' individual tax returns. So federal would not change.
A limited liability company (LLC), classified as a corporation for Florida and federal income tax purposes, is subject to the Florida Income Tax Code and must file a Florida corporate income tax return.
BUT, a single member LLC, is disregarded for Florida and federal income tax purposes, does not have to file a separate Florida corporate income tax return.
http://dor.myflorida.com/dor/taxes/corporate.html
Ask Your Own Tax Question
Ask Robin D. Your Own Question
Robin D.
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,880
15,880 Satisfied Customers
Experience: 15years with H & R Block. Divisional leader, Instructor

Robin D. is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

15,880 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Tax Question: Non-Resident Withholding Tax, Franchise Tax
Tax Question: Non-Resident Withholding Tax, Franchise Tax Board, CA HISTORY: 1. The property is in California 2. The owner resides in outside of California 3. Metro Property Management collects monthl… read more
abci168
abci168
Principal
27 satisfied customers
I need a copy of my 2015 federal income tax ( I need a copy
I need a copy of my 2015 federal income tax ( I need a copy of my federal income tax W2 form. How do I go about getting a copy? … read more
abci168
abci168
Principal
27 satisfied customers
What is a franchise tax. What is franchise tax and it taxed
Is there anything else the Accountant should be aware of?Customer: the home sold was inherented… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
I would like to know how to get my voluntary federal income
I would like to know how to get my voluntary federal income amount changed to 0. I do not want any federal income to come out of my check … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,473 satisfied customers
Where can I get the Federal income tax regulation? Where can
Where can I get the Federal income tax regulation? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Adjusted individual tax return for 2014(Iowa),says no
Adjusted individual tax return for 2014(Iowa),says no response to letter of inquiry,disallowed health insurance. deduction.says my wife and I owe$600.00.she called # and was told to show proof of insu… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I asked for an Federal Income Tax extension to 10/16/17 and
I asked for an Federal Income Tax extension to 10/16/17 and I paid taxes due. This was for 2016. Am I able to extend it further?… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
I'm going my federal income taxes. I have a small business.
I'm going my federal income taxes. I have a small business. I have 1099s from some of the companies that paid me, and the rest were individuals, various amounts. I listed all the 1099s separately in T… read more
abci168
abci168
Principal
27 satisfied customers
We have a NOL carryover on our federal income taxes. While I
We have a NOL carryover on our federal income taxes. While I was working on our taxes this week, I noticed an error was made in 2013, 2014 and 2015 in the calculation of the NOL carryover. I neglected… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
If I buy a house using my LLC (for limited liability since
If I buy a house using my LLC (for limited liability since I'll rent out part of the house) and use it as my primary residence, do I still get to deduct the mortgage interest against my personal incom… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2 FROM HER EMPLOYER WITH A TYPO IN THE SOCIAL SECURITY NUMBER. TO DATE THE EMPLOYER HAS NOT PROVIDED A "CORRECTED" FORM W-2. IS THERE AN IRS "… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
US FEDERAL INCOME TAX. QUESTION: A SINGLE WOMAN OWNS A
US FEDERAL INCOME TAX. QUESTION: A SINGLE WOMAN OWNS A HOUSE, HER PRINCIPAL RESIDENCE, AND LIVES IN IT FOR 4 YEARS. IN 2017 SHE MARRIES A MAN WHO WILL ALSO USE IT AS HIS PRINCIPAL RESIDENCE BUT NOT HA… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
If person A sales a used car to person, is a sales tax
If person A sales a used car to person B, is a sales tax required to be paid by either party? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
What is the ADDRESS of the Federal Income Tax Service?????
What is the ADDRESS of the Federal Income Tax Service????? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Is a 1040 US Individual Income Tax Return federal income
Hi Is a 1040 US Individual Income Tax Return federal income taxes owed to the US government? Or is it FICA? I received a letter owing some back taxes and since I'm a priest with a weird set of tax exc… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
682 satisfied customers
Is a tax refund on a decedent's individual tax return
is a tax refund on a decedent's individual tax return includible in the decedent's estate (Form 706) AND/OR the decedent's estate income tax return (Form 1041)? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
Federal income tax question to determine if gift taxes are
Federal income tax question to determine if gift taxes are involved. … read more
socrateaser
socrateaser
1,031 satisfied customers
Can lost profit be used as a deduction for federal income
Can lost profit be used as a deduction for federal income tax? … read more
Rick Martin
Rick Martin
MBA
92 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x