Yaros can you please tell us more about LLC and USA?

Nor

Nor

Member
since i live in Canada, our taxes are very high. Corporate tax starts at 15% and goes up form there. Since im in the dropshipping business, im not sure if i need to pay sales tax since i do not hold an inventory which is 13%. I just wanted to hear more about why you choose and LLC in the US and what are your tax rates based on the state you formed your LLC in?

I ask all this because i want to see if its worth setting up an LLC in USA rather than form it here in Canada where im subjected to high taxes.
 
Yaros

Yaros

Moderator
Staff member
May be some information below will be useful for those who want to establish a company in US from overseas.

Why do I need it?

I think, running your dropshipping business under a US company has many advantages.

If you or your business are based not in US, you are limited with a choice of payment gateways you can use on your store. in my case I was not able to integrate Stripe, Authorize, PayU and other systems to start accepting credit cards on my sites. Actually there are many other solutions of course, but they all did not meet my needs. For example, in Russia I can easily connect local payment processors, but the problem is that according to Russian law you can show your clients only Rubbles on checkout page (not US Dollars or any other currency). So, this fact makes all these systems absolutely useless for me.

Another advantage is that you can choose any State for registration (no-sales-tax state or a state that suits your business better). And you don't need to present any documents, only information. You also don't need to be present in the U.S. to register a company. All filings can be done remotely, electronically.

Other important thing that as a foreigner you are not required to have Social Security Number to open your company and obtain EIN (company tax ID). You also don’t need to have a U.S. address or phone number, however if you like it’s possible to obtain them from specializing vendors.

How much does it cost?

I paid $634 for LLC and + $299 for U.S. Business and mailing address. It took around a month to complete everything.

What about opening US bank account?

After 9/11 and with the passing of the Patriot Act it became really hard for foreigners to open U.S. bank accounts. Only a trip to the US would present you with the best opportunity to open a bank account.

But in most cases what you need is not a bank account, but the functions provided by a traditional bank account. For this purpose you can use a reloadable prepaid debit card from companies like NetSpend, Payoneer, Payza. What you get is an internationally recognised debit card and an account number with routing and ABA numbers that you can connect to your 2checkout, Stripe, etc. accounts. As for me I successfully connected my Payoneer card to Stripe.
 
Nor

Nor

Member
ok thanks for the info. But which state did you open your LLC in? What are your corporate taxes and sales taxes in that state, and what was the reason for choosing that state to do business instead of the other states in the US?
 
Yaros

Yaros

Moderator
Staff member
I chose California without any great reasons actually... Now I am paying taxes in my country. Once I open a US bank account I will start paying taxes in California.
 
Thirsty Storm

Thirsty Storm

Member
Direct Webstore said:
Think of 3 names you like ... write them on 3 pieces of paper. Put the pieces of paper in a hat. Close your eyes, put your hand in the hat and choose a name.

I chose "Direct Webstores"

:)
Click to expand...
i know it sounds funny, but at that moment i felt so confused, anyways all sorted out

thanks anyway :)
 
a_abbasi

a_abbasi

Member
Yaros said:
I paid $634 for LLC and + $299 for U.S. Business and mailing address. It took around a month to complete everything.
Click to expand...

for California, it shows the following
otal In Your Cart:
  • $ 292Processing and Filing
  • $ 75California State Filing Fees
  • $ 59California Statement of Information P...
  • $ 59Order Processing
  • $ 99Registered Agent Service
  • $ 109Recommended Additional Items
  • $ 109EIN for Non-US Persons
  • $ 0Other Useful Services
  • FREEFree Business Insurance Quote
  • FREEFree FTC Guardian Basic Membership
  • $ 0Bonuses
  • FREEDiscounted Web Hosting Services
  • $ 0Shipping & Handling
  • FREEElectronic Delivery ONLY
Total:$ 401.00
1. Did it decreased or you have selected some more option as well?
2. Which Fee from above all is to be paid on yearly basis? Registered agent service only i.e. 99 dollars on above mentioned case or we will have to pay 401 dollars every year?
3. US mailing address required by Stripe? Can i have some cheaper one?
4. What if i have some friend or relative in US. Can i get stripe on his SSN or what is the solution for foreigners who have relatives in US.
Waiting for your reply.

Thanks
 
A

afaceripedia

New Member
Guys I don't own an LLC yet but from what I've heard it's best to register one in states like Delaware or Wyoming. In Wyoming you can open a company for only $200.
What I'd like to know more about is sales tax. How does it work? @Yaros what do you mean you're paying taxes in your country, why not in USA if you own an LLC?
 
Direct Webstore

Direct Webstore

Well-Known Member
afaceripedia said:
What I'd like to know more about is sales tax. How does it work?
Click to expand...
These are the 5 Sales Tax free states in the U.S ...
  • Alaska.
  • Delaware.
  • Montana.
  • New Hampshire.
  • Oregon
If your LLC is in one of those, you don't pay any tax in the U.S.

You only pay normal Income Tax on your profits in your own country ... like everyone else.

Also ... if your country has a tax like GST or VAT then you "may" have to pay tax on any sales made to customers in YOUR country only.

e.g. I'm in Australia and I have to pay normal income tax on my overall profits.
I also have to pay 10% GST on sales to Australian customers when my sales to Australian customers goes over $75,000 per year. Below that I don't need to worry about it. It's similar in India (so I've heard) and many other countries.

You need to research your own country's tax department website to learn about your own country's tax rules.

Bottom line, setup your LLC in one of those 5 Sales Tax free U.S states above and you do not have to pay tax in the U.S ... like @Yaros. The taxes he is paying in his own country of Russia would be normal Income Tax on his profits.

Do NOT use WYOMING!

:)
 
A

afaceripedia

New Member
Direct Webstore said:
If your LLC is in one of those, you don't pay any tax in the U.S.

You only pay normal Income Tax on your profits in your own country ... like everyone else.
Click to expand...

But what if people from US states that have sales tax buy from me, won't I have to collect taxes from those customers and pay it afterwards to their states? Even if my LLC is in Delaware?
 
Direct Webstore

Direct Webstore

Well-Known Member
afaceripedia said:
But what if people from states that have sales tax buy from me
Click to expand...
If your business is not registered in the states they are in, you pay no sales tax.

You only pay sales tax in the state your business is registered in IF they have sales tax. You DO NOT pay other states taxes.

BUT ..... IF the state your business is registered in has NO SALES TAX, like the sales tax free states mentioned above ... you PAY NO TAX

Bottom line ... just make sure you register your LLC in one of the SALES TAX FREE STATES .... and PAY NO TAX AT ALL IN THE U.S.A.

The ONLY taxes you need to worry about are ...

1. Your income tax in your own country (On your complete profits from ALL sales worldwide including your own country)

2. Possibly sales tax in your own country when you sell to customers in your own country. (Research your country's sales tax requirements)

Simple as that.

afaceripedia said:
Even if my LLC is in Delaware?
Click to expand...
Delaware is SALES TAX FREE STATE ... you pay no sales tax to them no matter where your customers are.

SALES TAX FREE STATE = NO TAX. EVER EVER EVER NEVER! (In the USA) ... now write that 100 times on the blackboard! (Just joking!)

So just worry about your own country's tax.

:)
 
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A

afaceripedia

New Member
Direct Webstore said:
You only pay sales tax in the state your business is registered in IF they have sales tax. You DO NOT pay other states taxes.
Click to expand...

That's awesome news! I was worried I had to take care of a lot of taxes. Good thing that I can keep most of my profit :)
But I guess I still need some form of book keeping in order to submit the yearly forms. Should I hire someone from US or how do you do it?

Also I was thinking of purchasing a Stripe Atlas package because they make a US bank account for you. Or I could open a Transfer Wise account. What do you think?
 
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Direct Webstore

Direct Webstore

Well-Known Member
afaceripedia said:
But I guess I still need some form of book keeping though in order to submit the yearly forms. Should I hire someone from US or how do you do it?
Click to expand...
I just keep track of my expenses and profits in an Excel workbook. But I'm thinking of downloading a copy of M.Y.O.B or some other accounting software. No greedy accountant is getting my money! lol.

It's not really that complicated. Just keep a record of your expenses (Some are tax deductible) and Gross profits ... then put those figures into your tax return each year.

I also have to keep a separate record of sales to Australians. When the sales get over $75,000 in a year, I have to pay GST. But I doubt my Australian sales will ever get that high. There's only 25 million of us ... ;) But if they ever do go over that, I'll be rich enough to pay the tax anyway.

I live in Australia and don't need to set up an LLC in the U.S.A. The only reason I know so much about it is because I researched it before with plans of hiding my profits from the Australian Tax Department and keeping all my money outside Australia ... but then I decided to be honest instead. lol ;)
 
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