Starting my own LLC in the US as foreigner 7

[Konstantinos88]

This is Konstantinos. I am Greek - EU citizen, but the past two years, I have been living in Toronto, Canada (it is expected to become Canadian Permanent Resident soon).

I am planning to start my own LLC in the USA. I have already some clients who are interested in. My scientific discipline is software engineering (risk management, market - financial predictions, machine learning, data mining etc.).

Can you give me some advice about my plan?

A few questions:

1) The provider agents are very positive - optimistic that it will be easy, even though I am not American Citizen. Is it so easy or there will be some serious issues in the next steps?

2) I am thinking about California, or Washington State, or New York. What is the best state for my purpose?

3) Only one person will be in this company: Me. I will be working while I will not be in the US. If I offer to an American client the service that he/she wants, including official invoice, does someone from the government care how this service produced? I mean, do they care where it produced and by whom? If all the service has been completed 100% outside of America, do they care about the details how it was done? Of course, I am talking about legal (software) projects (nothing illegal or curious). To ask more simply: If I a pay my taxes without doing something curious or illegal, do they really care about the details? Can I say that my company has branches somewhere else and "everything produced there"? Can an American LLC with 0 (American) employees offer its services to American clients? Otherwise, I have to hire at least one American, or to specify who produced it and where with much detailed analysis?

Except USA, I will also start something similar in the EU, and I will be working there. Can I say that the software product produced in Europe, but now I sell it in the USA, using invoice from my American LLC? Or my European company has to "sell it" in my American company and then it will also sell it to the American client? In this case, is it something that will be taxed both in USA and EU?

Thanks in advance.

 

[jari001]

You need a lawyer.

As for where you should incorporate your LLC, there's a tradition (and a joke) to incorporate in Delaware because of reasons that I don't know. If it has to be one of your three spots, I'd pick California because Silicon Valley is in California (a great reason, right?)

I'd really think about a lawyer, and if they can't answer these questions, get another one.

 

[Konstantinos88]

Thanks jari001. The provider agents do the work of lawyer. I think lawyers have the provider agents.

Yes, I know, Delaware is the most possible choice.

 

[canwesteng]

IIRC, Delaware has had lots of corporate cases tried, so there is lots of legal precedent for most common issues, making trials short, cheap and predictable.

 

[jdgengineer]

Where to incorporate is a good question for your attorney who is helping you with the process. Generally for a small company I would think it makes sense to incorporate where your business will be based. You'll need to file state tax returns based on where the revenue was generated. Tech companies and other businesses looking to sell or go public are often incorporated in Delaware for reasons mentioned by canwesteng. If you are not in either of these categories, it probably makes more sense to incorporate where you are going to be based. But I would run by your attorney. I'm not an expert by any means but did some research when we incorporated our business.

 

[Konstantinos88]

Thank you both for your answers. Just, let's focus on the third and most important question. Can a company with 0 employees produce a service and sell it to an American client? Or it has to hire a "ghost-employee"?

I will tell you another example: If I work in Ireland in my own company, and produce a software product, can I sell it to my American company with cost just "20 dollars", and then my American company, sell it to an American client with cost 200.000 dollars?

I hope there are serious solutions for a non citizen who wants to offer taxes (100% legally) in the USA, but does not have time to deal with work permits, bureaucracy and other similar issues.

There is much vagueness in this point.

 

[jdgengineer]

Konstantinos88 I think that question is probably best reserved for a lawyer who can help you incorporate or answer that question. I don't think you'll find good definitive answers on Eng-Tips.

 

[KENAT]

Question for a lawyer or maybe accountant.

Dont want to go into details but when I first moved out here to US the I had vaguely similar questions about paying tax etc. while doing work free lance for company back in blighty and consulted with an accountant.

Posting guidelines faq731-376

http://eng-tips.com/market.cfm?

(probably not aimed specifically at you)
What is Engineering anyway: faq1088-1484​

 

[Konstantinos88]

jdgengineer yes, you are right. But I think that there could be a few lawyers or some people who were in the same situation and have the answers, here. At least someone who can pave the way for me, to do the next steps. Primary ideas.

 

[Konstantinos88]

@ KENAT

You have experience, at least tell me if the US is friendly for non-citizens who want to offer taxes by incorporating a company, or there is a kind of "business drain" or "brain drain"...???

 

[Retrograde]

If I work in Ireland in my own company, and produce a software product, can I sell it to my American company with cost just "20 dollars", and then my American company, sell it to an American client with cost 200.000 dollars?

This type of transfer pricing would be considered tax avoidance. Although in your case you would actually be paying more tax as the US has a higher corporate tax rate than Ireland.

 

[imagitec]

I'm not a lawyer or an accountant, so this is not legal or accounting advice. Rather, it's based on my experience working with and knowing quite a few small business owners with "micro-multinational" companies. Some of these people are US citizens; some are not. Some of them live outside the US; some do not. Some of the US-persons (a US person is someone subject to US income tax, whether a citizen, permanent resident, or otherwise) qualify for the Foreign Earned Income Exclusion Credit; some do not.

You should contact an accountant or a lawyer with experience in these particular areas. If you message me, I could point you toward some.

"I am Greek - EU citizen, but the past two years, I have been living in Toronto, Canada (it is expected to become Canadian Permanent Resident soon). I am planning to start my own LLC in the USA.

1) The provider agents are very positive - optimistic that it will be easy, even though I am not American Citizen. Is it so easy or there will be some serious issues in the next steps?"

You can start a US LLC as a foreign citizen. It is common for a foreign company (owned by a US or foreign citizen) to start and own an LLC in the US, simply so that the LLC can open a US bank account to receive payments, directly or through a service like Stripe. Under the right circumstances, that money can pass through to the parent company with no or limited income tax. Again, see an accountant and/or lawyer with experience in this area.

Sales tax is a different matter.

"2) I am thinking about California, or Washington State, or New York. What is the best state for my purpose?"

Hell no, no, and hell no, in that order. I have friends who left California, haven't lived there for ten years, and are still hounded by the California revenue service for back taxes on money they earned after they pulled up stakes and left because they forgot to cancel a library card or some such thing. Maybe not quite that ludicrous, but close.

Delaware is a safe bet, as many lawyers and accountants are familiar with the laws there. And it may be advantageous if you see yourself growing to a point of going public or being acquired. But if you're running a fairly straightforward service business, there is no reason not to incorporate in Neveda, Wyoming, or a similar jurisdiction with lower fees, simpler paperwork, lower/no taxes, and in some cases, greater anonymity.

"3) Only one person will be in this company: Me. I will be working while I will not be in the US. If I offer to an American client the service that he/she wants, including official invoice, does someone from the government care how this service produced?"

The government doesn't care so long as the work is done as you describe and the work isn't covered by something like ITAR. If you visit clients while in the US, I suspect you'll need more than a tourist visa. I'm not sure of the tax implications, but I suspect it wouldn't be an issue. Like a German vendor visiting a US customer.

You should be transparent with your clients, however.

"Can an American LLC with 0 (American) employees offer its services to American clients? Otherwise, I have to hire at least one American, or to specify who produced it and where with much detailed analysis?"

Yes, a US LLC with zero employees can sell services in the US. No, you don't need any US-based employees. You will need a registered agent or similar for the LLC. There are people and companies who provide this type of service, along with a mailing address, etc.

"Except USA, I will also start something similar in the EU, and I will be working there. Can I say that the software product produced in Europe, but now I sell it in the USA, using invoice from my American LLC? Or my European company has to "sell it" in my American company and then it will also sell it to the American client? In this case, is it something that will be taxed both in USA and EU?"

This is a fairly common use for the US LLC owned by a foreign corporation scenario. Your US LLC could through up a web page and accept payments via Stripe or PayPal into your US LLC's bank account and transfer to your foreign company and handle income taxes there.

Sales taxes would be a different matter.

Again, you should contact an accountant or a lawyer with experience in these particular areas.


- Rob Campbell, PE
Learn precision engineering at [link practicalprecision.com]practicalprecision.com[/url]

 

[Konstantinos88]

@ Retrograde, imagitec

Thanks both for your answers.

Rob, your answer is so detailed. Thanks. After reading all your post, everywhere there is clarity except one point:

... If you visit clients while in the US, I suspect you'll need more than a tourist visa...

Can you explain it a little more? I had presumed that tourist visa is enough in this case.

Thanks again.

AntiMech Prognostic Analytics:
Financial Data Mining, Machine Learning and International Investment Management

http://antimech.com/

 

[MacGyverS2000]

You are visiting a client, which means business, not sight-seeing. A business-class visa would be required in such cases. If you're caught doing business while claiming tourism, they will rescind your visa status and likely prevent you from getting one for several years after.

Dan - Owner

http://www.Hi-TecDesigns.com

 

[EdStainless]

I am not sure about the visa, visiting a single existing client can be done on a tourist visa still I believe, but not soliciting business from multiple prospective clients. Go to the Dept of State web page and search for this info. The rules have morphed over the years.

= = = = = = = = = = = = = = = = = = = =
P.E. Metallurgy, Plymouth Tube

 

[rotw]

I have a question connected to the main topic.

- If I am owner of a limited liability company in US (while being not US resident / citizen, which means a person not authorized to work or be self-employed in the USA), and I have developed a software product 100% myself at virtually zero cost (say the software is an Excel spreadsheet which encapsulates the know-how I want to create value with) while sitting abroad; the question is: can I then sell my piece of software through the limited company?

I would expect that the limited company in the US can only trade and commercialize a software/product that has been imported or procured from another legal entity (either based in US or abroad). In this way, there is traceability of the cash flows (inflow, outflow). But what if I am in the above scenario?

Can someone shed some light on this?
Thanks in advance

 

[rotw]

When I referred to selling software I meant "software license".. could be misleading, sorry.

 

[spraytechnology]

It 's not going to work, you need to be close to your clients.

 

[rotw]

spraytechnology,

Point taken: proximity to client is key.
Regarding the concept of producing the software myself (in my home, say I am somewhere in the jungle of Papuasia) and selling software licenses through the limited company? (just assume there are clients who need that software so badly...for argument´s sake). How this scheme stands in terms of legal requirements, such as tax return and reporting aspects, of the limited company?