What's the best place to incorporate an online business?

#37

So basically there would be no sales tax. No corporation tax and no salary or dividend taxis to me. This is all OK proving I am not a USA citizen and I don’t live in the USA. All this available with a regular USA llc company? Any preference to what state I should set up in? And can anyone recommend an accountant or agent in usa to help me incorporate or give paid impartial adevice?

#38

@international_man / why set up a LLP in UK instead of LLC in USA:

  • it’s a 1-2 day process
  • I am in the UK
  • a service provider would only charge $100

At least 3 good reasons to check details regards a UK LLP

Just sad it would not work for Octave1 as he is British. So for him it would be a LLC in the US than.
(Or a LTD in HK, I just made one last year with not any problems.)

For LLC in USA: I can hardly imagine that the US tax authorities would give one no hard time. It’s one of the worse countries. I hear in HK you can get away with things I would never dream of. I never hear that about the US…

#39

I think you need to speak with either @StewartPatton or @FlagTheory – they’re the experts and can advise accordingly.

#40

I think you need to be thinking longer term and looking for a structure that best suits your needs and your lifestyle. Quick and cheap shouldn’t really factor into the equation.

In Hong Kong you need to file audited financials yearly. The so called 0% tax setup that a few people parrot in these parts still requires you jumping through hoops every year with the IRD. Additional cost and headache and not worth it.

I’ve never seen any real issues dealing with the IRS - that’s not to say that it doesn’t happen - but you structure things so that should anything occur you’re insulated. The main reason why I like the US setup, is access to merchant facilities. The LLC just acts as a payment processor and the bulk of the funds are wired offshore every couple of weeks. The US can be a very tax-efficient structure for foreigners.

#41

Locals and foreigner alike. Malaysia (the whole country) has a territorial taxation system that works in a similar way to that of Singapore.

#42

Yes, I am looking at the LLC too. I have made good experience with HK LTD in terms of “tax free” but we do have local connections there, which does make it easier.
I mean Delaware LLC has been an instrument for ages, sure…
Just there is the need of a PayPal account for that company. So the US LLC would have to have a US bank account and an EIN for that matter. That seems to be a bit of a problem. The big players in company formation do not offer US bank accounts. They rather offer HK or UK.

#43

I’ve seen 2 accountants. All say a uk llp has to pay UK corporation tax and VAT if over 83k turnover. There’s no way to avoid it makes.no difference where directors staff or shareholders live. So the information given here is false

#44

Non-resident partners are only liable to tax on:
profits that arise in the UK, although a corporate non-resident partner
will be liable on overseas profits which relate to a UK permanent
establishment, and
• their share of partnership investment income, to the extent that it
arises in the UK, although a corporate non-resident partner should
return its share of overseas investment income which relates to a UK
permanent establishment.

https://www.gov.uk/government/forum/uploads/system/forum/uploads/attachment_data/file/323787/hs380.pdf

#45

For the VAT, it only applies to UK sales. Sales to non-UK customers do not incur any VAT in the UK.

#46

Thanks for sharing this and all the other information.
I’m actually about to incorporate an LLP. None of the partners is a UK resident.
I’m looking for an accountant/firm that will ensure the simple (I think) reporting that will be needed.
Do you think you can help? Or you could point me in some direction?

#47

I would stronly recommend Hong Kong due to its simple and low tax system. Maximum corporate profit tax rate of 16.5% (in some cases, can be as low as zero). No VAT; no sales tax. Very simple and flexible business environment. No need to hire staff or rent office here as all back office works of your HK company can be supported by local service providers. Many foreign businesses (small or large) find it extremely beneficial (both from a financial and operational perspective) to use their own HK company as a hub to conduct its international business.

#48

Hi Mario,

You can actually register the LLP yourself. It’s easy and cheap.
https://www.gov.uk/set-up-and-run-limited-liability-partnership/register-your-llp

As for compliance, you could hire an accountant in the UK on a freelance basis to help you get started. Compliance is easy in the UK for a small business and it’s even easier for an LLP (if there is no UK income you barely have anything to do).

#49

I’ve been told by two different accountants this is not true and all income is taxable regardless of where customers and partner is located

#50

If I were you, I’d fire those accountants. You can clearly see here, on the UK Gov website that you only need to pay VAT on UK sales. If you sell to other EU countries, you need to collect the VAT for those countries (and send it to the respective countries using the EU one-stop-shop). That’s true regardless of where your business is registered.

In other words. A UK LLP selling to UK customers will pay UK VAT. A UK LLP selling to French customers will pay French VAT. A UK LLP selling to US customers will not pay any VAT.

https://www.gov.uk/guidance/vat-exports-dispatches-and-supplying-goods-abroad

#51

You only need to collect vat for those eu countries if you are above their distance selling thresholds per country. If you sell electronic products there’s no threshold. Non eu businesses selling non electronic products to the UK are not liable to EU vat

#52

Yes that goes without saying. As for non-EU businesses, even those selling VAT-applicable services to consumers rarely, if ever, pay VAT. The EU has just no way to enforce their rules internationally.

#53

But if you are outside of eu the thresholds don’t apply I understand? I’m selling non electronic goods. Probably best for me.based in usa . I’m buying from eu suppliers who charge me vat. My customers order the same products from me (I’m Middle man) The suppliers are local to EU country and deliver products locally. I don’t want to charge then vat abs get caught up in the whole one stop vat stuff. In case you hadn’t guessed I’m a relay agent for flower bouquet delivery. To complicate things further the people who order flowers are never the recipients (sending gifts) and often the person who orders is in a different countries to recipient. Was a great business before all this country of supply beaded vat stuff in the eu. Thanks for nothing amazon

#54

Hi @nomadtax,
yes, you are right.
I kept researching and found an accountant. Compliance will take a few hours of work per year. With UK revenue there will be a little more work involved but really simple anyway.
It’s a really good set up.
Thanks again.

#55

It’s not that they don’t apply, it’s that it’s impossible for the EU to enforce them. In your case though you’ll probably have to pay VAT. You are selling physical products, this makes things a lot more complicated.

#56

USA, if Trump is the new US president