Accounting questions for Delaware LLC

[ravenazrael]

Hello guys,

Somebody I know has started an sole proprietor LLC in Delaware. He is a foreign individual so he has no SSN or any ID in the USA.
The LLC is a disregarded entity, meaning that he will pay the taxes on the net income of the LLC. The company will not have employees and will run an adult site.

He talked to some accountants and actually all have different opinions so he asked me to ask here, in the Almighty GFY. Based on your experience, should this foreign individual get an EIN and/or ITIN? Or should the LLC do it? or both?

Everybody providing services to the LLC will be outside the USA. The LLC is there because it was better for many purposes to have presence in the USA.

Thanks!!!

PS: I will be providing some services to that company. I am a canadian resident... Will the company withhold any tax from the money it will pay me for my services?

[L-Pink]

I didn't think you could get an LLC without ID ..... ?

[Sunny Day]

Amazing all you need is a Registered Agent. They don't ask anything else.

http://corp.delaware.gov/llcform09.pdf

[faxxaff]

He will need to apply for a tax number for the LLC, not for himself.
The LLC needs a tax number to open a bank account. That simple.

[L-Pink]

Originally Posted by faxxaff

He will need to apply for a tax number for the LLC, not for himself.
The LLC needs a tax number to open a bank account. That simple.

That's what I was thinking. No way the Fed's let someone open a corp without seeing if taxes should be paid.

[NemesisEnforcer]

The LLC needs the EIN to do business with the fictitious name. The individual needs the ITIN for filing taxes as a sole proprietor.

As for withholding taxes for your services, it's up to the LLC to determine how/if payments are reported. I file 1099s for foreigners without any form of tax ID every year.

[faxxaff]

Originally Posted by L-Pink

That's what I was thinking. No way the Fed's let someone open a corp without seeing if taxes should be paid.

Actually, the taxes will be paid by the stock holders in their respective countries. They are not withheld by the US. That's what makes an Delaware LLC so attractive for those people living in countries with territorial tax regime as they and up paying zero income taxes. For normal Europeans it's of no benefit other than the location and lack of sales tax.

[ravenazrael]

Thanks guys. So the w-9 ahould be submitted by the llc to the payment processor? One person told me it should be the proprietor who does that.. But it makes more sense that the llc does.

Actually the registered agent could not give much relevant information...they just help in the incorporation process but not with anything related to taxes.

[XMaster]

Delaware LLC is so 2004 ^^

[L-Pink]

Originally Posted by faxxaff

Actually, the taxes will be paid by the stock holders in their respective countries. They are not withheld by the US. That's what makes an Delaware LLC so attractive for those people living in countries with territorial tax regime as they and up paying zero income taxes. For normal Europeans it's of no benefit other than the location and lack of sales tax.

Thanks, I should have known that.


.

[elmy]

I there have a company, Delaware increased taxes

[NemesisEnforcer]

Originally Posted by ravenazrael

Thanks guys. So the w-9 ahould be submitted by the llc to the payment processor? One person told me it should be the proprietor who does that.. But it makes more sense that the llc does.

Actually the registered agent could not give much relevant information...they just help in the incorporation process but not with anything related to taxes.

A W-9 is for your records only and is not filed with the IRS. Since the payment processor is not a sole proprietor or individual you don't need to submit a W-9 to the payment processor. Use their statements as receipts for your bookkeeping.

Regarding the registered/resident agent, you're correct, that's not their role.

[ravenazrael]

Thanks guys! the payment processor is asking for a w9 but i think that before that the llc would need the ein... ( just to confirm.. Is the ein for any company regardless it does bot have employees?)
The taxes in delaware increased just to $300 as far as I know

[Klen]

Originally Posted by elmy

I there have a company, Delaware increased taxes

No more state tax of 0% ?

[NemesisEnforcer]

Originally Posted by ravenazrael

Thanks guys! the payment processor is asking for a w9 but i think that before that the llc would need the ein... ( just to confirm.. Is the ein for any company regardless it does bot have employees?)
The taxes in delaware increased just to $300 as far as I know

For sure, the payment processor will ask you to fill out a W-9 and you will need an EIN if you're using the name of the LLC. Yes, the LLC will need an EIN regardless of the number of employees. The EIN is tied to the fictitious name. If you complete the W-9 with the name of the LLC and use a TIN not assigned to the LLC, the IRS will contact the payment processor to correct the information. If not resolved, the payment processor will withhold 20% of the LLC's earnings and send it to the IRS.

Are you having a problem getting an EIN?

[iSpyCams]

You may not need an EIN just to have an LLC, I am sure plenty of registered agents will be happy to take your money and send you some forms. But if you want to get any kind of billing in the USA you will surely need an EIN which will most likely require an SSN.

[ravenazrael]

Originally Posted by NemesisEnforcer

For sure, the payment processor will ask you to fill out a W-9 and you will need an EIN if you're using the name of the LLC. Yes, the LLC will need an EIN regardless of the number of employees. The EIN is tied to the fictitious name. If you complete the W-9 with the name of the LLC and use a TIN not assigned to the LLC, the IRS will contact the payment processor to correct the information. If not resolved, the payment processor will withhold 20% of the LLC's earnings and send it to the IRS.

Are you having a problem getting an EIN?

well i was not sure if the ein was eligible for all the companies regardless of the number of employees or lackthere of.

Hmm so first the ein and then the tin for the llc. If the payment processor withholds the 20% that would be like the tax rate unless the company makes few money

[ravenazrael]

Originally Posted by pompousjohn

You may not need an EIN just to have an LLC, I am sure plenty of registered agents will be happy to take your money and send you some forms. But if you want to get any kind of billing in the USA you will surely need an EIN which will most likely require an SSN.

Hmm gonna see how the foreign owner can get the ein for the llc. Thanks!!!

[NemesisEnforcer]

Originally Posted by ravenazrael

well i was not sure if the ein was eligible for all the companies regardless of the number of employees or lackthere of.

Hmm so first the ein and then the tin for the llc. If the payment processor withholds the 20% that would be like the tax rate unless the company makes few money

First the ITIN (IRS Form W-7) for the individual, then the EIN (IRS Form SS-4) for the LLC. When you apply for an EIN you have to submit your ITIN as the person applying.

The IRS is really friendly when it comes to this. They will even give a tax ID to an illegal alien. My landscape guy is an illegal alien and he has a tax ID. He tells me that he wants to go to California to get a driver's license at the first opportunity. It's that easy.

Yes, the 20% becomes your tax if you don't file for it.

[elmy]

Originally Posted by KlenTelaris

No more state tax of 0% ?

there was a flat tax, now it's about 400% more

[ravenazrael]

Originally Posted by elmy

there was a flat tax, now it's about 400% more

What do u mean? As far as I know it is $300 yearly

[RexusZ]

You think that, really?

[ravenazrael]

Originally Posted by RexusZ

You think that, really?

I mean the state taxes... No federal.. What is the info u got?

[ravenazrael]

This is ridiculous.. to get the EIN you need and ITIN... and to get the ITIN you need the EIN...freaking IRS replies after so many freaking day I hope they do before christmas

[iSpyCams]

Originally Posted by ravenazrael

This is ridiculous.. to get the EIN you need and ITIN... and to get the ITIN you need the EIN...freaking IRS replies after so many freaking day I hope they do before christmas

US corporations are for US persons. There may be another way to get one but I don't know what that is. I register US companies because I am American. There are many countries I would prefer to register in but since I am a US citizen that's what I am stuck with. It would not surprise me if the same is true for you. (That you are stuck with the country you are from)

[Forest]

Originally Posted by L-Pink

That's what I was thinking. No way the Fed's let someone open a corp without seeing if taxes should be paid.

In FL you can open a corp in 5 minutes with no tax id

[blinki bill]

Originally Posted by pompousjohn

US corporations are for US persons. There may be another way to get one but I don't know what that is. I register US companies because I am American. There are many countries I would prefer to register in but since I am a US citizen that's what I am stuck with. It would not surprise me if the same is true for you. (That you are stuck with the country you are from)

umm why is that? delaware is a well known offshore "zone" ie almost anyone can open those, most EU countries allow anyone to open a company so long as they have a permit to resign in EU, some also allow offshore companies in which case you don't need the permit to resign in EU. Not to mention schemes where you register a company in lets say UK then re-domicile it to Cyprus to have a prestigious UK front, while actually having a Cyprus company. Big corps have such complex corporate structures that your head will spin wile trying to figure it all out
Your way of seeing the business world (on a global level) is somewhat limited.

Originally Posted by ravenazrael

This is ridiculous.. to get the EIN you need and ITIN... and to get the ITIN you need the EIN...freaking IRS replies after so many freaking day I hope they do before christmas

This kind of catch 22 problem happens all the time when you are dealing with bureaucracy abroad, sometimes you think it's out of pure stupidity and incompetence, sometimes it feels like a deterrent for foreigners...

[Sunny Day]

Originally Posted by NemesisEnforcer

First the ITIN (IRS Form W-7) for the individual, then the EIN (IRS Form SS-4) for the LLC. When you apply for an EIN you have to submit your ITIN as the person applying.

The IRS is really friendly when it comes to this. They will even give a tax ID to an illegal alien. My landscape guy is an illegal alien and he has a tax ID. He tells me that he wants to go to California to get a driver's license at the first opportunity. It's that easy.

Yes, the 20% becomes your tax if you don't file for it.

They don't give numbers to illegals. He is using a stolen number. Someone sold him the Brooklyn Bridge.

20% is the withholding amount for not giving a W-9. The actual tax can be a fucking lot more than that.

The last 20 or so posts are from people with no, ABSOLUTELY NO FUCKING CLUE! HIRE A TAX ACCOUNTANT. If you can't afford one, you shouldn't be doing stupid things such as incorporating.

By the way, any person, US citizen or not, can incorporate a business or create an LLC in any state in the US. Some are tougher than others. Hell, I can set up either in my state, in seconds online, as long as I have a SSN/EIN and a bank account or credit card.

[iSpyCams]

Originally Posted by blinki bill

umm why is that? delaware is a well known offshore "zone" ie almost anyone can open those, most EU countries allow anyone to open a company so long as they have a permit to resign in EU, some also allow offshore companies in which case you don't need the permit to resign in EU. Not to mention schemes where you register a company in lets say UK then re-domicile it to Cyprus to have a prestigious UK front, while actually having a Cyprus company. Big corps have such complex corporate structures that your head will spin wile trying to figure it all out
Your way of seeing the business world (on a global level) is somewhat limited.



This kind of catch 22 problem happens all the time when you are dealing with bureaucracy abroad, sometimes you think it's out of pure stupidity and incompetence, sometimes it feels like a deterrent for foreigners...

If you have a legal residence in the US you will also have a Tax ID, or TIN. I assume you want a US corp because you want access to US credit card processing and US banking. (If I am wrong about that then ignore this and all my previous comments as they are then irrelevant.)

You are certainly going to need a TIN for the processing, and possibly even an SSN as this requires a credit check. The banking will be similar but you may be able to find some way around it. Once you start depositing money and moving it around though, at some point someone is going to need to get a tax ID on file.

[iSpyCams]

Originally Posted by Sunny Day

HIRE A TAX ACCOUNTANT. If you can't afford one, you shouldn't be doing stupid things such as incorporating.

Word. I bought a UK corp once, never used it ended up paying thousands in annual dues, late fees etc. cause I had no clue.

Originally Posted by Sunny Day

By the way, any person, US citizen or not, can incorporate a business or create an LLC in any state in the US. Some are tougher than others. Hell, I can set up either in my state, in seconds online, as long as I have a SSN/EIN and a bank account or credit card.

When I said US person I didn't necessarily mean citizen, I meant someone with a legal right to work in the US, which comes with a tax ID, or TIN and can often be used in situations where a SSN is required.

[blinki bill]

It's a bit unclear to me what is he trying to achieve, from his description it seems to me that this will be an offshore company and he is not even liable for tax in the US. If he needs for the company to be onshore and pay tax there and get US merchant account then he kind of jump started it by registering the company without getting a proper legal advice before hand.
If he wants to have it as onshore company that's not impossible but certainly more complicated for foreigners, some random dudes on gaf won't be able to help you.
My advice - get legal advice on the matter from a lawyer that specializes in this kind of thing, if you don't want to get in trouble

[ravenazrael]

Originally Posted by blinki bill

It's a bit unclear to me what is he trying to achieve, from his description it seems to me that this will be an offshore company and he is not even liable for tax in the US. If he needs for the company to be onshore and pay tax there and get US merchant account then he kind of jump started it by registering the company without getting a proper legal advice before hand.
If he wants to have it as onshore company that's not impossible but certainly more complicated for foreigners, some random dudes on gaf won't be able to help you.
My advice - get legal advice on the matter from a lawyer that specializes in this kind of thing, if you don't want to get in trouble

According to a Delaware CPA each partner would pay taxes in the states and their respectives countries- depending on the treaty- Does anybody know a good accountant in Delaware? and what are their rates per hour?