By incorporating your company offshore you help increase your company’s profitability by reducing its tax burden! That is just one of many reasons 50% of the world’s Fortune 500 companies are based in Delaware where they take advantage of some very specific tax and privacy laws. See all the benefits of Delaware.
What are the laws which protect your privacy?
The owner of a company is not a matter of public record anywhere! Determining the owner of a company takes a subpoena and a court order.
Is it hard to start a Delaware Company?
The laws to register a company are fairly straightforward. You only need a name, address, and brief description of what the company will be doing.
There are 0 capital requirements! In addition, a Delaware company can operate anywhere in the world!
To maintain the company you merely 1) need a Registered Agent and 2) pay the franchise tax, which for the most part ranges from $125 to $250 depending on the type of corporation you set up and how it is structured.
What is the best company structure type?
I would recommend a single member Delaware LLC. And follow the “check the box rule.” Basically saying you do not elect the business entity type therefore you will be taxed as a sole proprietorship and do not have to file a tax return to the State. Don’t take my word for it see for yourself on the State of Delaware website.
What about taxes?
The only tax due for this kind of company is an annual Franchise Tax of $300!
Lift the tax Burden!!!
Now that takes care of the State Taxes but what about the Federal Taxes?
- First you must make sure you are a non-resident alien as long as you pass these two tests (see page 3).
- Second, you must make sure you are not liable to file a tax return. As previously stated as long as you did not conduct trade or business or spend more than a short vacation in the US. To check the exact regulations see page 3 under “Who must File” on the IRS website.
So as long as you do not maintain a “physical presence” and conduct no business within the US you have no taxable income to the US. Note having a bank account, virtual office, or Registered Agent is not considered a “physical presence”. However having a server for your website that is based in the USA does mean you have a physical presence.
If you decide you want to conduct business in the USA then only the income earned from US sources would be taxed by the USA. This is around 30% before deductions. With proper allocation of expenses you may be able to reduce the 30% to 2-3%. Better ask your accountant!
Ready to Start your Business?
If you have any questions about forming a company or choosing a different structure please contact us to find out more and speak to one of our immigration specialists who will answer your questions and discuss your individual business and relocation plans with you.
This article is accurate to the extent of our understanding of the tax code. However, Inc. Plan is not a licensed tax professional and does not purport to give professional advice. For such advice, seek the services of a licensed accounting and tax professional. Inc Plan can take no such responsibility for the ultimate legality and accuracy of the above discussion.