I am an Israeli living in Thailand - I recently removed my tax residency from Israel.<p>I have an old C-CORP (Delaware) in the US that I created a few years back as I thought of building a big company to get investors and other founders - the more time passed, I bootstrapped stuff and made it very profitable as a single-person company.<p>C-CORP for my scale and intention makes no sense.
I am considering incorporating a new LLC in the US because it has some benefits of not being a citizen/resident and having customers from abroad.<p>I am mainly trying to save money on taxes and still be a legitimate business and use things like Stripe (in the future)<p>But is my best option?<p>I know you don't have all the context, but I hope to hear your stories.
Taxes pay for society: education, healthcare, infrastructure, defence, culture.<p>You benefit from these, and expect to benefit in the future from them (e.g. expecting to employ someone with a good education). You should pay your share.
I am in a similar situation. IANAL either, but this is what I learned so far:<p>- Corporate tax and personal taxes interact in non-trivial ways. US LLCs with a single owner/partner are generally considered pass-through entities, which makes them somewhat special compared to the other options. That is bad if you live in a high-tax country, but can be great if you live in a low-tax country<p>- If things go well, "source of funds" can become an issue. Let's say you made $2m and want to buy a house somewhere. You might have to provide proof of where that money came from. This is where it might be useful to clearly have live somewhere (as opposed to claiming "I'm a nomad and I lived nowhere"). Apparently, there's a market for Dubai "residences" (utilities bills) because of that... So it can be helpful to have paid some low taxes rather than no taxes at all. I don't fully understand yet how corporate taxes might help in this one.<p>- If you can't provide proof that you lived in country X or ideally paid some taxes, there is a risk that either your home country or the country you want to buy property in start claiming taxes.<p>- Beware of some countries, e.g. Germany, who might retroactively claim taxes if you have ever lived there during the time the business existed. They might want to tax you based on unrealized gains...<p>- I also looked into Malta, but it sounds rather complex unless you actually live there<p>An additional benefit of US LLCs is that they are somewhat anonymous, especially in New Mexico and partially in Wyoming.<p>I have previously founded companies in Germany, definitely not recommended. In particular, un-registering companies is a very slow and expensive process, easily taking 18 months. US LLCs via e.g. startglobal cost only around USD 1,300 to start, supposedly.
I'm surprised no-one's mentioned Estonia so far. I looked into it a while back, and it all seemed very easy to set up. You just needed to get an e-Resident ID (which was pretty simple) and there were cheap local companies to handle all the paperwork for you. Corporation tax was low, and importantly was only charged if you paid dividends: profits retained for future investment were not taxed. Perhaps I misunderstood things (I wound up not going ahead with it) or things have changed, but it looked like a great option, and they were marketing it for people exactly in your situation.
Thailand didn't used to have CFC laws, but now they do, so you need to talk to a local Thai accountant. Most countries will tax foreign companies that are owned by tax residents in some form -- that's why you can't just run a Belize company when you live in the UK as a run around UK corporation tax. In short: MOST PEOPLE CAN'T (LEGALLY) SAVE MONEY BY INCORPORATING IN A COUNTRY OTHER THAN THE ONE THEY'RE TAX RESIDENT IN.<p>OTOH, Thailand has a pretty good determination of it you're tax resident, looking at purely the number of days resident, so if you're there less than 183(?) days, you might well have some options. However, everyone is still scrambling to work out what the Sep 2023 tax decrees mean.<p>If it's a tech company, and if a local accountant thinks you'll be hit by those, do you qualify to start a Thailand BOI company? There are significant local tax breaks offered by that.
I strongly advise against incorporating in the US, if you never plan to live in the US.<p>Given you're in Thailand, both Thailand and Singapore are fine; the difference is that a Singaporean company would be seen favorably by pretty much any other company or investors in the world; a Thai company is simply less seen by others, and therefore it might raise eyebrows.<p>You can check out Sleek.sg [0], they help you incorporate online. Very similar to Stripe Atlas in the US. No affiliation, just a happy customer.<p>If you don't care about external investors, then a company in Thailand is going to be much less expensive, and just as fine.<p>[0]: <a href="https://sleek.com/sg/incorporation/foreigner/" rel="nofollow noreferrer">https://sleek.com/sg/incorporation/foreigner/</a>
I've managed corps in a lot of different jurisdictions. Delaware is good because: a) it's well understood by almost everyone, b) there's very light regulation and accounting standards are loose, c) cost is reasonable for what you get. Where Delaware sucks is that a) you have to deal with the IRS (much better if you're not a US citizen, but not zero), b) you have to deal with the rusty dinosaur that is the US banking system, esp. when it comes to international transactions, c) if at any time you need proper accounting or legal help your costs will be basically 10x of wherever else in the world.<p>Other jurisdictions (Cyprus, UAE) will get you much better banking systems, much cheaper professional services (which also goes to cost of doing business, dont just get stuck on taxes) but maybe weirder regulations and tougher treatment from investors/partners.<p>My advice: focus on where your customers and partners are. If that's the US, keep using Delaware, the extra risk is worth it. If they are all over the place, find what the 'good' jurisdictions are for larger businesses near where you live and spend your time/money. Eventually you will need to use your money; piggy back off the research of others.
Would you consider Cyprus?<p>A member of European Union, EUR currency, 12.5% corporate tax (for most software businesses could go as low as 2.5%). You collect and pay VAT only for European customers, otherwise no VAT. Supported by Stripe.<p>Foreigners pay 0% dividend tax. Rather low setup and maintenance costs, can effectively have no physical presence in the country. Most documents are in English.<p>Good climate, too, if you get to visit (visit not required for company setup). Hit me up if interested, I am very happy myself with it.
Hong Kong is another option, incorporation fees are quite low + ongoing cost is relatively low.<p>Corporate fees capped at 16.5%, with the first 2 million HKD only 8.25%.<p>Can all be done online and remotely as well.<p>Additional benefit that you can apply for an APEC visa to make traveling around easier.
SG is good for many reasons... taxes, treatment of intellectual property, development grants, sound banking system, politically stable, and a legal system based on English common law (usually something people want to see in contracts).<p>Setting up a company is a quick process HOWEVER getting the business to a state where you can transact legally may take a while if you need special licenses.<p>Also, EDB in Singapore can provide quite a bit of support for SG companies. EDB can set up meetings in foreign countries for you to help drum up business.<p>A lot of Brits I met in SG also had BVI companies.
Disclaimer: IANAL<p>These are all anecdotal information from experience and hearing founder friends. A US LLC is a good choice if your primary/majority of paying customers will be from the USA. An LLC has a lot less compliance and taxation headaches, but it is not well separated from an Individual taxpayer -- it is akin to an extension of you (of sort). This makes perfect sense for a US tax-paying individual (resident with an SSN). However, it comes with its own taxation headaches once you grow bigger as you are not paying individual taxes in the USA. At this stage, you are likely to get an ITIN.<p>If you have decided that a corporation in US makes sense, then it might also makes sense to stick to the C-Corp.<p>So, my point is -- talk to a lawyer. You are already succeeding, and you can afford a good one. Plan for the future, and if you have to pay a tad more now for that ease in the future, I suggest you do that option.
Talk to a tax attorney where you live, ideally someone well versed in such constructs. It can get very complicated if you don't live where your company is incorporated. When opening a company in Austria, I read about fun EU edge cases when the seat of the company (where the leadership resides) is abroad in respect to the incorporation country and the company needed to register a branch office where the seat is. This had weird tax implications. The place where the services are rendered and the potential VAT you need to pay can also change due to this. Again, talk to a/multiple tax attorneys.
I'm incorporated in Isle of Man. Stripe isn't available, but others are. 0% tax, it absolutely looks like you're incorporated in the UK for anyone who doesn't know what to look for (UK phone number, VAT number, UK-looking address, UK sort-code, etc). Banking is a PITA, but I've been making it work with Wise. You'll probably shell out at least $5k a year in accountancy and service fees. Also it's small enough that your accountant can ring up his buddy Fred who's the Tax Minister this year to get clarity on any points of law.
A US LLC isn't the worst idea. Benefits include getting easier vetting from US based companies to some degree, some payment systems get the wheels greased if you are a US company and such too.
I would suggest that you probably want to incorporate in a company that doesn't tax worldwide income and not the United States. If you plan on living in Thailand forever, then you might find that incorporating where you live results in the most sane result for most people.<p>I would not suggest the USA if you don't have any strong ties to the United States. It could just result in your being taxed here unnecessarily or being considered having close ties to the USA if you apply for a visa.
If you're living in Thailand, how about Singapore? Corporate tax at 17%. Personal tax capped at 22%. Incorporation cost seems quite cheap, but you might want to ask them directly.<p>They're a startup launchpad for a good reason. Plenty of American and Asian investors & acquirers. The latter is more valuable now as American investors struggle with the economy.<p>Also really good finance infrastructure. Stripe has trouble landing in much of SEA, but does fine in Singapore.
Sincerely, your ONLY option is to figure out how to make your life easier.<p>Building is hard. Building something incorporated in a different country could be harder.<p>You can always incorporate where you can easily raise your money and that newXo can own your current company.<p>But unless you have a product ready to ship, customers, and a need to.raime money right now... just try to make your like easier.
Maybe a Ltd in Cyprus is a good option. Corporate tax rate is 12,5% with exceptions for income from outside the country. And it is near Israel and in the EU.
try llp(same as llc in usa) but in uk. it would have same benefits as us based llc. It is relatively quick and cheaper to maintain. Moreover until u reach certain threshold , you are lightly regulated. It has good reputation as well and stripe etc. are available for uk biz.<p>Also note that in USA, you will not be able to deduct software salary or for that mtter any R&D expense as revenue in same year so consider it as well.