Important Tax Questions for Dropshippers

**danield** · 11-05-2009 07:28 AM

Hello all,

I'm in the process to incorporate a LLC company in Florida or in Delaware, I'm checking with my accounting where is the best option. I'm not located in the US and I'm not a US resident. Our business operation is E-Commerce and mainly using Drop Shipping service from our providers.

Questions:

1. I have drop shipping suppliers in different states. Some of them charge me taxes when shipping to their states. In this case I also need to charge the sales tax to my customer. If I incorporate in Florida, do I need to incorporate too in Utah for example? In the case that not, how I report to the IRS about these taxes that aren't in my state?

2. There are big differences when incorporating in Florida or Delaware? My accounting says not. I heard that mainly the big companies incorporate in Delaware. I'm looking for the best solution in order to pay less taxes.

3. If I use Amazon fulfillment to purchase some products in quantities and I have been incorporate in Florida for example, having stock on Amazon doesn't means that I have Nexus in the state where the stock is located?.

4. Someone can tell in which bank I can make electronic bank transfers within the US with the less fees or even without?

5.Suggestions for the bank where is easier to receive a credit card as a non US resident having a US based company?

Thanks.

Daniel.

**Helse** · 11-05-2009 05:54 PM

Wow. If danield agrees to endure our examination, we will hover on your questions.
You are requesting answers to problems relating to multiple topics. Delaware is
regarded as the premier US state to create entities. You are “incorporating an LLC”? Do
you mean Forming an LLC or Creating a Corporation?

I’ll treat this discussion as a mock client interview. First, assist us with examination. Then
our crack staff will step into the hallway, throw a couple punches, return bloodied with every
answer in the book.

LLC versus Corporation is dispositive to several topics.
Is English your native language (sorry, USA, Brits, French, Dutch differ on expressions and
concepts relating to presence, residency, domicile, locus and abode)?

Issue: Foreign Entity versus US Entity
Your jurisdiction does not offer a comparable entity?
May we ask for you to identify your jurisdiction (to suggest alternative entities and discuss treaty considerations?
Most non US banks will deny a “US person” (US Corporation) a bank account.
Does your jurisdiction offer LLCs or Business Trusts?
Registration of foreign corp unnecessary to distribute merchandise ordered via internet (Quill Corp. presence test).

Issue: Choice of Entity
Why are you creating a Corporation?
Non US citizen = exclusion from Subchapter S qualification

Issue: US Source Income
Corporation will receive income from US source, distribute profits (dividends) to non US person
Corporation officer/employee will be nonUS person (income tax withholding consideration)?
"Nexus", in US is often expressed: "doing business in the State of". Amazon's activities are unlikely
to be attributable to your entity. USA's common law differs from "commercial", or, lex civilus (civil law)
to define "nexus" as not mere physical presence but actionable legal transactions exceeding 8 p/year.

Issue: Non US Person ownership of corporation or LLC
If your not careful, your going to create a controlled foreign corporation
You are requesting answers to problems relating to multiple topics. Delaware is
regarded as the premier state to create corporations.
Mandatory US back-up withholding 33% for nonUS person LLC Members.

Issue: Forfeiture of stock ordered by US Jurisdiction Court
Asset Protection issues for foreign person to appear and defend corporation in US.

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