Doing Business Internationally
July 11, 2008 8:44 AM Subscribe
Doing business in foreign country... Should I LLC it in U.S.? Other CPA questions.
I will be talking to my CPA next week, but would like to do think over few things during the weekend.
I am about to buy 50% share of a consultancy firm, X, in Japan.
In Japan, I will be an official 50% owner as a foreigner. I will be paying what ever the taxes in that country for what ever I earn from there.
The question is what to do in U.S. since I am an American.
I will be reporting my earnings in Japan in US also.. but my understanding is that I wouldn't have to pay US tax since I already paid Japan tax. (am i right? how do i prove this to irs?)
Also... would it be better to setup X-USA, LLC so that I can report my X-USA expenses to U.S.? (airline fee, hotels will not be reimbursed from X-Japan.
It looks like the X-Japan will pay my earnings to my self, Jack Smith, instead of X-USA, LLC. It won't matter to me since X-USA, LLC is basically me.
But... since X-Japan will pay to Jack Smith's personal account in Japan, How do i report to IRS in U.S. that X-USA, LLC is actually the one who got the earnings. (or does it matter if a check is issue to Jack Smith or X-USA, LLC ? ((which is 100% owned by Jack Smith)))
The X-USA, LLC will probably never earn anything in U.S.
After this reading, I would take any thoughts and suggestions.
**note: I could possibly not create any LLC and just use my own personal accounts and personal names to do this business....
I will be talking to my CPA next week, but would like to do think over few things during the weekend.
I am about to buy 50% share of a consultancy firm, X, in Japan.
In Japan, I will be an official 50% owner as a foreigner. I will be paying what ever the taxes in that country for what ever I earn from there.
The question is what to do in U.S. since I am an American.
I will be reporting my earnings in Japan in US also.. but my understanding is that I wouldn't have to pay US tax since I already paid Japan tax. (am i right? how do i prove this to irs?)
Also... would it be better to setup X-USA, LLC so that I can report my X-USA expenses to U.S.? (airline fee, hotels will not be reimbursed from X-Japan.
It looks like the X-Japan will pay my earnings to my self, Jack Smith, instead of X-USA, LLC. It won't matter to me since X-USA, LLC is basically me.
But... since X-Japan will pay to Jack Smith's personal account in Japan, How do i report to IRS in U.S. that X-USA, LLC is actually the one who got the earnings. (or does it matter if a check is issue to Jack Smith or X-USA, LLC ? ((which is 100% owned by Jack Smith)))
The X-USA, LLC will probably never earn anything in U.S.
After this reading, I would take any thoughts and suggestions.
**note: I could possibly not create any LLC and just use my own personal accounts and personal names to do this business....
Response by poster: Why are you buying in into this company?
I am buying the share of company because, I will be working more actively in Japan than U.S.
Since I plan to report my earnings through X-USA, LLC in US,... the LLC will have profit...
I hope this will ease my tax reporting...
anymore suggestions..??? any one..?
posted by curiousleo at 5:07 PM on July 11, 2008
I am buying the share of company because, I will be working more actively in Japan than U.S.
Since I plan to report my earnings through X-USA, LLC in US,... the LLC will have profit...
I hope this will ease my tax reporting...
anymore suggestions..??? any one..?
posted by curiousleo at 5:07 PM on July 11, 2008
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1. As an American you are likely obligated to pay taxes in Japan AND the US.
2. Does a double tax treaty exists between the US and Japan?
If yes then you may have not to pay taxes in the US but AFAIK there exits a limit how much you can earn (80k?) and not have to pay taxes in the US. Even if you move to Japan you will have to submit an US tax declaration.
http://www.taxmeless.com/page4.html
It may make more sense to get taxes more on the entity level and less on your personal income taxes. But I guess you should know this yourself as a CPA and definitely should speak to a international tax specialist. Where will you live? In the US or Japan?
Why are you buying in into this company? If you are living in the US and just flying sometimes to Japan to do consulting you could just set up a US Inc/LCC and bill the Japanese company. They will deduct this from their earning and pay less tax and you just tax your income in the US.
LLC will probably never earn anything in U.S.
While some people use LLCs for asset protection I am not sure if it is legal to run an LLC to deduct expenses and never expect to make a profit.
IANAL
posted by yoyo_nyc at 12:25 PM on July 11, 2008