Becoming a LLC? Offshore CO? Tax Havens?!?

[brada7x]

Hey guys and gals,

For those of you who, like me, are based in the States...

Do you think applying to make an online business a LLC is a better option than just labeling myself as self-employed?

The tax rate on self employed is a killer %15.2 and I'm sure moving toward a LLC will give me a bit more of a break than that would.

Anyone have any experience with this?

P.S. - I know nothing about forming a business, I'm just looking at options to help myself in the long run.

P.P.S - I'm not certain whether I'd be better off either way, but I want to find a way around that massive %15.2 tax so if there are any other possibilities, throw 'em at me!

[Vadym]

If you're actually planning to form a company, get a Panama corp.

It costs about $1600-2000 to form, and has 0% taxing. Has HSBC banking, which lets you go to an ATM and pull the money out from anywhere.

[brada7x]

%0 tax? How does that work?

You have to pay some sort of income tax no matter what don't you?

[Vadym]

%0 tax? How does that work?

You have to pay some sort of income tax no matter what don't you?

Yeah, that's why it's PANAMA.

Tax free.

You can forward $997 to my Paypal for this little tip.

[NCMedia]

^ Wish it were that easy V, but yes end result is amazing tax benefits in Panama, and you can stay there for 6 months, hop the border to costa rica for 3 days, and go back for another six (if you simply want to live there 'vacationing'). Starting a biz there, getting an address, opening bank accounts, getting citizenship/visas, setting up your banking to ensure foreign income is not taxable etc. is still a long process, but probably well worth it. HOWEVER this doesn't stop the IRS from picking on you for trying to hide your monies, AND you can't bring any of that money back to US soil. If you start making it HUGE - you'll probably be audited over and over - until you say screw it and give up your citizenship :P.

I'm currently looking into actually becoming a snowbird (6 months here/6 months somewhere hot) and there is QUITE a clusterfuck of info and regulations that nobody has answers to for people like us (self employed online that can operate remotely and with little time spent actually working).

I just posted this at WF because I thought some there might have some answers but so far nothing: check it out -

Even after speaking with a few lawyers and one that does immigration internationally, I can't seem to get clear answers out of the pros, so hoping some here might already be doing this:

My sitution:

*In Canada
*Sole Prop
*Want to move somewhere hot and do 6 months here/there

^That's the short of it, seems easy right? i.e. with the dollar almost even again, and the states eco still shite, I am looking at buying a home in vegas or cali flat out - no mortgage, to live in during the cold months here.

*Again sounds easy right? I have the cash, I have the will, so I start looking into it a bit deeper recently, and here are the road blocks.

*You can't 'work' in the states as a visitor (obviously), but this actually includes telecommuting to a Canadian job, even if it's looking after my own CO. online... I'm guessing if I get an internet connection and simply do some emails and or some phone calls back here to my VA's, it's considered work. Would they actually monitor my shit? Could I just get a wireless international provider for my lappy and 'hide' the small bits of communication or heaven forbid I upload/edit a site quickly from an internet cafe?

Res/operation: I don't want to go through the hassle of opening up LLC's and doing international taxes twice/understanding tax treaties, etc. just for the sake of being able to turn on my machine and check stats/do some quick work.

There's a ton of Visa's to apply for when trying to get citizenship or temporary stay, OR you get married as your in... but to date I haven't seen any incentive for business owners/intl property investors, or any perk other than the cheap prices. I don't plan on renting, I don't plan on making money off the property (maybe if/when I sell, but primary reason is to actually live in it). Then upon even further inspection, I find I can easily simply be turned around/denied at the border (i guess that's anywhere though).

I checked a few other spots including Panama and Philipines so far - with panama you can stay there for 6 months, jump the border for 3 days to costa rica, then come back to panama for another 6 months/repeat (though I wouldn't - I want to remain a Canadian citizen and you lose your health care/ohip once you're out of the province/country for more than six). Even there it seems visa's are more often than not the popular route.

Most other people's scenario's include complex shit i.e. mortgages/renting/jobs/banks, or opening up shop in said country, etc., I'm merely looking to buy and live there for 6 months a year.

Is anyone here currently doing this or have any insight even if you didn't start in Canada or end up in the US? I have a few sites for resources, but none come close to these types of questions. Not even sure who I'd phone on the govt level to ask this shit if immigration lawyers haven't helped.

Thanks and sorry for the long read, hopefully this will help others in my shoes too..
NC.
_____

** Regarding your question though - dude if all you're paying being self employed is 16% or some shit than you are being misinformed as there is a cap to that, and you start paying way more once you cross it.

You should learn about your tax brackets vs. your net profit first:
USA
Income tax in the United States - Wikipedia, the free encyclopedia

CANADA
What are the income tax rates in Canada?

So if you think you can make 100K and keep 84, giving the govt 16, sorry dudeski you're paying closer to 40K. This is where many go wrong and don't understand that you can't just spend all your monies on luxurious lifestyles and worry about taxman/biz consequences later. Many athletes/entertainers get caught up in this and end up owing IRS/canrev millions...

Get yourself an accountant once you start making 5 figures or more it's worth it and you'll start to learn about tax benefits, writing off your expenses, and being creative with your actual EBIDTA.

Also please read the days curriculum on starting your own biz in the 30 day course: just updated it: http://forums.nichechoppers.com/30-d...-man-info.html

Cheers hopefully this helps all you guys. YES you should register yourself as a biz asap - choosing between all the different variations is up to you re soleprop/llc/inc/corp/etc.

[Vadym]

I forgot to mention there is about $800 in corp fees to the govt, but that's nothing.

Oh, and to Norb - I've got a guy who's hooking me up with a hell of a lawyer to take care of the whole thing for me. Reason I know so much about it is because I'm getting a corp together there within a month when my new big ol' venture starts with a partner. And he's successfully set his up, while living in Hong Kong.

[NCMedia]

Awesome, we'll have to touch base and shoot the shit for a bit. I'm lost with what to do but am itching to gtfo of Canada...

[brada7x]

Thanks for that info, Norb.

I haven't the slightest clue about anything tax related.

I'm only 21. Every job I've ever had consisted of taxes being taken out and me being sent a W2 at the end of the year. Nothing I had to think about ever.

Now, I'm more than likely going to pull in over $40k this year as my income has been on the rise and I'm trying to figure out what I need to do before I end up effing myself.

[SirKhan]

Yeah the problem with offshore companies is that you still have to get the money in your country from for example Panama. And that's where the government will see it and ask you what's that in your hand my friend..

I have an offshore company set up in the Seychelles for more than 2 years now but only so that I don't have to collect every invoice I send out or receive because in Seyc. you don't have to keep a book. So it simplifies with the $5 transactions a LOT. But you can't get around taxes (easily), sorry.

Yes you can get the money in the country via an ATM but how are you going to buy a car or property for yourself with a money that you 'don't even own' (on paper)?

If USA is anything like my country there are quite a few ways to deal with income and my suggestion after 2 years of offshoring would be to start an LLC with a professional accountant and buy your house, car, everything on your LLC's name. Deduct the costs from your revenue so you'll have less profit to pay tax after, I don't know the lingo for this sorry. :-)

Where are you located btw? I hear that Delaware (USA) offers some low taxes for people who setup up LLCs there. You should check it out before rushing into something.

[bluffspot]

Howdy all - yeah - Norb we looked into moving a couple of years ago... but with kids in tow.. not possible - have to worry about medical and trying to home-school. Although, I await their university years when they come home, knock on the door to find we've moved.... 8)

Anyhow, this site: Living Overseas - International Real Estate, Overseas Jobs - Asset Protection - Expatriate Resources - Overseas Retirement has a ton of info. There is also a teaching group called ALC that hires a lot of English speaking talky types. I do know they have openings for Internet instructors in some parts - Morocco mostly - so, while you can claim an income with this group or one like it where you teach an hour a week - it keeps you in the country as a teacher.

As for where we were looking to move - this is where you want to telecommute from: Real Estate In Turks and Caicos

Here is another good link about property all over the world: http://www.escapeartist.com/Internat..._Location.html

Need a second passport? http://www.escapeartist.com/Offshore...itts-Passport/



Good luck with your search.

[NCMedia]

^ +1 TY!!

[NCMedia]

Dominica Passport
Single Applicant Fees are only US$75,000 + Legal Fees & Background Checks
Tax Free on Foreign Income, Capital Gains, Wealth, Gift & Inheritance Tax
Dual Citizenship is Allowed and is not reported to other countries
Dominica is a island should you so choose to live there, but maintaining a residence on the island is not required
Visa Free travel to more than 100 countries

^ damn eh? Buy your way in for 75K, change your wire info to your new bank, never pay taxes on that money again - live like a king THERE, screw coming back!

This is the first thing I've seen that makes sense for people in our industry. That site is a great resource (escapeartist.com) thanks a TON Bluff.

[bluffspot]

Yep - if you can bring money into their country and maybe supply a few jobs - its open arms. We found that TurksCaicos was more than open arms - they want people to move there -

[Ashley]

lol dude.. 15%?! is that ALL?

If I earn over £45k (about $70k) I have to give away 40%!!!!!!

[SirKhan]

lol dude.. 15%?! is that ALL?

If I earn over £45k (about $70k) I have to give away 40%!!!!!!

No, he THOUGHT it was 15%. But he was just dreaming unfortunately. If it was 15% I'd move. Today.

[stewmath]

Ash there planning on making it 50% for over another threshold as well. Thats there theres alot of millionaires getting the hell out this country

[SirKhan]

Ash there planning on making it 50% for over another threshold as well. Thats there theres alot of millionaires getting the hell out this country

Going where?

[Ashley]

Ye well I'm outta here in 2012 to a more civilized 18-27% maximum

[stewmath]

Going where?

tax havens

monico, panama etc

[SirKhan]

Ye well I'm outta here in 2012 to a more civilized 18-27% maximum

Why 2012 and where are you going?
I'm thinking about fleeing my home country as well. I've been to most european countries none of them was to my like I should visit NYC and Tokyo

[Ashley]

Why 2012 and where are you going?
I'm thinking about fleeing my home country as well. I've been to most european countries none of them was to my like I should visit NYC and Tokyo

Because that's when the misses will finish education... if we don't last - I'll go earlier lol.

Anyway we've got a villa in the south of Spain. Yummy.

[NCMedia]

I think i've finally caved into Panama or DomRep as well - this is all you need to read:

Panama Incorporation, Offshore Incorporation Services: Forming Or Incorporating A Small Business In a Tax Beneficial Jurisdiction

when done, go to his homepage and read some of his newsletters, this stuff is gold! Covers everything from purchasing a home, maintaining dual citizenship, myths re your Gov't scaring you regarding these practices...

I think Panama's benefit is the foundation setup and the 'unlimited lifetime' protection where as other countries are '20 year terms' then you have to renew or by then things might shi(f)t. Also loving the fact that you earn avg 10% on your saving accounts, and that's also tax free

This has been a CRAZY month for me! I started out looking for property across my province in Windsor (don't ask), even put in a few offers (thank GOD they countered), then I thought 'hmmm let's do VEGAS', and learned it's a tricky tricky process and there are NO benefits/perks other than cheap prices of homes, now after as much reading/research as I could do in this short amount of time, I'm SET for Panama or DomRep FOR SURE this year.

In fact I CAN'T BELIEVE I let my gov't take so much of my dough from me these last few years, and I have creative accountants!

I wonder how many people are LOL'ing at the world right now in said countries keeping 100% of their money...

Vadym pass me your contact asap bro.




Another resource: http://www.canuckabroad.com/living-abroad/

[bluffspot]

Norb... really.. Windsor.. .not enough peeler bars in the GTA? 8)

Just in case you wanted to see where it is you may be living - here is a livecam from most major cities: http://www.earthcam.com/

Some of these cams are trippy - here is NYC - live audio feed as well HD http://www.earthcam.com/usa/newyork/...?cam=lennon_hd

[NCMedia]

^ It was just a bad buzz phase here and I thought it might be a wise decision... Fell in love with the house more than anything (by the water, huge, brand new, quiet...), now realizing it would have probably been a horrible decision but the research was fun anyway (I spent about a week looking at thousands of homes across Ontario - then US - now DomRep/Panama).

Yeah screw the winters here I'm vowing to myself that by next snowfall I'm leaaaving, on a jet plane, don't know when I'll be back again...

[PlatinumPi4u]

This is a good thread.

For the US, up until you get to the baller status, there is always S corp which will still let you write everything off.... Thats what I got..

[NCMedia]

Another GREAT article/resource.

This is truly turning out to be a signal from the gods... Panama is MADE for IM'ers, literally!

Business Panama: Investing in Panama: Investment Opportunities:Internet & Ecommerce

!!

[bluffspot]

WOW - Literally, Panama is an IM'ers paradise - nice find Norb -

a) Main Advantages

* US dollar based economy
* Earthquake free
* No active volcanoes
* No hurricanes* No taxes on foreign source income
* Excellent living conditions
* Fully bilingual certified engineers
* Best submarine fiber optic access of the region
* No pollution
* Fiber Link


If you open an office in the new Government Sponsored TechnoPark:
The most relevant incentives granted to High-Tech Parks are:
* Exemption of all taxes, contributions, duties or import fees on all machinery, equipment, furniture, vehicles, appliances, or materials necessary for the development of the project.

* Exemption of any national direct tax on capital.
* Exemption of income taxes.
* Exemption of any national direct tax on dividends and interests originated from securities issued by the company and traded in local or international markets.

* Special immigration and labour regime.

[bluffspot]

Choose Morocco - anyhow, here is one of the volunteer schools - will see if I can fnd the ACL package sent to me a couple of years back.

Volunteer Teaching English Abroad

[inzpiration]

Why not set up a company in DUBAI? (I'm not quite sure about what I'm talking about) Don't know how much it costs, but:

Taxation: Dubai offshore companies pay no taxes on profit, capital gains or anything else in Dubai.

Audit and financial returns: No annual reports or accounts need to be filed. Accounts must be audited and accounts must be distributed to shareholders (but NOT filed with the authorities).

Time needed for formation: Usually it is 5-7 working days.

What do you think?

[kinitex]

Great thread!

I too have been getting killed by this 46% tax bracket here in Ontario, Canada. To give close to half your money every year to the government is just ridiculous to say the least.

Had it been 20-30% I would have been in a nice house already paying property taxes and the likes for years to come. Instead I am looking at fleeing my home country.

[grooveman]

Norb if Panama takes a while to materialize you can hop across the border and head south to Texas, Arizona or wherever for 4 months at a time with no hassle whatsoever as many of your Canadian counterparts already do. You can even buy property down here. When the 4 months is up, go back to CA for a day and come back.
I work at the U.S. Border so if you have any questions just shoot me a pm and I'll try to dig up the answer for you.

[SirKhan]

Why not set up a company in DUBAI? (I'm not quite sure about what I'm talking about) Don't know how much it costs, but:

What do you think?

Exactly as with other tax havens but Norb and the guys are looking for a more complex solution.
Besides I wouldn't go to Dubai for all the money in the world, 50°C+ 6 months of the year is not for humans.

[NCMedia]

Great thread!

I too have been getting killed by this 46% tax bracket here in Ontario, Canada. To give close to half your money every year to the government is just ridiculous to say the least.

Had it been 20-30% I would have been in a nice house already paying property taxes and the likes for years to come. Instead I am looking at fleeing my home country.

**Yep Check this out, here's what you have to watch our for when leaving the country and becoming a non-res., sourced from (good read) > [CEN-TAPEDE] Becoming a non-resident of Canada - living in Korea and engaged to citizen of Japan. - David Ingram specializes in giving expert income tax and immigration help to American and Canadian citizens living out of their home countries from Zi

- ownership of a dwelling in Canada or rental of a dwelling on a
long-term
basis (for example, a lease of one or more years);

- residence of spouse, children and other dependent family
members in a
dwelling maintained by the individual in Canada;

- memberships with Canadian churches, or synagogues, recreational
and social
clubs, unions and professional organizations (left out mosques);

- registration and maintenance of automobiles, boats and
airplanes in
Canada;

- holding credit cards issued by Canadian financial institutions
and other
commercial entities including stores, car rental agencies, etc.;

- local newspaper subscriptions sent to a Canadian address;

- rental of Canadian safety deposit box or post office box;

- subscriptions for life or general insurance including health
insurance
through a Canadian insurance company;

- mailing address in Canada;

- telephone listing in Canada;

- stationery including business cards showing a Canadian address;

- magazine and other periodical subscriptions sent to a Canadian
address;

- Canadian bank accounts other than a non-resident account;

- active securities accounts with Canadian brokers;

- Canadian drivers licence;

- membership in a Canadian pension plan;

- holding directorships of Canadian corporations;

- membership in Canadian partnerships;

- frequent visits to Canada for social or business purposes;

- burial plot in Canada;

- legal documentation indicating Canadian residence;

- filing a Canadian income tax return as a Canadian resident;

- ownership of a Canadian vacation property;

- active involvement with business activities in Canada;

- employment in Canada;

- maintenance or storage in Canada of personal belongings
including
clothing, furniture, family pets, etc.;

- obtaining landed immigrant status or appropriate work permits
in Canada;

- severing substantially all ties with former country of
residence.

Norb if Panama takes a while to materialize you can hop across the border and head south to Texas, Arizona or wherever for 4 months at a time with no hassle whatsoever as many of your Canadian counterparts already do. You can even buy property down here. When the 4 months is up, go back to CA for a day and come back.
I work at the U.S. Border so if you have any questions just shoot me a pm and I'll try to dig up the answer for you.

*Cheers, I think staying away from the US is going to be my plan for now but yeah Arizona and Florida seem to be the biggest spots for Canadian snowbirds.

Exactly as with other tax havens but Norb and the guys are looking for a more complex solution.
Besides I wouldn't go to Dubai for all the money in the world, 50°C+ 6 months of the year is not for humans.

*Dubai is crazy, expensive, and great for a vacation to say you've done it, however I don't think it's for me.

Really cool doing this research, and kinda scary realizing what you really have to do in order to do it right.

*Open intl bank/foundation/etc.

*Seek Non-Res from your country

*Seek res elsewhere

*Seek a home/rent - continue to make $ through it all

*Retire/live MUCH better/easier.

Here's a quick comparison i did on 10% (the avg growth of savings accounts offshore is 9-12% with good plans) compounded year to year with 100K and adding 100K each year (as if you were paid a 100K salary)

Let's see how 10% compounded works in a tax free environment:
I made: Enough to live and save 110K each year to put into a bank.
No taxes: I take home 110K. I stick that in a 10% savings account every year - watch it compound:

End of year 1: 110K + 10% = 121K + 100K (you're adding 100K each year as you save up) = 221K
End of year 2: 221K + 10% = 243K + 100K = 343
End of year 3: 343K + 10% = 377K + 100K = 477
End of year 4: 477K + 10% = 524K + 100K = 624K
**Keep doing this and in 10 years:
5: 786K
6. 965K < Millionaire in your 7-8th year.
7. 1.161M
8. 1.377M
9. 1.615M
10. 1.871M


Here:
100K taxed: 60K take home (approx).
Stick that in a bank here - ING or a savings account you'll get 1.x% if you're lucky! Let's say 2% to be generous...
End of year 1: 60K + 2% = 61.2K + add another 60K (you're adding 60K each year as you save) = 121.2K
End of year 2: 121.2K + 2% = 123.6K + 60K = 183.6K
End of year 3: 183.6K + 2% = 187.2K + 60K = 247.2K
End of year 4: 247.2K + 2% = 252.2K + 60K = 312.2K
End of year 5: 312.2K + 2% = 318.4K + 60K = 378.4K
**Keep doing this and in 10 years:
6. 445.9
7. 514.8
8. 585.1
9. 656.8
10. 730
11. 804
12. 880
13. 958
14. 1.037 < Finally... But by year 14, the first account would have been at 3million. Now you see the difference between the 'american dream' vs. taking care of your own health care and other things in a civil law jurisdiction where you are not taxed on foreign income.

Sounds easier than it really is once the layers are pulled back. I suggest keeping this thread going and have stickied it - would be wise for everyone to know what's involved if they plan on doing this legally.

Another bit of info just sourced from help at WF:
Global Tax Navigator: HSBC Bank International Ltd

Cheers guys.
NC.

[PlatinumPi4u]

I heard hong kong / BVI was a way to go too...

[john247]

Secychelles, Panama, Scotland, Cyprus, Belize.

The legislation which enables the formation of offshore companies in these off-shore jurisdictions is progressive, you can pay zero tax. Privacy and confidentiality and freedom from all taxes in these havens are guaranteed, company structures are flexible and the process of incorporation is fast and efficient.

You'll need an "introducer" to help you with the offshore incorporation. This "introducer" will also help you in opening an offshore bank account.

[NCMedia]

^ welcome to the group - I'll be PM'ing you regarding the above, leaving for DomRep in 3-4 months for Res., and doing Panama Foundation+Corp. Biggest part of the expat is being gone for long enough and having cut all ties with your current res. country to be able to claim non-res and file taxes from your new res (whole process seems it's going to take 18months) one last time.

Just banking there and not claiming is easy, but that's tax evasion. What you want is tax avoidance. Get res elsewhere, once you get it you can still travel/live where you want/do what you want and not pay on your foreign income.

That's what it boils down to for most - is you're in US/UK/CA/AUS etc. and you ALL get taxed on your worldwide income as long as you remain a res. Gets really complicated having dual citizenship too so being able to claim DomRep Res., retain Canadian Citizenship but not Res., and stop filing all together next year once all business is transferred, and life closed/no ties (for now) to Canada is the current cheapest route. Getting second visas or buying your way into either Panama (80K for reforestation) or Belize (350K) for sponsored res is not an option for most..

EDIT: US citizens actually have to renounce their citizenship fully, not just become non-res. Link above explains how the IRS taxes its citizens on worldwide income regardless of where their residency is, if you're a citizen and you live on this planet - you claim/pay.

Also interesting fact I learned: Canada has a 5 year perk for immigrants to operate tax free on foreign income - nice eh? I've been here paying taxes for all these years and my perk is... ? Another interesting fact - which may be posted here already or I read it somewhere else recently - last year over 100,000 millionaires left the US/CA.

[bluffspot]

Wife and I chatted this up the past few weeks - so we are beginning the research again - this time waiting for the last kid to enter university.

Suggestion for you single/childless types - GO - go visit, go explore, just go - glad to have traveled BC (before children) - it doesnt take the bug out of your system - but I had some pretty amazing times that I can reflect on until I can go again.

Also- heard the same thing about most millionaire Yanks - they seem to be headed to Costa Rica and a small majority to Europe.

Friend of mine that made the move a number of years ago said it was extremely important to cut all ties - most importantly to remove your name from any utility (power, water, gas, cable, cellular)

[john247]

Here's an interesting read: How to Move Money Offshore without a Direct Trail

[EliteMarketing]

Wow great thread.

I've just got a simple S-Corp setup in the US and thanks to some creative accountant I paid about 15% in taxes... which isn't too bad.

Whats always interested me about living in one of these places is not only the tax benefits, but the cheap cost of living.

But if you're in the US and you don't really have the option of moving... you've got to at least setup an S-Corp or LLC.

My first year online I did pretty good and I never incorporated... BIG MISTAKE. I got raped in taxes. lol

[techology]

The bottom line is this. If you are not earning tons of money, do self-employed. As your earning grow, employ a tax accountant. They will advise (and rob you blind of course), but now you have the money to lose so it makes sense. Keep it simple. BTW in the UK you must register within 3 months of starting a business or you get fined (not much, £100, but it all adds up). Good luck.