I am considering starting an online business that would make money exclusively from online advertising. I am the sole employee and I am located in the US - I have some writers also freelancing in the US.
I wanted to know if I can avoid paying us taxes on my corporate income if I locate my servers offshore and incorporate my business offshore.
2006-10-04 05:34:09 · 4 answers · asked by John Chambers 2 in Business & Finance ➔ Taxes ➔ United States
The corporation may not but your still have to pay income tax of your earnings even if you never bring the money back to U.S.
In reality, for small business it isn't worth the trouble. Your corporation will pay corporate tax at the foreign country. You will pay personal income tax for US when you receive salary/distribution from your corporation even if the money stays abroad. Your foreign bank accounts will get tax withholding because you do not have their equivalent of tax IDs. You probably still need US currency accounts to pay freelancers, so you will pay for currency conversion. Not to mention the structure and taxation are complex and you probably need to hire lawyers to help you set it up and accountants to do your tax every year.
Best wishes.
2006-10-04 05:40:47 · answer #1 · answered by JQT 6 · 1⤊ 0⤋
JQT has hit it right on the head. If you live in the US you will pay tax on your income. Don't think that you can have your corporation pay all of your personal expenses and write them off as business expense. I have been a tax accountant for 16 years and have specialized in corporate and small business tax for nearly half that time and, yet, it never ceases to amaze me how even the small income business wants to get one over on the Government! Some of these folks will spend twice as much in setup and fees as they would in tax just to think that they are clever. Do the business, make the money, pay only your fair share of taxes by getting a good tax preparer (the best choice is not always a CPA or a tax Attorney's office), and good luck in your new endevour!
2006-10-04 06:02:46 · answer #2 · answered by Great Tax Info 2 · 1⤊ 1⤋
If you are a US citizen, all income worldwide is subject to US tax law even if you never step foot in the US. There are exemptions for foreign income and credits for foreign taxes paid. It doesn't sound like either would apply in the case you describe.
2006-10-04 11:38:00 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
ask an accountant, not us..you could get in serious trouble with wrong advise..
2006-10-04 05:36:46 · answer #4 · answered by snoogans 5 · 0⤊ 1⤋