Thank you for your time in answering this. I am interested in setting up an online company that will sell products in the US from US wholesalers and suppliers. This requires I have some kind of entity set up to legalize the process. Firstly, Is this ‘entity” and method of doing business able to be done legally without any implications? Second, what taxes are there to think about? and lastly, if it is indeed possible, please inform me of my next steps to set this up.
Let’s break these questions down one by one:
1. Generally, many online companies selling products choose to file their business in the state of Delaware, as the state does not charge sales tax on goods sold in the state. You are able to register the company in Delaware using any address (with the exception of a P.O. Box) as the business address. Keep in mind, you will need to have a registered agent in the state of Delaware. This is a service we offer.
2. As I mentioned, the state does not charge sales tax on products sold in the state. If you register a corporation, the state charges a minimum $75 annual franchise tax, which increases with the number of issued shares of the company (the state charges $75 for 1-5000 non par value shares, $150 for 5,000-10,000 non par value shares, and then an additional $75 for each 10,000 non par value shares issued, with a maximum tax of $180,000). This corporate franchise tax is due March 1st every year.
LLC’s have an annual tax of $250 due on June 1st of every year. This does not change regardless how much or little the company makes in profits.
3. Another great option would be to register your business in the state of Wyoming. The benefit in this state would be that corporations and LLC’s are only charged $50 to file the company’s Annual Report. The disadvantage would be that in Wyoming, sales tax must be charged to your customers on all products sales, so you would need to get a Wyoming state sales tax vendor id. It would then be your responsibility to forward the collected sales taxes to the appropriate state offices.
I would suggest you take a moment and read through our research page of Wyoming vs. Delaware (I left Nevada out of the discussion as they are not as cost effective or easy to maintain as the other two favored business states). This will help clarify the key differences between these two states. When you decide which entity type is best for you and what state you want to register your business in, you would be able to do so simply by selecting that state on our homepage, choosing your entity type, and at the top of the Step 1 pricing screen, you would need to select the link that says “International clients please click here”.
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