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US expat starting web-based clothing business in Italy.

Asked by: Y.S.  — 23 January, 2014

Hello from an expat from California, I am now in Italy and ready to start an online clothing business selling ready made and custom made clothing for women all with Italian fabric, Italian seamstresses, and shipping to world addresses directly from Italy.

My question, given that it will be an online business, is, “Where is it most convenient to register my business?” In the beginning, I will be buying the fabric, paying Italian seamstresses to sew the articles of clothing to be then sold via online orders. My intention is to accept payments using Paypal.

Another question, can I deduct my expenses for operating, materials, and labor sustained in Italy off of my US taxes later (after registering, operating, etc), when I will eventually file taxes in California on any business earnings?

Answered by: admin  — 23 January, 2014

Dear Y.S.,

In your case with an online business shipping directly from Italy to your customers, you can technically register your company in any state by easily applying online, and our favorites would be Wyoming or Delaware. We have a research article titled ‘Choosing Where to Incorporate‘ which should be very helpful.

Regarding taxes, as I understand with an LLC, the income is passed-through the business to the owners’ personal income, and you would pay income taxes to the state/country you live in. However, we are a separate professional field than professional accounting, and cannot give specific tax advise. We have a resource section titled ‘U.S. Taxation for Foreigners‘, I believe this would be helpful as well.

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