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Virtual company, taxes and paying oneself (for a foreigner)

Asked by: Jo??o Jilgueiro - 20 October, 2011 Hello guys,

I'm not an US citizen (although I do have a B1/B2 Visa). I'm currently a freelance software engineer/web designer working remotely from home. Most of my clients are from the US, and some are big companies. I want to start treating this as a business instead of a freelance job, and in order to do that I need to look more professional, and having a LLC is a good start.

Considering I'll not be living in the US and that my work is mainly web-development services that I do from where I live (and eventually digitally-delivered products such as ebooks), what kind of taxes apply?

(I think I've read that if you prove that you don't have assets in the US and that you don't sell physical goodies, you don't really pay taxes at all, is that correct?)

Also, how can I pay myself? I already have a personal bank account in the US (my clients currently deposit to this one) and I'm willing to open a business one. How's the process of paying yourself if you're the only managing member of the and what taxes apply (also considering my situation, as stated above)?

Looking forward to using your services soon!

Thank you in advance,

Answered by: Robert Kowalski - 21 October, 2011 Dear Jo??o,

First of all its not a bad idea to form an LLC if you decided to run your professional affairs as a business. I would suggest going for a Wyoming LLC because its relatively inexpensive, has no income taxes, and gives you all the benefits of having your company formed in one of the incorporation heavens.

Now to profits and taxes. Your company would generate profit and being an LLC it would pass all the profits to your personal tax return. The process of taking profit from an LLC is called "distribution of profit to an LLC member" and I would recommend you to consult a CPA to do it correctly. You would have to file personal and company tax return annually since you derive profit from a US company.

Other than that since you do not deliver any taxable products to end consumers you would not need to worry about collection sales tax.

Banking: once your company is formed you should open a business bank account and use it strictly for business related transactions. A CPA would be able to explain how to distribute the profits from the business account to your personal account.


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