Category Archives: Filing Your Taxes
Incorporate your business and protect your assets!
Corporation vs. Limited Liability Company
√ Pay tax on profits in New York and 15% to 34% taxes on profits to the IRS
√ Have less paperwork in terms of Tax Returns that need to be filed
√ Foreigners do not have to pay taxes under the corporation unless the corporation declares dividends
√ Owners may act as Consultants to the Corporation under a written Consultant’s agreement completing all consulting work in their home country and billing the corporation in the United States for this service. Utilizing this strategy, it may be possible to eliminate any profits and all taxes otherwise payable.
Limited Liability Companies
√ Are exempt from Federal Corporate Tax, the LLC pays no tax.
√ Profits, whether distributed or not, are taxed and the Owners of the LLC must pay tax at the personal level at their individual tax rate.
√ Have to file both a Partnership Tax Return for the LLC and Tax Returns for each member.
√ While partnership tax rules are generally more flexible, the LLC should be owned by more than one person or entity to ensure classification as a Partnership for tax purposes.
√ Owners may act as Consultants to the LLC under a written Consultant’s agreement completing all consulting work within their home country and billing the LLC in the United States for this service. Utilizing this strategy, it may be possible to eliminate any profits and all taxes otherwise payable.
Both types of companies have the same legal protection in terms of liability of the owners. Therefore, which one you choose depends on your business activity and projected profits. If the company is going to have little activity in the United States and fairly small amounts of money will be made, you may form a regular corporation which has a simpler record keeping process. If the company grows and earns large sums of money, you may always register an LLC in the future. If you expect to have large amounts of profit right away, you will generally pay fewer taxes with the LLC, although more paperwork will have to be prepared for the IRS.
(Bloomberg) Senate Majority Leader Harry Reid rejected the latest Republican offer to resolve the U.S. fiscal crisis as Minority Leader Mitch McConnell reached out to Vice President Joe Biden in an effort to break the impasse.
“The sticking point appears to be a willingness or interest or frankly, the courage to close the deal,” McConnell, a Kentucky Republican, said on the Senate floor Sunday. “I’m willing to get this done, but I need a dance partner.”
Senator John McCain of Arizona said his fellow Republicans will stop insisting on using a new inflation measure that would lead to smaller Social Security cost-of-living increases.
Reid said earlier today that Democrats wouldn’t agree to use the new inflation measure as part of a short-term deal. He said he would keep trying to come up with an offer to Republicans.
“We’re making progress. At this stage we don’t have a deal, and that’s an understatement,” said Reid, a Nevada Democrat.
Congress is working to avert more than $600 billion in tax increases and federal spending cuts, the so-called fiscal cliff, set to start taking effect in two days. The House and Senate are holding an unusual Sunday session after President Barack Obama on Dec. 28 asked Reid and McConnell to try to find a solution.
Regarding talks between McConnell and Biden, Reid said, “I wish them well.” Biden is at the White House, according to an administration official who spoke on condition of anonymity.