On Dec 28, 4:19*pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -


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where they operate, not where they are organized. The state of
incorporation imposes certain reporting requirements and may impose
taxes based on capital stock or net worth. A Delaware corporation is
subject to the Delaware franchise tax on 100% of its authorized (not
necessarily issued) stock. However, income tax is imposed only in
income from business carried on in the state.

A corporation, wherever organized, that has all of its employees in
California and no physical presence anywhere else would be subject to
California franchise (income) tax on 100% of its net income. Owning a
server located in a no-income-tax state (e.g. Nevada) could allow such
a business to apportion some of its income outside California. Merely
leasing space on a server somewhere probably would not create
"taxability" in another jurisdiction so as to give the corporation the
right to apportion its income.

This is not just a California rule; the same thing is true in EVERY
OTHER STATE that imposes a comprehensive corporate income tax or
franchise tax measured by income. That's every state except Nevada,
Wyoming, South Dakota, and Washington.

Bottom line: you cannot avoid state corporate income/franchise
taxation by organizing your corporation in a Delaware or a "tax haven"
state such as Nevada.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

<removeps-groups[at]yahoo.com> wrote
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Hard to say precisely. Each state has a different formula, but it generally
falls as a prorata share based on a combination of:
Wages in state to total wages
Sales in state to total sales
Property (building and equipment) in state to total property
And/or other factors.

Some states allow for actual revenues and expenses for that state if you
have the supporting documentation.

So for a Deleware company that had all it's employees in CA, all sales were
made from CA (in person, by phone or over the internet), all physical assets
were located in CA......then it's a CA based business and they want ther
taxes in full. And the company needs to register and pay the exact same
fees to CA as they would if it were a CA company.

FYI: You'll also have some obligatory filings and fees to pay to Deleware,
so in some cases you pay double.




- quote -


Hardly.



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I doubt the server location itself dictates what state you get taxed in, or
not get taxed in for that matter. But now you've jumped into a legal issue.

Clearly if the server is yours - in that you own it - and not just lease
server space as is often the case - it may have some impact. But the one(s)
that carry the most weight is where you sit your butt down when the work is
done, where you have inventory, where you bank, where you receive mail, etc
and so on.




--
Paul A. Thomas, CPA
Athens, Georgia

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Dec 27, 8:13*am, "Phil Marti" <prm20...[at]verizon.net> wrote:

- quote -

If the corporation is a C corp and incorporated in Delaware, but one
or more employees operate out of California, then what is California's
cut? The California employees would have to pay California income tax
on their income and dividends, but profts of the company would be
outside California's grasp, right? I'm guessing that for an internet
company that sells a web service over the internet (like internet
games and click advertising revenue), the server storing customer data
like username, password, credit card info should be located outside
California -- otherwise the company could be construed as operating
out of California.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On 27 déc, 22:24, "Paul Thomas, CPA" <paulthomascp...[at]bellsouth.netwrote:

- quote -

Well, I'm swiss citizen, currently living...well, legally I don't even
know where I'm supposed to be living I spend my time between Hong-
Kong, Taiwan, Mainland China and Singapore. Used to be Taiwan resident
but no longer. I still fill my swiss tax form even though I pay
nothing because I have no "legal" source of income. See, kinda
difficult. Let's say I should have to pay tax in Switzerland.

- quote -

My plan is somewhat different:
1) Do business with my US company
2) Pay ALL the US tax related to my business (Federal tax etc...I want
no trouble on that point)
3) Find a way to legally transfer xx% of the profit to my offshore
company -- the tricky part. Wonder if my offshore company can actually
be the sole shareholder of the US LLC. If so, it might make things
easier.
then...well, who loves to pay income tax?

See, I don't want the US company to have to face money-laundry
accusations, that's why I really want to pay every due cent to the IRS
and only transfer profit.

mmm, think I imagine your question: "why I don't make business with
the offshore company"? Have you tried to - really - make business with
a paper company from a tax-haven? OK, if you own websites and get
money though PayPal or stuff like this, no problem. But if you trade,
it gets almost impossible. Your partners accept your money (after all,
my business bank account is in a well known UK bank) but very few of
them accept to pay you money. They fear it might put them into trouble
with their tax agency -- money laundry, as always...

As long as I was selling to end-users it was no problem. I even used
to use my personal home address in Taipei as contact information. All
my customers thought it was a Taiwanese company even though it's
actually based in Anguilla. But wholesale market is fairly
different...When I send them business info and they see a PO Box
address in a caribbean tax-haven they say "sorry, we can't make
business with you".

- quote -

yes, I figured it out already.

- quote -

independent sales reps. Now can be sole-proprietorships, Corporations,
LLCs, not my problem as long as they have a legal business and we sign
contract together. Percentage paid.

- quote -

NO physical presence. Don't even need my own warehouse, I'll use
fullfillment services provided by an independent company if needed -
products are supposed to be manufactured and sent to customers by a
company based in the USA (not my company, an independent business)
and we'll work with a zero-stock/just-in-time policy.

- quote -

afaik, would have to pay sales tax (if any). Not resident so not
income tax. No employee, no property. Even secretarial services will
be run by a third-party independent business.

- quote -

Not even California? Aren't you supposed to bill more when your
customers are in Cal.?

Thanks for your answers Paul.

Larry

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Larry" <Laurent.Courtin[at]gmail.com> wrote
- quote -


And that's a valid observation.

You don't say what state you will be operating from. Please be aware that
~~that~~ state's tax laws apply to your business regardless of where you
incorporate. As well, you'll still have to register (and pay a fee to the
state) as a foreign corporation with your home state.....as well as all
other states in which the business does business.




- quote -


Federal tax laws apply regardless.

Deleware - as do many states - doesn't tax income the company generates in
other states. Although as I mentioned above, you'll still owe tax to your
home state.





- quote -


Are these "salespersons" your employees? Or are they "independent sales
reps"?

Be aware that the IRS is cracking down on this issue, so don't just call
them IC's when they meet the definition of an employee.





- quote -




In all states in which you have nexus (a physical presence in), you'll
possibly owe: corporate income tax, sales tax, property tax, payroll tax,
and you'll have to register as a foreign corporation.

Income tax would be due on the share of net income (profit) allocated to
that state.
Sales tax is on the sales made in that state.
Payroll tax is on the wages earned by your employees while they work in that
state.
Property tax is due on company assets used in that state.


There are always exemptions and exceptions, like conventions and
conferences, etc..... so take a good look at each state's laws.




- quote -


On ~~all~~ sales you make where delivery is on another state in which you
don't have nexus (ie: you mail/ship products to another state in which you
don't have any other business tie), you don't owe any sales tax to tyour
state, or the state in which you send the goods.

Sales made by phone or the internet - made to your home state (or any other
state in which you have nexus) - are subject to that state's sales tax (you
need to charge, collect, account for, prepare and file reports, and remit
the tax).






- quote -


You mean as in another country?

I have clients who make sales in and to other countries. The profits from
those sales are taxed in the US.





- quote -



What is "double" would be the initial and annual registrations in each state
you do business in - as well as in the state of incorporation.

So if you were operating in Iowa and formed this Deleware corporation, both
Deleware and Iowa would have annual registrations and fees to pay by the
company, as well as all Iowa sales tax, corporate tax, payroll tax, etc and
so on. Double filings in some cases. Double the costs to do so.




It probably wouldn't hurt to find a CPA or EA in your area who can advise
you on all these issues and fill in many of the gaps you have about your
business tax obligations. Do so before the upcoming tax season
hits....like this week maybe.





--
Paul A. Thomas, CPA
Athens, Georgia

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Larry" wrote:

- quote -

My best guess is that they don't tax your non-Delaware source income.

You should be more concerned with how the state(s) where you operate tax
your income. If you're operating from California, they couldn't care less
where you incorporated. They're going to want their cut.

- quote -

Delaware is considered primarily a corporate governance haven, not a tax
haven.

I suspect you're chasing a shadow in expecting that where you incorporate is
going to save you chunks of tax. In any case, your planned operations sound
sufficiently complicated that you really should invest in some good
accounting and legal advice. It will save you money in the long run.

Good luck with your better mousetrap.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Hi!

I'm very interested in incorporating a LLC in Delaware for tax
purposes. However, I have some questions left unanswered so far, and I
hope you can give me some information. I've contacted several
incorposation services providers but since they are business trying to
sell services I'm still unsure if their answers are true or not

1) "No state income tax for Delaware corporations that operate out of
state". Kinda vague (and doesn't mention possible National tax)...
Let's say I sale [Goods] through a network of salespersons operating
in USA. If some of these [Goods] are sold in Delaware as well, will my
company have:
a) to pay tax upon sales made on the whole US market
or
b) pay tax upon the sales made in Delaware only?

2) What about direct sales though the internet? Would I have to pay
tax even though a web site is not "physically" located in Delaware?

3) Does anyone ever experienced any problem when it comes to do
business abroad? Delaware is considered as some sort of tax-haven (I
have some big doubts here...or else why the hell would people keep on
incorporating in other states?) I was wondering if it can be a problem
when it comes to double-taxation?

Thanks
Larry

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >