Praise the Lord for 24 Hour Tax Chat!
OK, so I've just formed a US Company - what else would I be doing on a Sunday afternoon?
Basically, the tax is horrendous if you buy as an individual (30% tax on the GROSS income). By forming a LLC, the company is taxed in America, between 10% and 35% on the NETT income (after expenses). Then, in Australia, we are just taxed on the gap, if our tax rate is higher than the tax rate in America. So, basically, the most we will pay is the Australian tax rate on the 'profit' we make - exactly as it would be here!
The cost to form the company was about $1600, which includes the company formation, bank account, US address and mail forwarding, plus 12 months' tax advice, preparation of tax returns and monthly bookkeeping - not a bad deal. I'm sure we'll save more than $1600 in the first year, just with the tax advantages.
Do I need some kind of disclaimer at the bottom of these posts?
Disclaimer: If you take my word for any of this without talking to a proper tax agent or lawyer, you need your head read.
Hi Jane,
ReplyDeleteYour post is very informational. I am in Canada. I am considering to form a LLC. I need more research. Because I heard individual also doesn't need pay 30% if he/she has election to IRS.
Thanks.
John
Hi John - I'll be really interested to hear anything that you manage to find out about that - I haven't heard anything about election to the IRS. Please keep in touch!
ReplyDeleteAll the best - Jane