sole proprietorship and non-resident alien tax status -Florida

[Anthropos_77]

What is the name of your state? - Florida
(This post was also submitted under business law, in case that category is more appropriate.)

I am A citizen of Trinidad & Tobago in the West Indies, where I also reside. I am planning to start an on-line store (dot.com) to market a product innovation (hardgoods line, patent-pending) to the US market. The product will me made in the USA by a contract manufacturer.

Q1. Is it necessary or advisable to register as a legal business entity in the Florida to be able to contract business services such as banking, manufacturing, fulfillment, etc? And if so, can I register initially as a sole proprietor (instead of an LLC or Corporation)?

Q2. Is the revenue of the Internet business equally taxable in the USA whether or not I am registered in the USA as a sole proprietor?

Q3. Does it make a difference if I'm registered as a sole proprietor in Nevada or Delaware instead of Florida?

Regards
Anthropos 77

 

[LdiJ]

What is the name of your state? - Florida
(This post was also submitted under business law, in case that category is more appropriate.)

I am A citizen of Trinidad & Tobago in the West Indies, where I also reside. I am planning to start an on-line store (dot.com) to market a product innovation (hardgoods line, patent-pending) to the US market. The product will me made in the USA by a contract manufacturer.

Q1. Is it necessary or advisable to register as a legal business entity in the Florida to be able to contract business services such as banking, manufacturing, fulfillment, etc? And if so, can I register initially as a sole proprietor (instead of an LLC or Corporation)?

Q2. Is the revenue of the Internet business equally taxable in the USA whether or not I am registered in the USA as a sole proprietor?

Q3. Does it make a difference if I'm registered as a sole proprietor in Nevada or Delaware instead of Florida?

Regards
Anthropos 77

It is not necessary, and would probably not be advisable (at least at first) to register a business in the US. You do not need to do that in order to contract services (manufacturing, fullfillment)...and banking can easily be handled by opening an account with an international bank that has branches in the US.

It would unnecessarily subject you to US income tax.

If your business grows sufficiently that it seems more economically sound for the business to have a US operation, then you would need to register as either a C corporation or an LLC.

 

[abezon]

If you are a nonresident & do not have a green card, nor a fixed base in the US, you will not be subject to US taxes. If you spend significant time in the US, you may be subject to US taxes for that year.

Incorporating may be advisable depending on whether you have to worry about product liability.

 

[LdiJ]

If you are a nonresident & do not have a green card, nor a fixed base in the US, you will not be subject to US taxes. If you spend significant time in the US, you may be subject to US taxes for that year.

Incorporating may be advisable depending on whether you have to worry about product liability.

I agree if he does not register a business in the US. However, if he does, then he would be subject to US income taxes.

 

[abezon]

If he incorporates in the US, the corporation would have to pay taxes.

If he just creates a partnership (which would probably include a single-owner LLC, generally taxed as a Schedule C sole proprietorship) or operates as a sole proprietor, he would be taxed only on US-source income attributable to a fixed base in the US. He'd file a 1040NR & Schedule C showing only the US source income & expenses. He would not pay SE taxes.

We actually have a tax treaty with Trinidad! http://www.irs.gov/pub/irs-trty/trinidad.pdf

Article 8: Business Profits
1. Industrial or commercial profits of a resident of one of the Contracting States shall be
taxable only in that Contracting State unless such resident is engaged in industrial or commercial activity through a permanent establishment in the other Contracting State. If such a resident of one of the Contracting States is so engaged, tax may be imposed by that other Contracting State on the industrial or commercial profits of that resident but only on so much of such profits as are attributable to the permanent establishment in that other Contracting State.

Article 9 defines permanent establishment.

 

[Anthropos_77]

Sole proprietorship and non-resident alien tax status

Hello LdiJ and abezon

Thanks for your concise, informative responses.
I will therefore open a US merchant account in an international bank and use it to transact business. I will consider an offshore IBC in due course. The question of a US presence will also be reviewed when it is expedient.

Researching answers on the Internet to simple but vital questions can be very time-consuming sometimes. Therefore, it is good to have a network of this kind to share advice and even make business connections.

Thanks
Anthropos_77