

Ask HN: Is there an easy way to register my international company in Delaware? - marcamillion

Is there a website I can go to, just pay with my credit card, and have everything done for me ? Am I expecting too much?<p>Or should I contact an attorney?<p>Any details you can provide of your experience would be greatly appreciated.
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philiphodgen
There are any number of service companies which will do the routine filings
for you. But what you are contemplating is a step fraught with tax landmines.
Don't do anything until you have ironed the tax problems out.

An "international company" means (to me) a corporation organized under the
laws of a country other than the United States. If you "register" (this is an
imprecise word and could mean many things) your corporation in Delaware you
have potentially exposed it to US corporate income taxation. This means that
it pays tax on its profit. Then it potentially pays tax of 30% of its after
tax profit. (This is the branch profits tax). I give this as one example of
the tax cow pie into which the unsuspecting foot can fall.

Figurre out why you are interested in entering the US. Then figure the tax
exposure. Then you will understand the "what should I do?" and "who should do
this for me?" questions.

There are many ways you can enter the US market with a non-US company. Almost
invariably your default best choice starting point will be to form a US
company rather than have your non-US company enter the US directly. Figure
that as your strategy then try to prove it wrong.

Delaware is overrated unless you are General Motors.

And yes IAAITL (I am an international tax lawyer).

@philiphodgen

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marcamillion
philliphodgen, my main reason is to be able to get a US bank account, merchant
account, payment gateway, etc. which all prefer that I am an incorporated US
company.

I have incorporated in Jamaica, and as far as I understand it, there is a
double taxation treaty between the US and Jamaica that allows me only paying
taxes once (i.e. more than likely in Jamaica) and not having a liability in
the US.

I could be mistaken, and if there is another reason for me to take a step
back, please let me know.

All I want to be able to do is easily accept all major credit cards, from
customers in the US & Europe (all in US dollars), and have the funds deposited
into a bank account that gives me the ability to wire to and from
electronically.

Based on my research so far, there are a number of banks that have this setup,
but the first step is to be incorporated.

Thoughts?

~~~
philiphodgen
If you are selling into the US you can configure your business operations to
be nontaxable in the US. If ownership/title transfers from you to your US
buyer outside the US, you are not doing business in the US, hence no tax here.
That is the simplest way to go but now you have the banking problem.

Your idea will cause your Delaware corporation to be doing business. Depending
on how you configure your business operations your Delaware corporation might
be acting as your agent (taking a commission) or it might buy from your
Jamaican corporation and resell at a profit. Figure out what is best. in
situations like this you can often operate your US corporation so it makes
modest profits in the US thus pays modest tax in the US. Google "transfer
pricing" for he way this game is played at high revenue levels. At low revenue
levels it will work fine.

You mention tax treaties. Be sure you qualify for treaty benefits - look at
the Limitations on Benefits clause. Be sure that the US won't tax business
profits derived in the US.

What you think you can do with a US bank and what you will actually achieve -
light years apart. You have to be sitting there in front of the banker with
your documentation and your passport and everything. Dim Bulbs Everywhere. :-)

Action plan:

1\. You or a trusted intelligent friend in the US gets explicit advance
approval from a bank, credit card service provider, etc. When Mama's happy,
everybody's happy. Bank = Mama.

2\. Then solve your tax questions by figuring out how you will sell from
Jamaica through your US corporation and through to your US customers, then
follow the trail of money back from the customer's credit card through the
merchant account to your bank for your US company, then onward to the bank
account of your Jamaican company. The path of least resistance (until your
revenues push $1 million or so) is to configure your US company to show a
modest profit and pay modest tax, with the bulk of profits earned in Jamaica.

US international tax rules are written as if every company is the size of
Mitsubishi. Be careful not to be strangled with government-mandated overhead
in the form of accounting and legal fees.

~~~
marcamillion
Wow...thanks for the feedback again.

I am simply charging customers for access to a web app. So no buying or
selling or transferring of ownership/title will be done.

Think 37signals type pricing model...except that I want to be able to easily
access the cash that accrues in my bank account in the US :)

My bank account needs are relatively trivial. Just accepting funds from my
merchant account, and doing electronic international wire transfers (which I
know a number of financial institutions do, e.g. Bank of America).

So no credit lines, no credit cards, etc....yet.

More than likely, when I am ready for those, I will likely just engage my
local bank here.

If my US corporation does the 'selling', i.e. the web app is owned by the US
corp, and the US corp is wholly owned by the Jamaican corp, can't I 'expense'
a transaction - e.g. licensing fee or something - and leave the US corp with a
modest profit and pay the taxes on that?

Is this all worth it? Should I just setup a paypal account to work with my
Jamaican credentials, and accept money there and go that route first, then
move to the merchant account with US corp after I generate a significant
amount of revenues?

Thanks for the help by the way, really appreciate it.

And I know this isn't real 'legal advice' and I will corroborate our
discussion with 'advisors', if & when I get them - and you will not be held
liable for any stupid things I do :)

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drx
If you're asking how to set up a Delaware company as a non-US resident without
ever stepping on US soil, then yes, it's possible.

You can do that via an agent. You can find one by googling 'Delaware Inc' or
'Delaware LLC' or by looking at the official list of registered agents at
<http://corp.delaware.gov/agents/agts.shtml>. It usually costs around
$200-$300 per annum for the basic service.

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tzs
Do you have a good reason for wanting to be a Delaware company?

Delaware does provide some advantages over other states in certain
circumstances. A lot of major companies are incorporate there, and so a lot of
important lawsuits involving corporate law have been fought there, and so
their law is well studied and understood. Their court system also is friendly
toward corporate litigation, expediting things so suits don't languish on the
calendar.

Delaware also makes a lot of money from fees and such on corporations
incorporated therein, and so has tried to make their law friendly, to
encourage companies to incorporate there.

If you are a large public company that expects to be involved in a lot of
litigation against other companies or expect to get sued a lot by your
shareholders and investors, it can make a lot of sense to incorporate in
Delaware.

For nearly everyone else, there's no particular advantage to Delaware. It's
generally best to just incorporate where you actually are or where you will be
doing most of your business. Even some large companies do this. Microsoft is
incorporated in Washington, for example.

~~~
marcamillion
Interesting points. Well, I am incorporated in Jamaica (where I am), but a lot
of my business will be US based. So, based on what I keep reading, if I am
incorporating in the US, it is best to incorporate in Delaware (not only
because future investors prefer it, but because of lower/negligent state
taxes).

Those were the main reasons, but I will look into it, given your feedback.

My main reason for incorporating in the US, is to get a US bank account, US
merchant account, etc. - which makes everything much easier when dealing with
other US companies.

Thoughts?

~~~
philiphodgen
Before you do anything, go talk to the bank you want to do business with. I
formed 2 companies in Delaware for gentlemen living in the Caribbean and
getting accounts opened was a nontrivial task. Can be done, but line it up
first.

Same thing is true for your merchant account.

Once you jump those practical hurdles the next question is tax. Are you "doing
business" in the US or not? This is going to drive your US tax exposure. This
is at a Federal level as well as state level.

Once you understand the tax implications -- then you probably form the company
and start making money.

Consider also the overhead of having the Delaware (or other location if
preferable) corporation. I figure you should budget $3,000 per year in
overhead to keep it afloat. Filing fees, accounting fees, legal fees, etc.
That's with minor business operations.

~~~
marcamillion
Well...regarding the banks...that's the thing. I have approached, easily,
about 5 - 7 different banks (including Silicon Valley Bank, and Square1Bank)
and they all are hesitant without a US corp.

I am trying to get my bank account setup first, if there was a US based bank
that allowed me to setup a regular business checking account using foreign
credentials, I would definitely prefer that route. Do you happen to know of
any that I can try?

Never considered that just having a presence in Delaware would run me about
$3K/year. That's interesting.

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petervandijck
What do you mean exactly by "international" company? If you register it in
Delaware, it will be an American company, pay American taxes etc. (please
correct me if I'm wrong here).

Is this a company that already exists? If so, registering it doesn't make any
sense. (Again, please correct me if I'm wrong.)

~~~
marcamillion
Right now, I am registered in Jamaica (where I live), but whenever I want to
do anything in the US (merchant account, simple checking account, etc.) they
need US credentials. It will make life MUCH easier for me to be registered.

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ojbyrne
[http://www.ehow.com/how_4696999_register-llc-based-
company-d...](http://www.ehow.com/how_4696999_register-llc-based-company-
delaware.html) seems fairly authoritative.

------
there
have you looked at <http://legalzoom.com/> ? i know they provide registered
agent services in delaware but i'm not sure if you can do it from outside the
country.

~~~
marcamillion
I have read a bag of mixed reviews for legalzoom.

Are they really good for this type of thing?

------
ahoyhere
I'm an American, but I used <http://www.delawareinc.com/> and I'm happy with
their service.

