Forums: Discussions for entrepreneurs and small business.

I hope enterpreneurs here have a sense of internalionalizm, extend help to overseas enterpreneurs not American.

Im really fired up with doing business in the US after listening to Start-up Nation Podcast and reading several books like Rich Dad, Poor Dad. Im from China, my business would be selling local things to Chinese in the US thru ecommerce. The things will be in china and delivered in china. The value added to that is I made the things sold locally available online in the US. I have a sister who has American passport who I thought would register LLC for me in the US sorta dummy owner, but I`ll be the one to run the business from cross the pacific.

What sorrta problems i might encounter with this situation (web security, legal, taxation, etc)? Since the items never really reach US soils (only the payment), how am i taxed?  Or is there a better way to do this business?

First of all, Startup Nation is conceptual, not geographic. In other words, if you`re an entrepreneur, it doesn`t matter at all what country you`re from. Starting a business is starting a business.

What`s Fantastic, though, is to hear so many entrepreneurs from China! Although you`re not yet in a fully capitalist society, and it`s a sort of experiment on your government`s part, once the spirit of making your own money grabs hold, I wonder if the government will ever be able to stop it. :-D Here`s hoping they won`t be able to.

The problem I`m having with the above part of your message is that you`re making or getting items locally, and delivering them in China. So how does someone in the US get your product? Why would I pay for an item for myself that`s delivered overseas? I want it in my hands, right?

Could you maybe clarify what you mean? (Don`t worry about English...nobody cares about how well you type, we`ll figure it out and ask questions.)

Thank you for this "Startup Nation is conceptual, not geographic". Im in the right place. I appreciate it.

Many chinese people in the US send money to there relatives in china. I dont know if the Italians or Scottish do that but we (most chinese) remain concern for our relatives. My sister still sends things or money to china. These money will be used to buy goods for the family in china. However sometimes the money sent is misused. So instead of sending money, they pay for the local goods in the internet, ask the site to deliver these goods in the locality in china. No goods going to the US, however the payment is in the US.
It is difficult to secure online merchant account in china.

Thank you.

I`ll preface by saying that I`m no expert in the matter.

It appears to me that you are going about this all wrong.  

If you open a US business it will have to pay State and Federal taxes in the US, you would get paid in Dollars and as it stands today the US Dollar is rapidly deteriorating, what today you sell for 100 Yuan would be bought with $13.31 you then need to convert and transfer that money to China. Using the Bank of China for instance that would cost you $20 each time, so you would have to bundle up your payments to keep expenses low and unnecessarily slow down your cash flow. The issue with this is that as the Dollar declines you can buy less and less Yuans US $Chart  (link needs Java enabled browser)

So in effect you sell for X amount of Yuan but will receive less than that due to international exchange rates, money transfer fees and US taxable income, worse still accounting for what you bought in China sold in the US and delivered in China will be a nightmare. I`m fairly certain that the accountant will charge and arm and a leg for that type of stuff.

What you should do is open an on-line store in China, anybody in the US that wants it delivered somewhere over there would just put the Chinese address on the delivery form and presto!

Good luck,

Thank you very much ElidS.

Iv already thought of that scenario. If I put 12% markup to the price of the item, would that be enough to offset federal taxes, accounting services, currency exchange, my own profit etc? My assumption is people will pay 12% more than the local price than loosing money because it`s been misused as earlier mentioned.

Thank you

Well yes that ought do it. Think your cash flow will still be slowed down but a 12% markup is likely to make up for it.

Good luck,

Eli brings up a good point. What you seem to be doing is a "drop ship" model. You`re taking the order from "anywhere" (the US maybe), fulfilling it in China, and delivering it to a Chinese address. Why create an American business for this?

The main issue I see is the money transactions. I`m guessing a large portion of your US customers wouldn`t be using online payments like PayPal? So you`d be dealing with international money orders or something?

Now consider the tobacco business of the American Indians (Native Americans?). They have a reservation, which by law is considered a sovereign nation. Regardless that the reservation is completely surrounded by US land, the Indian nation isn`t subject to any of the US laws or taxing.

The result is that if I order cigarettes online and send a money order, the *actual transaction* (the point where money exchanges hands for goods) is considered to be on Indian land. Therefore, not subject to taxes.

It`s driving the US gov`t crazy in their greed for more money, but so far, they can`t do anything about it. So too, your money exchange would take place in China.

So the big question is whether or not Chinese taxes are higher than US taxes. If so, then it makes sense to form the business in the US. (There are customs duties involved as well, I`d think....maybe?)

On the other hand, since all you`re doing in the US is offering a mailing address for money, but everything else is taking place in China, why not keep it a Chinese company? You`re basically a "broker." I don`t even know if China has "taxes" in the way the West uses the term.