Make Connections

Network, Get Answers, Find Members in Your Area, and More!

Forums » Strategies & Tactics for Getting Efficient

Which countries are best for an online business?

    • 32 posts
    November 5, 2008 4:51 AM EST
    I am a CPA and had a tax practice for 14 years so the only questions I will really address is the tax question.
     
    Are you planning to move out of the US?  Keep in mind that as long as you are a US citizen, you will be subject to US tax regardless of where the income is earned and regardless of where you live.  There are some special rules for ex-pats but I won`t go into that here.
     
    As for the corp tax rate,  most small corps qualify for the "S-election".  What this does is effectively treat a corporation as a partnership.  The corp does not pay tax but the income is reported on the individual`s return.  The advantage of this is the individual is not taxed when they take the income out of the corp but ad the income is earned.
     
    The things you should consider is what types of taxes the foreign country imposes.  Do they have a VAT (value added tax)?  What about property taxes?  How are they going to tax you as a foreigner?
     
    The other thing to keep in mind is if you have any activity in the US you will be subject to US tax.  That can be as simple as inventory/employee/office/bank account in the US.
     
    I have had clients with foreign corps that when they liquidated the company found it VERY difficult to get the money out of the country.  Some countries do not allow money to move out of the country as easily as the US does.
     
    Hope this helps and best of luck.
     
     

    ---
    http://www.slowcookermate.com
    http://www.twitter.com/yslowcook

    • 2 posts
    November 4, 2008 11:49 PM EST
    I have an online business that I can locate anywhere in the world. Help me decide in which country I should locate it and even which state/province within a country.

    First, I`m an American so unless the country in which I locate the country is America, I will be a foreigner and having to deal with the country as a foreigner.

    Things I think are important in this decision process are:

    LEGAL
    Which countries allow foreigners to set up corporations in their countries with the fewest problems, restrictions, red tape, etc.? This is, by and large, where USA does well. The opposite would be Thailand which, from my understanding, requires a native to be given a substantial portion of one`s business to operate in their country.

    TAXES
    Which countries have the lowest corporate tax rate and taxation on foreigners and foreign-owned companies? This is where USA doesn`t shine as it has the second highest corporate tax rate and, with Obama now becoming President, it will be raised even higher.

    COST OF LIVING
    Which countries are the cheapest places to live and operate a business? Another area that USA ranks poorly.

    INTERNET INFRASTRUCTURE
    Which country has good cheap large-bandwidth Internet connections? An area in which that the USA ranks really well ... though I`m not sure how it does as far as expense.

    OTHER CONSIDERATIONS?
    What else do you think should be taken into consideration?
    • 2 posts
    November 5, 2008 5:54 AM EST
    SlowerCookerMate,

    Thanks for the reply.

    Am I correct that as long as I have my company reinvest back into itself, it doesn`t pay taxes on that reinvestment?

    And by "small corps", do you mean employee-wise, revenue-wise, both, or something else?

    I am not anxious to leave America or locate my business outside of America.  It depends on how much the Obama presidency penalizes business.  By his comments about penalizing American corporations that move jobs overseas, if he actually does that, it will be an all one or another decision for me.  Either completely move the company overseas or not.  If the business environment is worse under Obama than now, the decision to completely move overseas would be seriously considered.

    As for activity in the US, the business is a games website that sends winners prizes.  If the winner is an American and a prize is sent to them, would that be activity that would subject me to US tax?  How about receiving advertising revenue from American advertisers into an overseas bank account?  I can keep the rest of the operation overseas.

    Lastly, any thoughts on China as a candidate?