NOTE: similar issues should be addressed by US companies looking to expand overseas.
How a company is structured (type of entity and ownership thereof) can have a tremendous impact on the taxation of the entity and the cost of profit repatriation. Additionally, the complexity of tax compliance and reporting is determined based upon the type and ownership of the entity.
Here is a checklist of the inbound issues which should be addressed (more detailed information on each of these issues is available):
|Determine Level of US Business Presence|
|Seek Input/Assistance from Local Professional Advisors (Accountants, Tax Advisors, Attorneys, Etc.)|
|Choice of Entity and Entity Ownership (Structure)|
|State of Incorporation/Formation|
|Determine Tax and Accounting Year-End|
|Determine Corporate Officers|
|Determine Board Of Directors|
|Engage a Registered Agent for State Representation|
|Registration for a Federal Identification Number (EIN)|
|State(S) in Which to Obtain a Certificate of Authority to Do Business|
|Register for State Payroll Tax, Sales Tax and Income Tax|
|Determine if Products/Services are Subject to State Sales Tax|
|Review Workers’ Compensation Insurance Requirements|
|Review General Insurance Needs|
|Engage a Payroll Service Company for US Payroll|
|Determine Fringe and Welfare Benefits to Offer US Employees|
|Discuss Global Mobility Issues (See Prior International Tax Planning Month Article) for Any Home Country Employees to Be Seconded to the US|
|Obtain Work Visas for Non-US Employees|
|Consider Employee vs. Independent Contractor Status – Federal and State Rules May Be Different|
|Determine “Nexus” (I.E., Physical or Economic Presence) in Each State According to Each State’s Rules|
|Open a Bank Account with Federal EIN and State Formation Document|
|Determine Capitalization (Debt vs. Equity Amounts)|
|Determine if Business Licenses are Needed|
|Review E-Commerce Concerns|
|Establish Transfer Pricing Policies for Intercompany Transactions|
|Review Technology (and Other Intellectual Property) Transfers and Licenses|
|Determine if Financial Statements (Audited, Reviewed, Compiled) are Required – Note, The US Government and States Do Not Require Financial Statements|
The best time to get started through this extensive (and not necessarily complete) checklist is during the initial planning stages of international expansion.
At Withum, we can help you get started on your inbound (or outbound) journey as your business expands cross-border. Do not hesitate to call on the International Services experts at Withum with any questions by filling out the form below.
To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.