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Old 27th December 2012, 09:55 PM   #1

Join Date: Dec 2012
Posts: 0
Question Is This Legal?


I reside in the U.S. Does anyone know if it's legal to register a company in another country and pay taxes on profits on the personal 1040? Or is there no way to avoid paying your state's franchise fee?

Just looking for a LEGAL way to save money for a small online business.

Appreciate any help.


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Old 29th December 2012, 06:19 PM   #2

Join Date: Dec 2012
Location: New York, NY
Posts: 18


Standard disclaimer - not your lawyer, this is not legal / tax advice.

One of the main reasons you set up a legal business entity (corporation, llc, etc) is to limit your own personal liability. If you operate a business that is separate from you personally then you have the benefit of that limited liability (ie. if someone slips on a banana peel in your store they can sue the store, but can NOT come after your personal assets). If you operate as though *you* are the same person as the store then courts will "pierce the corporate veil" and look through to you personally. So if you were to do what you are discussing that would be one result.

If you are NOT concerned about limited liability (and it seems like you probably don't have any partners if you want to put this on your personal return), that brings me to my main question which is who go through the cost and hassle of setting up a business entity? Why not operate as a sole proprietorship?

I would never actually recommend that to anyone, but if you don't want to take advantage of the benefits of being incorporated it might make sense.

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