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Clarity

Jason Knott

Bradenton, FL

Practice focused on U.S. tax and compliance matters. Help individuals and businesses navigate the complexities of the U.S. tax system, with an emphasis on international and cross-border tax issues.

Help clients with foreign corporation and partnership reporting issues (e.g., Forms 1120-F, 5471, 5472, 8858, and 8865), FATCA, FBAR, and CRS reporting.

$2.50/min

73 Calls

28 Reviews

23 minutes
Avg. call

Technology eCommerce Legal Tax Law Tax Corporations

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International Asset Protection Strategies

Jason assists both U.S. and non-U.S. persons with crafting a comprehensive asset protection strategy that utilizes foreign and domestic corporate entities, LLCs, and foreign trusts.

An effective asset protection strategy helps protect your personal and business assets from creditors, litigators, government entities, and disgruntled former customers and partners.

Whether you are a large organization or a small business, these programs are critical to protecting your hard-earned assets.

Corporate Law for Startups

Jason is an experienced attorney that has helped thousands of new business ventures with their entity formation, trademark filings, drafting operating agreements and corporate bylaws, creating website terms & conditions and other privacy policies, and advising on the most efficient means of raising capital.

International Tax Consulting & Cross Border Planning

Jason is an International Tax Attorney with over 10 years of experience advising individuals and businesses on their tax and legal issues.

If your business operates internationally, you need a tax strategy that considers the global tax footprint and aims to minimize all taxes regardless of where you operate or where the business owners reside.

Answers 75
Reviews 28

Answers

Jason Knott answered

I'm a business in Canada (QC) that mostly does business with USA based clients over the web. What taxes do I need to apply?

Anytime you conduct business within the U.S. or with U.S. based customers, you should consider the various federal and state tax implications that may apply to your business.

Generally, a foreign business is subject to U.S. federal income taxes if that business is engaged in a U.S. trade or business and has income effectively connected (ECI) with such U.S. trade or business. If your only connection to the U.S. are sales to U.S. customers, that is generally not enough to create a taxable nexus with the U.S.

Factors that may create a U.S. trade or business with effectively connected income may include, but are not limited to, having employees based in the U.S., a fixed office location in the U.S. and if you are personally traveling to the U.S. to perform the work.

The other issue is whether tax treaty benefits may apply. Assuming you qualify for treaty benefits under the U.S.-Canada tax treaty, Canadian businesses are only subject to income taxes in the U.S. if they operate a permanent establishment in the U.S., as defined in Article 5 of the tax treaty.

If it's determined that your company is engaged in U.S. trade or business and is subject to income taxes, you'll be deemed to operate a branch in the U.S. A foreign corporation with a U.S. branch needs to file a Form 1120-F and report it's U.S. effectively connected earnings.

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Tax

Income Tax

Corporate Finance

Jason Knott answered

How should I document my investment into a business for proof of transfer?

Your investment in the business can be documented in a variety of ways. The appropriate documentation will depend upon the type of investment (equity, debt or a hybrid structure), the type of business entity (LLC, partnership, corporation, etc), and the terms of your investment.

If your investment is an equity investment in a corporation, the corporate share registry should be updated to reflect your cash contribution and the number of shares you received. Most corporations also have a shareholder's agreement which corporate shareholders use to outline their rights and obligations amongst themselves.

If the investment is an equity investment in a partnership or LLC, you'll need to sign the LLC operating agreement and update the members' schedule to evidence your investment.

A debt investment in any structure is typically evidenced by a promissory note which is signed by you and the company. The note outlines the principal amount of investment, interest rate, payment terms and other conditions.

An investment in an business is not a tax deductible expense for the investor, nor is the cash contribution considered taxable income to the business. In certain cases where your investment becomes worthless, or the promissory note is deemed uncollectible, you may be able to write off the investment as a capital or ordinary loss.

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Tax Preparation

CPA

Corporate Finance

Jason Knott answered

What are the pros and cons of opening a personal bank account versus a business bank account?

If you have a business, you should have a separate operating bank account to receive income and pay expenses. As a best practice, you want to keep the finances and activities of the company separate from the owners.

If business and personal activities are commingled, it makes it difficult to prepare accurate financial records which are necessary to track company performance and prepare year-end tax filings and financial statements.

From a liability perspective, if there is a mix of personal and business use in an entity, the business may not be respected as a separate entity, and the owner can be held personally liable for the debts and obligations of the business. It's important to not oeprate the business as an alter ego of the owner.

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Tax Preparation

Business Development

Startups

Jason Knott answered

What is the difference between paying with personal funds versus business funds when it comes to investing in my business?

It sounds like you are renting studio space for your company (which would be a deductible rental expense for the business), and need to pay the invoices using either funds in your business bank account or personal bank account.

If you pay for business expenses using the company funds, the payments are deducted as an expense which reduces the company's net income for the period. Anytime an expense is incurred at the company level, this is a reduction in the overall equity of the company. It doesn't impact your equity account directly. The net amount of income over expenses for the year is closed out to the company's retained earnings, which is a part of the company's total net equity.

If you pay for the studio rental expense with personal funds, the expense is still a business deduction on the company's accounting records. However, because the expense was paid using personal funds, you need to record an additional entry to evidence your contribution for the expense. This can be recorded as either an equity contribution or a loan to the company. For example, the transaction would be recorded on your general ledger as a Debit to rental expense, and a corresponding Credit entry to either "Loans to Owners" (a liability account) or to "Additional Paid in Capital" (an equity account).

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Entertainment

CPA

Private Equity

Jason Knott answered

What are by tax obligations in the USA?

There are two main considerations. First, if you are selling products to U.S. residents located in various states, you may be liable to collect state sales tax depending upon the residency of your customers. Second, you may be liable for federal income taxes on your net earnings if it's determined that you are engaged in a U.S. trade or business and have income effectively connected with that U.S. trade or business. The rules for determining whether U.S. source income is effectively connected income are quite complex with many nuances. For the sale of inventory in the U.S., the old "title passage rule" used to apply. If title to goods passes outside of the U.S., income from sale of the goods was deemed foreign source and not subject to U.S. federal taxes. The recent tax law changes under the TCJA have modified these sourcing rules. If products are manufactured outside of the U.S. and then sold to U.S. customers, the proceeds are foreign source and not subject to U.S. tax. You also need to be mindful of the treaty provisions that may apply. The U.S. and U.K. have an income tax treaty which provides that a U.K. company's business profits will not be subject to tax in the U.S., unless the U.K. company operates a permanent establishment in the U.S. What constitutes a permanent establishment depends upon the specific facts and circumstances of your situation, so it's important to consult with a knowledgeable tax advisor and consider all of these issues.

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Tax

International Business

Tax Law

Jason Knott answered

How can one file an EIN without an SSN/ITIN?

If you are a nonresident for U.S. tax purposes, you do not need an ITIN or an SSN to apply for an EIN for an entity.
The online application process is the fastest, but this system is not available for nonresidents. You need to download and fill out a Form SS-4 for your company and name yourself as the responsible party. In the field where it asks for your "SSN, ITIN, or EIN" enter the word "FOREIGN" to indicate you are a nonresident. Mail or fax the completed form to the IRS and wait for them to assign your EIN. Alternatively, you can contact the IRS via phone and fax the form to the representative once they provide you with their dedicated fax number.

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Legal Services

Legal Advice

Legal

Jason Knott answered

When it comes to paying vendors, at what point do I need to collect a W9?

You should collect a signed Form W-9 at the time you have the vendor sign the subcontractor agreement. It's always a best practice to have the form included as part of the onboarding package for when you hire a vendor or bring a subcontractor on board with your team. At the latest, the Form W-9 should be provided before you remit payment to the vendor or contractor. If you don't receive the signed Form W-9, you are technically required to impose backup withholding upon the gross payment and remit the taxes to the IRS.

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Tax

Entertainment

CPA

Jason Knott answered

Are in-kind donations are tax deductible?

In-kind donations of tangible products are generally tax-deductible. For example, if a business wants to donate used computer equipment to a charitable cause, the business can contribute the property to the charity and take a tax deduction equal to the FMV of the property at the time of donation. There are special rules, however, if the property has depreciated or appreciated in value from when the company purchased the product. Definitely consult with a tax advisor before donating property and recording the charitable contributions on the business tax return.

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Non-profits

Tax

Charity

Jason Knott answered

Can a C Corp be the owner of and fund several LLC's? Can these LLC's have the same paid Directors?

Yes, it is okay for a C corporation to hold an interest in several LLC's. The only caveat is if you have an LLC that makes an election to be taxed as an S corporation. LLC's are eligible to make an S election, however, there are limitations on who can be a shareholder in an S corporation. S corporation shareholders are limited to natural persons and certain types of trusts, so a C corporation cannot hold stock in an S corporation. If the LLC is treated as a disregarded entity for federal tax purposes, or the LLC filed an election to be taxed as a C corporation, then there shouldn't be an issue. If the LLC's are wholly owned by the C corporation, the C corporation is the sole Member of the LLC, and can appoint the Directors to be Managers of the LLC. Each LLC should maintain separate books and records and have its own LLC operating agreement.

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New Business Development

Jason Knott answered

How do I get Tax Residency Certificate

If the LLC continues to be a disregarded entity, and you as the sole owner continue to be a nonresident alien for U.S. tax purposes, then you won't be able to get a U.S. tax residency certificate.

If you file an election for the LLC to be taxed as a C corporation, then the LLC will be a regarded entity for U.S. tax purposes, and will qualify as a U.S. tax resident. Once you file the election you can go ahead and complete Form 8802 to obtain the residency certificate, if needed.

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Tax Law

Tax Preparation

Corporate Tax

Jason Knott answered

If I have a startup LLC and an early investor would like to invest for a 10% equity in my business, does he also need to be a legal business partner?

If your business is currently structured as an LLC, you can admit a 10% equity holder as a limited member/partner, which means he holds an equity stake in the company, but doesn't participate in the day-to-day management activities of the business - that responsibility remains with you. You'll have to amend the capital schedule in the LLC operating agreement to admit the new partner. If the LLC was previously only owned by you, the admission of a second owner means the LLC is now a partnership for U.S. tax purposes, so you're required to file an annual Form 1065 partnership tax return. If you don't want to create a partnership, you could explore having him contribute the funds in the form of a debt arrangement, rather than an equity interest.

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Equity Funding

Reviews

Knowledgable, professional, to the point. Highly recommend Jason for his expertise in US tax.

Philipp Muellauer Source: Clarity

Great advisor, got all questions answered clearly and to the point. Will contact Jason again:)

Nicolas Anguiano Source: Clarity

Super Helpful! Jason helped me clarify a couple of important questions.

Yuan Chen Source: Clarity

Jason was great. Clear and concise and answered my questions directly. Worth the time.

Grant Sinclair Source: Clarity

Always amazing. Will be back for more info ! Thanks Jason

Henrae Chen Source: Clarity

Jason is easy to talk to and knowledgeable about taxation for foreign entities.

Sunil Davangere Shashidhara Source: Clarity

Always a great chat with Jason. Super informative and doesn't waste your time, gets straight to it.

Henrae Chen Source: Clarity

Thanks Jason, good honest bloke, helpful :)

Michael Stewart Source: Clarity

Jason is amazing. Answered all my questions very straightforward and he is very knowledgeable in the online business space. 100% worth every penny.

Henrae Chen Source: Clarity

Jason is one of the few advisors I've spoken to that understands ecommerce. His advice was simple to understand. Worth every second and made it easy to move forward with next steps in business.

Matt Clarke Source: Clarity

Jason is great to work with. He has a clear understanding of International taxation.

Vinodh David Source: Clarity

Member since January 2019