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MenuDo I have to file a 'zero' Tax Return with the IRS?
I have a single member LLC set up in Wyoming. Actualy, this LLC is 100% shareholded by a Sechellois company of that I'm the only owner. I'm not US resident alien and the Wyoming LLC does not generate US-source income.
Answers
yes, if you have an LLC you probably already have to file quarterly or as per your state's regulations. Regardless of the frequency even if you are making zero sales, zero expenses, etc. you need to report them as the files are due.
Yes, you definitely have a U.S. tax filing obligation. A single member LLC is a disregarded entity for U.S. federal income tax purposes. Although the entity itself does not pay federal income taxes, the single owner is responsible for reporting the income and expense of the LLC on his/her income tax return and paying the requisite income tax, if applicable. If the LLC does not generate any U.S. source income, and you do not conduct business in the U.S. through a permanent establishment, then the LLC probably does not owe any U.S. federal income taxes. However, the IRS has recently implemented new regulations which require single member LLC's to file a Form 5472 to report the activity of the LLC. This form is filed alongside a proforma Form 1120. It is absolutely critical that you file these returns. The IRS can impose a $25,000 USD penalty for noncompliance. I highly recommend you consult a competent U.S. tax adviser that specializes in these filings.
You never have to file.
And if you don't the IRS may assign a tax bill to your company via random number generation or whatever crazy valuation they're using at the time for your type of business.
Best for very person (SS number) + every entity (EIN) should file a tax return, even if $0 tax is required.
If the IRS assigns a tax value, you will spend countless hours trying to straighten this out.
Also, if you have an entity which is fallow (no longer used), shut it down, so you can avoid undo paper work filings every year.
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I'm a Canadian selling ecommerce products on Amazon (US only). Need info on cross border tax clarification & if it's time to incorporate (in US or CA)
Regarding US taxation of internet sales. Since you are a foreign entity or person (in regard to the US), and there is an income tax treaty between Canada and the US, you will not be liable for US federal income tax on internet sales unless you have a “permanent establishment” in the US with which the internet sales income is effectively connected. So as long as you do not have a warehouse, physical store, sales office, etc... in the US you don't have to file US returns or remit tax to the US. Amazon should be charging to the customer and withholding any sales tax due to a state in which your products are sold. If you sell through other merchants or directly you may have to deal with this yourself. Regarding incorporation Incorporation is almost always a good idea from a liability standpoint as it prevents a judgement for damages from taking all your property and limits the collection to what is owned by the business, With the facts you have given I would suggest incorporating in Canada unless you have a business reason to establish a physical presence in the US. This will eliminate US taxes and related compliance costs. Once you establish a US presence you will need to begin filing returns in the US even if you are running a net operating loss. If there is no benefit to having a physical presence in the US then the related compliance costs and tax would be an unnecessary expense. Feel free to setup a phone call if you would like to chat for a bit regarding the matter. ThanksDM
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