What does a freelancer based in Switzerland need to consider in terms of taxation when selling digital services via the US based reseller Digistore24?

I have registered over 20 companies in the last decade and from my experience I can tell you that every country serves a different purpose. I run a small gambling company that I have registered in Malta due to the legality of online gambling there. I have another company registered in Delaware, whilst my main company is registered in the Netherlands. If your business is only online I would advise you to register it in Europe or if you must in the United States in Delaware/Nevada. Credibility wise I would say that registering your company in Singapore or Malta or Costa Rica, will not benefit you much opposed to say Delaware or The Netherlands. I am available for a call if you need anymore help. I am currently doing a promotion for a one time free 15 minute phone call so just send me a message for the discount code.

The income should be reported by the individual or business that provided the service and earned the income. If the 1099 is in your name, you could ask the issuing Company to change to the S-Corp if that is who earned the income. In the future, have a written agreement between your S-Corp and the Company you are providing service. Also, provide them with a Form W9, so they know where to report the 1099 income at year end.

NIcole is right. When I first started my business I thought I was saving money by doing my own bookkeeping. It took me much longer than it would take a bookkeeper - all time that I was not spending on marketing or billable activities. And in the end I made errors which made the initial work of the bookkeeper longer. I now have a consistent routine. My bookkeeper picks up all my material monthly and does my books in less than 2 hours. Very worthwhile.

Yes you should be reporting the capital contributions. Under the old Form 5472 rules, it's true that only items that impacted taxable income would be reportable transactions. So, a capital contribution by you to the corporation would not be reportable, unless the equity contribution was somehow below or above a fair value contribution in exchange for services that you might provide for the corporation - essentially an imputed reportable transactions. When the IRS changed the Form 5472 rules to require non-U.S. owned single member LLC's, they expanded the reportable transaction definition to include virtually everything. The term “transaction” is defined in Treas. Regs. Section 1.482-1(i)(7) to include any sale, assignment, lease, license, loan, advance, contribution or other transfer of any interest in or a right to use any property or money, as well as the performance of any services for the benefit of, or on behalf of, another taxpayer. So, for example, contributions and distributions would be considered reportable transactions with respect to such entities. These amounts can be reported on Lines 12 and 25 with an explanatory footnote that clarities the amounts are capital contributions and not amounts that impact taxable income.

I have established off-shore development relationships with individuals and firms in India, Ukraine, Belarus, Russia and Korea going back to 1996. You might find it a lot smoother to have them work through an established firm in India that is already set up with all appropriate licenses, tax-reporting, payment systems, and so on. It can be tricky enough to communicate the software requirements and other specifics of your project without you and them also learning and implementing processes to respect domestic and foreign regulations. If you'd like more information, feel free to set up a call.