Q. So given all the owners are non-U.S. persons, from income tax point of view is it more beneficial to register LLC or Corporation?
Tricky question that depends on lots of factors. Both entities have their pros and cons, so before reaching a conclusion you should analyze your specific situation, make some forecasts on how your business will evolve, and also - consult a CPA, it will help you a lot.
Keep in mind, there is not always a “right” and “wrong” answer - often times either entity that you would form for your business would work just fine.
Q. How and when do I file tax return?
By hiring a knowledgeable U.S. CPA (accountant). The deadline in most cases is or around April 15 (each year can be a bit different). You can file extension by that date, and the new due date is September 15 for companies and October 15 for individuals.
Keep in mind, corporations have to file quarterly reports, while LLCs taxed as partnerships file once a year. This could result in slightly higher cost of accounting services for corporations.
Q. Do I need an ITIN to file taxes? If yes, how can I get it?
Whether you need to obtain an ITIN will depend on if you have US tax reporting obligations due to your US business interests. It is possible that you will need an ITIN if you have membership interest (ownership) in an LLC, but most probably you won’t need one as a shareholder of a corporation.
KEEP IN MIND: Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception.
For more information on ITIN please visit this IRS page.
Q. What about state income tax?
This tax is only applicable to C Corporations, not LLCs. It applies to income earned by the corporation in the state, unlike federal income that applies to all U.S. sourced income.
Even though LLCs don’t pay income tax, it is a good idea to check with your CPA if there are any filing requirements for the LLC in the state of registration.
Q. Should I register my company in the state that has no income tax?
Again, it doesn’t matter if you choose LLC. For corporations it matters, but only to the extent that you believe you will have lot’s of income in the state of registration. For example, if you have a Delaware Corporation and your business has no income coming from sources in