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Thread: Question about forming LLC in Delaware and taxes

  1. #1

    Default Question about forming LLC in Delaware and taxes

    I am(US citizen currently in NJ) planning to form a LLC in US (lets say BalanceMark LLC) in Delaware State and have following questions

    It would be doing business with a company in UK (lets say Rapid Force Solutions)

    1. Customers in US would be paying to LLC in US - BalanceMark LLC using cheque or credit card. This money would eventually go to US Bank account held by BalanceMark LLC (via merchant account)

    2. Twice a month, around 75% money would be transferred from BalanceMark LLC bank account to bank account in UK(held by UKcompany Rapid Force) as expense. Is this a perfect thing to do from legal perspective or any limits etc needs to be taken care of here?

    Can you please let me know how the tax calculation would be done for BalanceMark LLC and expenses(profit/loss/etc) go for this?

    For eg
    1. US LLC (BalanceMark LLC) gets $10,000 from customers every month
    2. It transfers $7000(including the wire charge) to UK company for expenses
    3. So, assuming there are additional $500 expenses in US, $2500 is net balance in the US LLC = net profit ?
    Now, how much should be paid in taxes? And since this is an LLC, the individual holding the company need not pay any other taxes or he has to pay any taxes?

    Is S-corp recommended for above or LLC is best way to go? Would legalzoom be the best way to form the company?

  2. #2
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    The US tax will be on the $2500, yes. But the UK company will have to pay UK tax on the $7500 revenue.

    One more thing: you need to be aware of how sales taxes will work wherever the company has a "physical presence." Doesn't just matter where the company is registered, it matters where the company has ANY physical presence (and that's been stretched to even include affiliate partnerships, which hasn't been tested in court, but it's certainly something to consider).

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