LLC with contractors


3

I am not a US citizen and I want to create a company and work with many contractors outside US. It will be software development company. Company will be delaware based LLC, and office will be located in CA.

What taxes should I fill, and which documents should I prepare when I am paying something to my contractors.

1) As I understand I should fill form 1042 for all payments that is made to foreign entities (and non resident aliens).

Should I withhold any tax if all services is performed outside US?

a) If all contractors outside US as I understand that source of income is outside US according to this table: http://www.irs.gov/businesses/small/international/article/0,,id=96459,00.html According to this I shouldn't withhold tax. Am I right?

b). There is also a tax treaty between US and Russia, so as I understand in any case I do not need to withhold 30%. Should I use (1) or should I fill something to report tax-treaty.

2) Is all payments to contractors can be treated as deductions? How to calc tax at the end of the year.

3) Which taxes should I fill at the end of the year?

Software LLC Foreign Tax Iphone

asked May 14 '11 at 05:24
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Vitaliy
16 points
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1 Answer


2

If you are in the US you will need to get a CPA involved in this to get this right.

But based on your points:

  1. From what I understand the following will be happening: You get a client in the US that will pay you upon completion of the project for which you will be using contractors (companies) in Russia. If this is the case then what you pay them would become an expense and what your clients pay you will be your income. If you do not reside in the US then your personal taxes will have to be filled out via form 1042. Business taxes would be using forms appropriate for the business (check with CPA).
  2. Probably but check with your CPA.
  3. You will have to do both Personal and Corporate forms but the breakdown will need to be done by an accountant.
answered Jan 27 '12 at 08:28
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Karlson
1,779 points

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Software LLC Foreign Tax Iphone