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Hi! I live and work in Maryland, US. Because I will freelance for a European company some questions raised.
1. Which kind/form of company should I start?
1.1 In which state?
2. How to tax work for a foreign, European country?
2.1 Do I have to pay taxes in the European country?
2.2 Do I have to pay taxes in the US? (I asume, but due of 2.1 I want to be 100% sure...)
The facts of this company will be:
1. between $100 and $1000 a month in volume the next 12 month
2. maybe no sales/business volume for years, just having a company for the case "whenever I need one, and I just have the one I had in the past". Like having this company for my whole life and using it for work if required.
3. only one employee (myself)
4. only one company I work for (maybe will change in the future, but not planed)
5. home office
6. Require to have an separate company bank account. (accounting is so much easier then)
7. Paying myself from company money
8. Not much business expenses. Maybe I will buy a computer (~$1000) which I will use use 70-80% personal, and 20-30% for the company.
9. Tax-work will be streamlined/not difficult: 12bills/year to a company, 10-12 paychecks/year to myself, small amount of business expenses (see 8.)
Preferable I would chose a company form where I'm not liable. That's nice to have, but not a must.
LLC seem to be expensive on taxes if the company don't has an income. And as far as I understood the official page of Delaware (people say that it's cheap to open an LLC there) I have to pay $100-300 minimum a year in taxes for an LLC - even if this company doesn't have an annual income/business volume.
I read a lot about double taxing if I have a small and not liable-free company. As far as I understand it, I need to pay taxes for 1) the company work/bills the company writes for other companies 2) for my own "paycheck"/personal income. I try to avoid this because more or less all income of the company will be my personal income/payment.
Thanks in advance and tips.
Topic starter
Posted : 07/12/2011 9:48 pm
Re: Company form and taxes (Freelancer in US, work done for European company)
If I were you I would talk to a good accountant / tax attorney and see what your best options are. You can pay them to get everything set up for you and maybe file your first year returns just to see how it is done and where the loop holes will be for this type of setup. Do you have another job and this is just a small side business? You certainly should not have to pay taxes in Europe. One of the best things you can do is just keep very detailed records regardless and you should be able to figure everything out no matter which path you choose. Since this is such an important piece of the puzzle to any business I would seek local professional advice and see what you can come up with.
Posted : 10/12/2011 9:44 pm
Re: Company form and taxes (Freelancer in US, work done for European company)
I agree with daveb, you should definitely speak with an attorney or tax accountant in your state. It is important to get all of the facts from the professionals and not from just forums and help lines.
I would suggest opening in Florida as it has similar low rates like Delaware.
Posted : 16/12/2011 7:48 pm
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