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The shareholder pays taxes on the (W2) income and 15% tax on any C-corporation dividends that the C-corporation has already paid tax by the above brackets; this might be the reason that people assume it double tax.
See the link:
[yu0.net...] regarding the effectively connected income (ECI) and the LLC company fits under wordings: "f you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States."
You can certainly deduct the income of LLC while paying out salaries to you, however, the same thing you can do with the corporation.
If you are doing business outside of U.S., your choice should be LLC company in U.S., recommended state Wyoming instead of much popular Nevada or Delaware, for the lowest yearly fees in comparison and for the best advantages. Wyoming is the state where LLC company is born.
If you are doing business inside of U.S. and outside of U.S., recommended is corporation and NOT PAYING dividends. You can pay salaries to yourself as director, officer or employee or both, but do not pay dividends. Make sure you have proper corporate resolution or contract between corporation and you for salaries or wages. If you perform services outside of U.S. and receive salaries from U.S. based income, you will not be required to declare such income on U.S. tax forms, but it is left to you to declare it where you want. You will certainly not be required to pay or declare your income from US corporation in US, if your services are not performed in US.
You can certainly use the maildrop forwarding address for signups of people. I recommend you this one: [yu0.net...]
And you can additionaly take the U.S. based toll free number, voice mail or fax. See [ww.j2.com...]
Additionally, it is recommended to get the U.S. based bank account for your coming U.S. based company.
Thanks for your good explanation.
However, I don't see the cases you cite covers mine:
A mexican individual already paying income tax for a salary day job on a company, who wants to setup a sort of company in the U.S. for the sake of paying taxes there for the income on advertising on their sites and due the benefits of being an amerircan based company.
For example, an LLC is a "pass through" tax entity; that is, the IRS doesn't tax the corporation, they tax you. All of the corporation's earning are taxed as personal income on your tax return. Conversely, if the corporation loses money, you can claim that as a deduction on your personal taxes. This can be helpful when you're a start-up and expect a loss for the first year or so.
In other cases, a C-Corp is more advantageous. Suppose your gross revenue for the year was $500,000, of which you took $100,000 for your personal income. As an LLC, you'll be taxed on the entire $500,000 as personal income, even if you leave the remainder in the corporation's bank account for future business purposes. As a C-Corp, the IRS will tax you on the $100,000 and the corporation on the remaining $400,000 (so long as you paid yourself the $100K as a salary and/or bonus, not a dividend). Keep in mind that, the more money flowing into a single tax return, the more likely you'll be kicked into a higher tax bracket. You'll pay less taxes on the same amount of money if you spread the income over more than one tax return.
Thanks for your comment, you sound more like an accountant than the rest.
Sadly, I'm ashamed to say, that I am a CPA! Of course, that's in mexico, plus, as you can imagine, I know more about search engine updates, than tax regulations. After years of not working as CPA but as systems auditor, I know more about anything on computers than accounting. :(
Do they still using the "double entry" concept!? :) lol