I'm a European citizen living in Europe. I intend to register a Limited Liability Company in the US to sell Wordpress themes and do some affiliate marketing. My target will be all English speaking countries. I want to register in the US because most of my clients will be American and they will be more inclined to sign an affiliate marketing contract with a US company than with one located in Europe. Also it is by far easier to register a company in the US than in my country and it seems to be better for taxes too.
The company will only operate online by using websites hosted on a Canadian server (Canadian because of the better price) and I won't have partners, investors or employees. So, as long as I operate my business entirely from outsite the US and I don’t have any office, employees or equipment in the US, will I still be liable for US taxes ?
After a lot of searching I found that a foreign-owned LLC will be subject to US taxes only if it is “engaged in a trade or business in the US”. And to be engaged in a trade or business it needs to have at least an employee or dependant agent in the US. In fact a lawyer told me this but I’m not sure that he understood all the details.
So, my purpose is not to avoid taxes, but to minimize them, as I will pay taxes in my own country anyway.
It‘s worth mentioning that a LLC, unless you choose otherwise, is not seen as separate from its members for income tax purposes. It’s a “pass through” entity, meaning that all the income of the company will pass to its members and they will have to file that income on their personal tax returns. A one-member LLC is treated as a sole proprietorship, for tax purposes.