Certainly any US business entity can have foreign employees or independent contractors, including a Delaware LLC>
US citizens must pay income on their worldwide income. Foreign citizens residing abroad are subject to potentially different rules depending on their place of current residence. Tax treaties with the US may come into play. Your CPA will show you how to document payments for salary, commisions or other payments.
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You are asking very specific questions which suggests that you need your own personal advice not a public forum.
Anytime a US concern hires employees that reside in another country, those employees are protected by the laws of that country not the US. this can be an absolute nightmare in mane places. We had a client that took over a plant in Germany, you have any idea how utterly gnarly German labor law is?
You will required a consult with an employment lawyer in the country where the person resides or perhaps a US lawyer with deep knowledge of that countries requirements.
Regards to taxation, the IRS has a compliance regime to report such income. This is a subject that should be brought to the attention of you r tax professional. If you are hiring employees either in the US or elsewhere and do not have a accountant I would say you are underprepared here and now would be the time to get all this in order.
Most of us here, including myself, offer a free phone consult.
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This is a very specific question and not easily addressed on this forum. The other attorneys give very sound advice. My best advice is that you hire a tax attorney or CPA that is well versed in this area to represent you. You are embarking on an area that you should seek professional advice to make sure you do not make mistakes that could cost you penalties and interest and possible criminal charges if handled improperly.
H. Daniel Lively, Esq., LL.M., CPA Certified Tax Specialist, CA Board of Legal Specialization email@example.com www.USTaxRescue.com 714-708-2593 Mr. Lively is a Certified Tax Specialist by the State Bar of California Board of Legal Specialization. He can be reached at 714-708-2593 or USTaxRescue.com.Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.
Nothing too complex here:
- Yes, a DE LLC can have employees and consultants abroad.
- In general, the individual income tax rates will depend on the employees' tax residence, which is generally the place where they reside.
- The employer will likely have to pay payroll taxes in the local jurisdiction (abroad) for local employees (abroad). The employer may also have to establish a local employing entity. The employer will be subject to local employment laws.
- US employers generally do not need to set up a foreign payroll for foreign independent contractors (or the equivalent).
- NOTE WELL: the US business may have a permanent establishment risk, which will trigger foreign corporate income tax liability--which can be a big headache or a tax advantage (see my blog post below).
- The US business can generally deduct foreign taxes (or in some case foreign tax credit), salaries, and consultant fees from US income tax. (That is a oversimplified generality though.)
Our firm practices solely on these kinds of cross-border issues for small and medium-sized businesses. We would be glad to give a free consultation in plain English. In about 30 minutes, you will better understand these issues.
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Yes, employees can be taxed according to US rules and foreign tax rules, unless tax treaties apply (depending on which countries). The LLC has to comply with US tax rules, so the standard forms will be applicable. My impression is that you should work with an international firm. Self-help will create more risk for your business. Best.
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