Unsure about tax issues or double taxation problems operating a single member WA LLC company from outside the US.

Hello, thank you for your assistance with this confusing topic.

I wish to set up a software development LLC for liability protection and to facilitate doing business with American companies. I will be the sole member of the company, and will operate the company from outside the United States. As far as I know, this is supported by the LLC structure.

My question relates to taxation on income paid to the company, and then in turn paid to me as a US non-citizen and non-resident. I am a former WA state resident and have filed personal income tax in the US since 2005, but no longer reside there.

How can I operate the business legally while not getting double taxed on corporate income, and then on my own hours billed to the company? Am I required to pay federal personal income tax? State tax?
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Answers (1)

Fabio Ambrosio

Fabio Ambrosio

Contributor Level 5
Hi, I like your question because it's complex and fun to handle. First of all, we're dealing with two types of taxes here: Washington state tax and federal tax. They work in a completely different way but I can help you understanding both.

Much of the answer depends on whether the LLC is electing to be treated as a partnership or as a corporation. This can make a HUGE difference in your case. Also, it is important to know what the LLCs do, what business they're in, how much income they derive from within the US. The mere fact that the sole member is a foreign individual may play absolutely no role depending on the specific facts.

Rules of international tax are very complex. Most lawyers have no clue how to work these problems. Your case involves issues of residency, sourcing, ECI, FDAPI, etc etc. I cannot give you good advice unless I know more about your situation.

Give me a call if you'd like to discuss this further. I can certainly help you with your situation but I would need to know a lot more facts about you, your LLC, their tax status, and the business in general.

Fabio Ambrosio
Attorney at Law
(206)801-0985
www.ambrosiolawfirm.com

Disclaimer: This answer does not create an attorney-client relationship and is for informational purposes only. It is not, nor is it intended to be, legal advice. You should consult your attorney for legal advice tailored to your individual circumstances.
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