Offshore Services

Thanks for this information. The one thing that trips me up (and I have seen this in several different places today), is this:

Further, for a U.S. citizen/resident, being a 10% or greater shareholder of a foreign company may subject said U.S. citizen/ resident to certain tax and reporting requirements relative to the company, as a consequence of “Controlled Foreign Corporation” rules.

There is a form called Form 5471 that U.S. citizens would need to file with their taxes.

xhttp://www.irs.gov/pub/irs-pdf/f5471.pdf

So basically, if you set up an offshore company, you have to mention it on your tax return. That sort of defeats the purpose of creating the company, I think…. unless I’m missing something? Of course you always need to pay your taxes — I wasn’t suggesting anything to the contrary — the issue here is the “nature” of the business.

I suppose what you would need to do, is to diversify how you make money online, and then choose a category (for Form 5471) that is somewhat generic. Ex: “international marketing” or “advertising” or “website design” or something… I don’t know if these are real categories; I just made them up. You get the idea.

You would definitely need a good tax guy to help you fill out the form; it’s a monster!

Anytime you go offshore to avoid laws, you are walking in a legal minefield. Ultimately if you attempt to circumvent US (and live/travel in the US) law, you must 1st realize that you’re playing with fire. If you do, prepare.

One could avoid the 10% reporting issue by forming a holding company that many affiliates each own less than 10% of. Then have the holding company own the idividual offshore entities. Each entity operates as an independent subsidiary/profit center. This allows the manager of each company to operate and profit based on their own work, while the holding company handles the rest.