Amazon Business Offshore Setup for 2020

[PilotJohn]

Long time reader here, first post.

We are receiving bi-monthly electronic payments from amazon, over 20k. Our LLC + EIN + US bank account setup is amateurish and antiquated!

One american citizen looking to live offshore (open) and one Mexican citizen living in Mexico City. This combo opens several interesting options! That's why we need your collective wisdom.

How would YOU set yourself up?

We've been reading here voraciously before we join the paid forums.

Thoughts? How would YOU set this up if it was for yourself?

 

[Sols]

The American moving offshore doesn't improve the American's tax burden. You have to pay federal tax regardless of where you move to. Is your state income tax that high? Can you move to a state with no personal income tax?

What's wrong with the current structure? LLC with EIN and US bank account is a great setup, especially for a US resident.

You could explore C Corp (maybe S Corp) if you want to lower your tax burden (changing from personal income to combination of salary and dividends). Something to discuss with a local CPA/tax adviser.

The Mexican partner is subject to Mexican tax and may be able to attract a lower tax rate if paid dividends from a C Corp than personal income through a US LLC.

Remember, you're dealing with Amazon here. If you start presenting dodgy offshore companies to them as sellers, you may find they aren't as stable of an income source.

 

[PilotJohn]

Fine advice. This is the discussion I was looking for to give us background before meeting with the lawyer we've chosen in Los Angeles.

We are being recommended the following: offshore IBC with us as direcrors/only shareholders. This IBC is the shareholder of New Mexico LLC which holds the US bank account to which amazon deposits. We are then paid reasonable salaries keeping our tax burden low and the IBC in a tax haven maintains the growing assets.

Thoughts?

 

[Sols]

I'd say that's absolutely useless. The offshore IBC adds nothing of value to that structure compared to a C Corp. All it does is introduce an offshore risk element to your otherwise easily understood and low risk structure.

Unless you have a team sitting in wherever the IBC is formed creating a substantial physical presence, the IBC is going to be subject to both US and Mexican tax.

If you change over to a C Corp, the entity likely qualifies as solely resident in the US and subject only to US corporate tax on the company's profits (which are calculated after salaries). You can then pay yourself and the other partner/shareholder dividends, which are tax at a lower rate than income in many cases.