Currently in ownership of a non-offshore, US based LLC that I'd like to move offshore. Questions, concerns, discussion....

[SporadicNomadic]

Background / story-telling at first, then questions and concerns after. I'll try to keep things relatively short but am open to answer questions if it helps you in giving me sound advice.

Going on five years now, I've owned and ran an American based LLC for my online business. Well, business is pretty good and for the last two years or so it's been my fulltime job. Most of our sales are in crypto, though a noteworthy amount still arrives via traditional methods such as PayPal or bank wire / ACH.

Now, I live outside of the USA for the last year and in SEA. I've been in Cambodia for a bit now and am working on my self-employment work permit, my visa agent gave me a list of things I need to do to complete this so will begin on that this week. I like it here, I'm comfortable. I think it's better than Thailand and I don't qualify for the DTV anyway, though I'd be open to 179 days a year there as I did last year (179, as 180+ makes you a tax resident and 179 can be done on border bounces and extensions)

Now, I'm working on some side projects, similar to my main business but different enough that I believe they warrant operating as their own. I'm interested in creating an offshore, non-US based parent company for all my related business projects. Does this make sense to do, or should they operate independently? Or should they just stay under my US based business?

My business, and soon to be businesses, are focused on free speech and end-user privacy. Most of the infrastructure that powers it remains in the United States. I own physical servers and hardware that is located in datacenters in the United States. I also have leased assets outside of the US too, in Europe and plans to do the same in the APAC region in the next one or two years....

My concerns with going offshore, of course, is financially related. It's important that I can maintain our existing fiat merchant accounts for things like PayPal, as it's a trusted and well used payment gateway in my industry. I would imagine that this may be a challenge? What about traditional banking? Both my business and personal banks are US financial institutions. Would either, or both, need to be moved offshore? Will there be any regularity issues or BS I need to deal with if my personal US bank account begins to get funded solely by offshore inbound payments once or twice a month?

In short, I am interested in learning more if this is even worth doing or if I should to just stick to what I am already doing and open new businesses in Wyoming since it's fast, easy and cheap.

 

[yngmind]

It really comes down to where your customers are from. The closer you are to them, the fewer fees you will pay, and the better card acceptance rate you will get.

Moving the servers outside of the US for a privacy-related business is a great idea, though.

 

[SporadicNomadic]

It really comes down to where your customers are from. The closer you are to them, the fewer fees you will pay, and the better card acceptance rate you will get.

Moving the servers outside of the US for a privacy-related business is a great idea, though.

Not sure where the customers are from, as we don't require personal details for processing their orders. Just an email address to send invoices to. With that said, we do have provisions in place to block sanctioned countries, so no Cuba, no North Korea, etc.

The customers are aware of where the servers are. We're providing infrastructure that they need for their businesses and projects, so they choose the location based on their needs. If speech is a concern or they're wishing to target an American demographic, they'll select a location in the US. If it's more privacy focused or wanting to be close to an EU audience, they'll choose a location in the Netherlands. I can't migrate all services out of the US as it'd be an incredible increase in operating cost and I'd also lose many customers who wouldn't want to be subjected to EU's growing reach when it comes to censorship online of speech they do not like.

I guess, maybe I should be asking: Is there any benefit to creating an offshore parent company that my existing and new businesses operate under? I guess the American based LLC can remain independent and operating as it is now, if need be.

 

[yngmind]

I guess, maybe I should be asking: Is there any benefit to creating an offshore parent company that my existing and new businesses operate under? I guess the American based LLC can remain independent and operating as it is now.

It can add a layer of protection since your LLC is likely a pass-through entity, which does not provide personal asset protection. This means you would be personally responsible for all of the company's losses, lawsuits, and other liabilities.

I believe this would still be the case with any other company, but the risk may be lower.

If you are truly concerned about this and have a substantial amount of assets, I would recommend looking into the Cook Islands trust structure owning a Cook Islands LLC that owns your US/EU, and any other entity.

 

[daniels27]

It can add a layer of protection since your LLC is likely a pass-through entity, which does not provide personal asset protection. This means you would be personally responsible for all of the company's losses, lawsuits, and other liabilities.

It is still limited liability. He will only lose what is in the company. But using US LLCs generally can lead to personal tax problems. That's why I would not just turn bare without holding company.

But for fiat payments you may want to have a US and EU payment processing company to save on fees. You can check you PayPal account and check where the customers are from. It is a bit troublesome as you have to use friends and family option to see how much sending money to each of would cost from different locations unless they provided an address somehow in PayPal.

Moving the servers outside of the US for a privacy-related business is a great idea, though.

100% a privacy company with US servers is risky due to the warranty and letters. Just move them to some banana republic.

 

[SporadicNomadic]

It can add a layer of protection since your LLC is likely a pass-through entity, which does not provide personal asset protection. This means you would be personally responsible for all of the company's losses, lawsuits, and other liabilities.

I believe this would still be the case with any other company, but the risk may be lower.

If you are truly concerned about this and have a substantial amount of assets, I would recommend looking into the Cook Islands trust structure owning a Cook Islands LLC that owns your US/EU, and any other entity.

How about a Seychelles or similar formation for the parent, with all subsidiaries under it? What does Cook Islands offer specifically that many of the more popular offshore options like Seychelles, Panama, Belize, etc does not?

For the main business that is in operation now, I can maintain the US based LLC if anything, simply for payment processing purposes?

There are no substantial assets.

It is still limited liability. He will only lose what is in the company. But using US LLCs generally can lead to personal tax problems. That's why I would not just turn bare without holding company.

But for fiat payments you may want to have a US and EU payment processing company to save on fees. You can check you PayPal account and check where the customers are from. It is a bit troublesome as you have to use friends and family option to see how much sending money to each of would cost from different locations unless they provided an address somehow in PayPal.


100% a privacy company with US servers is risky due to the warranty and letters. Just move them to some banana republic.

Why not maintain a US LLC presence simply for processing payments of my main business? Would that work?

Privacy comes from internal policies on data collection and retention, not country of physical servers. I can't move the physical servers, the locations we operate in stateside are 100% known to the users and they specifically choose these locations for their services based on the audience they wish to reach. They want low latency to US east, central or west coasts respectively or wish to have content that would not be legal or may cause issues elsewhere due to most nation's stance on freedom of speech. EU in general has grown increasingly hostile towards speech (and privacy, for that matter) related issues. It's not required that we collect user data, so we do not. If sent a request by the US federal government, I can only share with them what I do know which isn't much. An email address. An IP of registration. Both of which can be anonymous if the user chooses. Their opsec is their responsibility, we just allow them to practice good opsec should they wish to. That's where the privacy comes to play. Luckily it's not been an issue and we don't attract those sort of headaches because our policies are pretty clear.

Going on a sort of rant here, but of course, there are relative cesspools that don't care about anything at all (until they do and cease all servers without warning), but I'm not moving my critical business infrastructure to some old storage warehouse in Moldova with a leaky roof just because they will ignore any and all requests from governments. If it's not enterprise quality, or at the very least critical business quality datacenters, it's not worth the headache to even consider. In any case, hard to escape the 5/9/14 eyes of the world. If the US, China, Israel or some other adviserary wants something they'll get it no matter what. There are only so many paths traffic on the internet can take between the destination and the source and many major POPs between countries are in a 5/9/14 eyes country anyway. Just because some major ISP won't cature traffic for big brother to anaylize doesn't mean one of the hops upstream isn't allowing it or doing it. /rant

 

[yngmind]

What do you want to achieve in the end?

 

[SporadicNomadic]

What do you want to achieve in the end?

Good question, after I review I see I didn't really specify in my original post.

One of the subsidiaries would be crypto. Currently, for my main business, we process all crypto payments in house as a means to save on fees and for additional privacy. No 3rd party exchanges in the mix. Self-hosted wallets and a platform that works with our current software stack and ordering process.

The stack is pretty common in the industry and I'd like to start a business offering the same system to others. Because we'd be processing crypto for other businesses, and not just ours, it seems that perhaps this would be best suited to not be an American based business. I know some states have some weird crypto laws and I'd rather not deal with the ever changing laws related to processing crypto in house.

Of the projects in development or on the drawing board, that's really the only one that I think may need to be "offshore".

I guess just an offshore parent may be more marketing fluff and a way to showcase what brands we operate. In the end, it may not really matter and it may be better to not directly associate all different brands under the same umbrella.

 

[JustAnotherNomad]

It can add a layer of protection since your LLC is likely a pass-through entity, which does not provide personal asset protection. This means you would be personally responsible for all of the company's losses, lawsuits, and other liabilities.

What exactly do you think the letters "LL" in "LLC" stand for? Unbelievable what kind of "advice" some people give here sometimes.

 

[daniels27]

Why not maintain a US LLC presence simply for processing payments of my main business? Would that work?

Yes, that's what I recommended (and @yngmind too):

But for fiat payments you may want to have a US and EU payment processing company to save on fees.

The stack is pretty common in the industry and I'd like to start a business offering the same system to others. Because we'd be processing crypto for other businesses, and not just ours, it seems that perhaps this would be best suited to not be an American based business. I know some states have some weird crypto laws and I'd rather not deal with the ever changing laws related to processing crypto in house.

Then, you need something with banking etc. to pay out you clients. It do you pay them in crypto to?

I guess just an offshore parent may be more marketing fluff and a way to showcase what brands we operate. In the end, it may not really matter and it may be better to not directly associate all different brands under the same umbrella.

It does make sense but depends on the business itself. I mean on what banking you need or what repairing you need to follow. Operating a PSP is regulated and for example in the US, you need to send out 1099K forms.

You need to ensure to be compliant where necessary and at the same time have access to banking and payment where needed. Offshore is good but only as long as the business can keep operating. A Seychelles company without bank account is useless if you need to receive money.

 

[yngmind]

What exactly do you think the letters "LL" in "LLC" stand for? Unbelievable what kind of "advice" some people give here sometimes.

That's true. It's only transparent for tax purposes. An LLC or LLP has limited liability, but you can still be held liable for certain obligations.

We aren’t lawyers, and nothing we say here should be considered tax or legal advice. We’re not even getting paid for this.

OP can hire a law firm to obtain a legal opinion.

 

[soonnomading]

I would recommend keeping your US structure in place, and if you absolutely want a parent company to own it, you should elect to tax the LLC as a C-Corp. Any US-earned income will be subject to US taxes even if the ownership is foreign, I'm unaware of any clean way around that. I suppose you could register another company, in say, Europe, to charge US clients to avoid being a US tax resident but you'd end up with a larger headache than you'd want, especially if we're talking about smaller sums of money. Ultimately, if you have machines in the US, Europe, wherever, they will be subject to the law of that country -- not the law of your parent company. You could argue over interpretations of the law, but in the end it's the country which the physical asset is located in which bears the laws.

At best you'd be able to be relatively anonymous owning it -- but you're already relatively anonymous if it's in Wyoming or New Mexico. You could add the extra layer with a Seychelles company, or BVI, or even Caymans, but if your goal is truly to become tax-free, there's easier ways to do that especially if you want to live in a 0% tax country doing it. You could form a parent in the UAE for example, I would personally recommend looking at Mainland but to each their own, obtain a golden visa after some time/effort, then move to the UAE and enjoy the 0% personal tax, and 0-9% corporate tax (subjective). You could then maintain your ownership in the US LLC, and only pay taxes on the US-sourced income and file an exemption form for all other income based on the mind & management concepts... but again, you're doing a lot of work to avoid what would be up to... 30(?)% of tax on profit. An easier solution is to never have significant profits, always re-invest it or pay dividends to your holding company.