How to get started storing profits offshore and tax free

[bdb]

Hi all,
I am US-based, moving from a W2 employee to a 1099 employee. Long-term I am interested in establishing a company in LatAm to outsource some of the tech-related work I do for various clients. I am interested in optimizing my tax liability in the immediate term, and beginning a long-term plan to significantly reduce it while remaining well within the legal confines of the US. Ultimately, I would like to accelerate my accumulation of wealth and setup a good path forward for my family.

I just finished reading Own Nothing, but Control Everything. Any getting started guides or baby-steps would be greatly appreciated.

I guess the question is, how do I work to start my company, bank account, etc setup in a way that allows me to get paid in a tax-free manner, store profits tax-free (or low tax), and pay myself a reasonable salary that I then pay US taxes on. I would like to set things up in a way that the US only sees the money being paid to me from the offshore company as "my money" that I control, and the rest of it is just some other third party (from their perspective).

 

[daniels27]

You follow the advice of @jafo and buy a plant ticket to your favourite LatAm country. You then set up a company there owned and managed by somebody you trust. You can then hire two employees working for you. You also hire yourself and pay yourself a salary to the US.

 

[drphantom]

second that

You follow the advice of @jafo and buy a plant ticket to your favourite LatAm country. You then set up a company there owned and managed by somebody you trust. You can then hire two employees working for you. You also hire yourself and pay yourself a salary to the US.

I took a flight last week to my destination of consideration Panama now I'm here to smell the air and get a feeling what Panama is after an 16 hours flight!

 

[Nw1]

second that

I took a flight last week to my destination of consideration Panama now I'm here to smell the air and get a feeling what Panama is after an 16 hours flight!

What is costs for online incorporation there government fees for company name reservation, incorporation, and other related expenses when registering directly with the respective country authorities?

 

[daniels27]

What is costs for online incorporation there government fees for company name reservation, incorporation, and other related expenses when registering directly with the respective country authorities?

It definitely won't be cheapest as you request in account thread. Wish why would you want a company name registration? That rarely makes any sense in private matters.

 

[aage]

second that

I took a flight last week to my destination of consideration Panama now I'm here to smell the air and get a feeling what Panama is after an 16 hours flight!

Do you mind sharing what agent you are using in Panama if you proceeded with the formation of a company there?

 

[JustAnotherNomad]

You follow the advice of @jafo and buy a plant ticket to your favourite LatAm country. You then set up a company there owned and managed by somebody you trust. You can then hire two employees working for you. You also hire yourself and pay yourself a salary to the US.

And then that company will have ECI.

Or he could use his own LLC and then reduce his profits by outsourcing some of the work to that company in LatAm.

 

[daniels27]

And then that company will have ECI.

Or he could use his own LLC and then reduce his profits by outsourcing some of the work to that company in LatAm.

Yes, but only ECI on the work he is doing. The LLC would not change anything as it would not make him an independent agent. He would have to set up 5 LatAm companies for that.

 

[redeye]

You follow the advice of @jafo and buy a plant ticket to your favourite LatAm country. You then set up a company there owned and managed by somebody you trust. You can then hire two employees working for you. You also hire yourself and pay yourself a salary to the US.

not easy to find someone to manage your company if you don't know anyone anywhere in the US!

 

[Nw1]

It definitely won't be cheapest as you request in account thread. Wish why would you want a company name registration? That rarely makes any sense in private matters.

Thought maybe this country have a rule that company needs buy name registration some juridications have rule which is basically a fake way for gov to earn more money from SME's while some countries give this for free. Any idea Panama how much cost?

 

[undercover]

What is costs for online incorporation there government fees for company name reservation, incorporation, and other related expenses when registering directly with the respective country authorities?

Can be done all inclusive roughly 3 - 5000US$ thats it, depending on what services you require!

 

[Nw1]

Can be done all inclusive roughly 3 - 5000US$ thats it, depending on what services you require!

All online no need visit bank to open account etc?

 

[daniels27]

not easy to find someone to manage your company if you don't know anyone anywhere in the US!

You read it wrong, it was about finding someone in LatAm to run the compay. @jafo is the living proof, that it works.

 

[daniels27]

All online no need visit bank to open account etc?

Yes, you can do this in most places. But I think the point of this thread used to be the opposite, namely that you should go there in person.

 

[JustAnotherNomad]

Yes, but only ECI on the work he is doing. The LLC would not change anything as it would not make him an independent agent. He would have to set up 5 LatAm companies for that.

Yes, but the offshore company would have to file. Not sure how much headache that creates. I guess they would try to tax more than just the salary (the value generated by the employee would obviously be higher than their salary). The company would also have to pay payroll tax etc.

With the LLC, everything would probably be simpler, as the outsourcing would simply be a business expense.
Or he could pay himself from the LatAm company through something like Upwork...

 

[pieceofmind]

Are you a US citizen? If so, you can only have the first ~$120K tax free with foreign earned income exclusion. From there, US taxes you on worldwide income.

That’s great until you’re making like $500K+, then you’ll want to get serious and get a 2nd passport and renounce your US citizenship then you’ll really be free of taxes, but where you live matters because it effects your personal tax.

That’s why it’s important to pick the right place in LatAm (or anywhere) to live because you can set yourself up with a second citizenship with all that time being spent there instead of wasted time.

Read about the flag theory if you haven’t already.

 

[daniels27]

@pieceofmind I think he wants to live in the US for now. Have you read his question?

 

[ImKing]

You have to show some substantial good income to bet a resident permit in the USA, don't know how easy it is never tried it.

 

[daniels27]

You have to show some substantial good income to bet a resident permit in the USA, don't know how easy it is never tried it.

With all due respect, have you read the question?

I am US-based, moving from a W2 employee to a 1099 employee.

 

[JustAnotherNomad]

Are you a US citizen?

The question is irrelevant in this case.

If so, you can only have the first ~$120K tax free with foreign earned income exclusion. From there, US taxes you on worldwide income.

Pretty much all developed countries tax their tax residents on worldwide income.
What you are mentioning would only be relevant if OP was asking about moving abroad to save taxes.