Ongoing Tax & Accounting
This page will focus on the ongoing tax services we deliver for your U.S. company.
After establishing your company in the U.S., our knowledgeable and friendly staff in the U.S. and Europe will take care of all aspects of the company’s administration and tax services.
Our support will be charged on an hourly basis unless we initially agreed on a fixed-rate. Our typical hourly rates apply.
Ongoing Accounting.
Current company accounting requirements in the U.S. are quite similar to those in Europe. If your company is registered for local sales tax, then quarterly sales tax return is required.
Our law firm uses Quickbooks and Xero for your company’s bookkeeping. Quickbooks and Xero are directly connected to your bank, so that data can be entered automatically instead of doing it manually every time
Annual Financial Statements, Tax Return, and Other IRS Notifications.
In principle, all financial statements for the previous year – for natural and legal persons – are valid until the 15th of April. Regardless of whether you’re filing a corporation tax return, income tax return, or partnership tax return, it must be filed by this date. Although, we will automatically request and deadline extension until the 15th of October.
The following must be submitted for the different types of society:
C-Corporation
Based on the accounting, a profit and loss account, and a balance sheet are prepared.
Some elements of these will be included in the corporate income tax return 1120 (at a federal level), and the tax will be charged.
If your company will be located in a state where a separate corporation tax is levied, then another corporation tax return must be made for the federal tax. This will differ from state to state.
The statements will be submitted online.
If 25% or more of your shareholders are not U.S. taxpayers, then the company must also complete form 5472 for each related party that payments have been made to. If you submit this form late, then a fine will be incurred of $10,000 per form.
Limited Liability Company (LLC) – Single shareholder
LLC’s with a single shareholder is called a “disregarded entity”, and is not a separate legal entity from a tax perspective. Your company will not have to file a tax return. The shareholder is taxed the income from the LLC on their income tax return (Form 1040).
Foreign owners of an LLC who need to file an income tax return within the U.S. will obtain a tax number (ITIN). When they receive this, the tax returns can be completed. If the LLC is established in a U.S. state that levies income tax in addition to federal tax, then the tax return must be submitted in that location.
Only until recently, LLC’s with non-U.S. shareholders, related sales, customers, employees, or permanent establishment were not taxed or accounted in the U.S. Unfortunately, this is not the case anymore. Since 2017, all single-member LLCs with foreign shareholders are now subjected to accounting, even if the bookkeeping must be requested.
Foreign-owned LLCs must submit form 5472 to related parties which payments have been made to.
If the LLC distributes profits to the shareholder, then 30% of withholding tax is to be withheld and paid.
The shareholder should then file a U.S. tax return and may be able to reclaim overpaid taxes.
Limited Liability Company (LLC) – Multiple Shareholders
An LLC with multiple shareholders is treated as a partnership company for tax purposes but can be taxed as a corporation on request. Taxation is analogous to the corporation.
Based on the accounting and profit and loss account, a partnership tax return 1065 is prepared and submitted.
As with an LLC with a single shareholder, an LLC shareholder announces his share of the LLC’s income on their U.S. tax return (1040) and is taxed according to their tax code.
An LLC with foreign shareholders with taxable profits must also be taxed in the U.S. (apply for ITIN) and then submit the tax return.
Profit distributions will be subject to a withholding tax of 39.6%, which is the highest U.S. tax rate. Overpaid taxes are reclaimed through the company’s tax return.
If non-U.S. taxpayers hold 25% or more of the company, then the company must also complete form 5472 for each party who payments have been made to. If you submit this form late, then a fine will be incurred of $10,000 per form.
Limited Partnership (LP)
A Limited Partnership is treated in a way similar to an LLC, which will be taxed as a partnership. Tax will be payable to the partners, and the company will submit a partnership tax return.
The LP must also withhold 39.6% if withholding tax on distributed profits. Overpaid taxes may be recovered by the shareholder if they submit an income tax return.
Similar to an LLC, an LP should submit form 5472.
U.S. Taxes.
Our law firm is not licensed as a tax consultancy in the U.S. However, we have employees who are qualified as U.S. Tax Advisors (CPAs) or Tax Preparers. Therefore, all tax returns will be processed and submitted by our qualified personnel. These same employees will be able to answer 90% of your tax questions.
In regards to complex tax law in the U.S., we prefer to rely on Tax Attorneys. If you need tax advice, we can contact you and refer you to our partner office in the U.S. You can then discuss your questions directly with the colleagues there.
More often than not, clients want to discuss matters with us in German, then we will take care of answering questions for our U.S. colleagues. We will then explain the result of the consultation with the client.
You can decide what works best for you.
Strategy and International Tax Issues.
In regards to international tax issues, tax planning, and tax strategy advice for your U.S. company, Mr. Sauerborn will be happy to help you.
A telephone call can usually be arranged in around a week. Additionally, personal meetings are possible.
How Much Will the Tax Return Be for My U.S. Company?
Typically, for the annual accounts and tax filing, clients pay around $2,000 – $3,000 per company.
This estimate is solely based on the typical expenses and fees charged to clients of the firm. We charge exactly every quarter of an hour. Charges can vary depending on the case so your fees could be much higher or much lower. This will depend on the size of the bookings and your industry etc.
It is important to note that our employees have different qualification levels (see Hourly Statement). This hourly statement doesn’t take different qualification levels into consideration.
Accounting
All our services that come as part of our ongoing client support for your U.S. company are billed on time accrued. Our usual hourly rates apply.
We also charge for any other expenses that are incurred such as postage and courier costs. You will receive a bill by email, which will be made directly to your U.S. company on a regular basis. You can then pay the amount from your U.S. business account.
Need Advice on Taxation, Company Formation, and Residency in the United States?
If you already have a project that you want to implement in the U.S., you will most likely have already dealt with the intense framework conditions in the U.S. Online, you can find a wealth of information on almost every subject. Though all this information is available, it is common for one to reach a point of confusion. There are too many aspects to consider simultaneously and the starting position can be complex.
To solve this mental knot and pave your way to success, jump on a 1-hour telephone counseling session based on taxation, incorporation, and residency in the U.S. In this conversation, we will discuss specific technical issues such as tax, U.S. corporations or LLCs. Or we can discuss any strategic options you are considering.