Having a US Associate Open a Business Account on Behalf of my LLC

[nethostler]

After some very helpful responses to my original thread on jurisdictions that came with good privacy and decent banking +pay pal and credit card processing.

The consensus was that the business and privacy friendly US states would be the way to go (New Mexico, Wyoming etc), with main issue being the opening of Pay Pal and merchant accounts that would require a US SSN.

Hypothetically, if I were to have an associate (friend) in the US open these accounts on my LLC's behalf, is this a workable solution?

If anyone has experience with this setup, what issues might it throw up? Is there a tax liability for the US account opener? Do they need to have relationship of substance to the LLC for eg. designated manager?

 

[Mark Rucken]

It would be ideal to appoint that person as a Manager of the company. Having a US citizen as LLC's Manager will help you get a US account a lot. If that is not an option, then you should give them PoA.

Generally speaking, US person, acting as a Manager should not have any tax liability in the US. They are after a Member

 

[fshore]

It would be ideal to appoint that person as a Manager of the company. Having a US citizen as LLC's Manager will help you get a US account a lot. If that is not an option, then you should give them PoA.

Generally speaking, US person, acting as a Manager should not have any tax liability in the US. They are after a Member

If that person is actually a manager then you clearly have someone working for you in the US, and your income with be taxable there.
However if he's only a bank signer then it doesn't matter if he is officially a manager.

 

[Mark Rucken]

If that person is actually a manager then you clearly have someone working for you in the US, and your income with be taxable there.
However if he's only a bank signer then it doesn't matter if he is officially a manager.

That is not correct. The Residency of LLC is determined by the citizenship of the Member. Having a US Manager does not change "disregarded" status of your company. Moreover, being a Manager of the company does not mean that person is actually employed by the company.

 

[fshore]

That is not correct. The Residency of LLC is determined by the citizenship of the Member. Having a US Manager does not change "disregarded" status of your company. Moreover, being a Manager of the company does not mean that person is actually employed by the company.

Income is not determined by citizenship, that's a ridiculous claim.
As i said, if he is acting as a manager in the US then the income is taxable. If he is manager only on paper and bank signer, and no business is conducted in US soil then the income might not be taxable in the US.

 

[Mark Rucken]

Income is not determined by citizenship, that's a ridiculous claim.
As i said, if he is acting as a manager in the US then the income is taxable. If he is manager only on paper and bank signer, and no business is conducted in US soil then the income might not be taxable in the US.

How do you officially divide those two terms "acting manager" and "manager only on paper"? How do you determine and prove that to IRS?

When you file relevant forms to IRS they do not care who and where from is the Manager. For example, when applying for EIN and filing SS4 Form, they care about Member only, no mention of Manager, because the fact that the Manager is a US citizen does not change or affect status of the LLC, as long as it is a single Memeber LLC, foreign Member and no income in the US.

Regarding no income in the US no tax in the US, we agree

 

[fshore]

How do you officially divide those two terms "acting manager" and "manager only on paper"? How do you determine and prove that to IRS?

When you file relevant forms to IRS they do not care who and where from is the Manager. For example, when applying for EIN and filing SS4 Form, they care about Member only, no mention of Manager, because the fact that the Manager is a US citizen does not change or affect status of the LLC, as long as it is a single Memeber LLC, foreign Member and no income in the US.

Regarding no income in the US no tax in the US, we agree

It's not no income in the US. Its no effectively connected income. If you have someone in the US that is working for you then you might have eci. But just signing on the bank will not be enough to have eci.