Where to incorporate for E-Commerce? - US market, Paraguayan citizenship

[covid]

Where should I incorporate for tax optimization, while still having access to banking and payment processing in this scenario?

Business Info:
- E-Commerce, physical products, whitehat
- 3rd party logistics in the US
- 100% US customers initially
- Cosmetics industry

Owner/Operator Info:
- Paraguayan resident, Canadian citizen
- Don't care about anonymity for this

 

[Sols]

If you run your business through a US LLC, you probably trigger ETBUS/EIC and the income becomes in scope for US tax. However, it's very unlikely the IRS would ever find out unless your business grows a lot or for some other reason draws a lot of attention. Banking and payment processing are quite doable, especially with mostly domestic trade. But if the IRS shows up, there will be tax to pay.

A Canada LP might be another option if you have or create a partner for the entity. But double check that your citizenship doesn't become a problem there and create some sort quasi tax residence in Canada.

An EU setup might work but choice of PSPs will be very limited when you have no or barely any EU customers. The same goes for setting it up in Asia.

Maybe Gibraltar or Channel Islands, if you at least appoint one local director. But it won't be easy.

 

[Clearsky Network]

I would say US entity, but I dont have much experience with US companies and heard that its complicated to run it (payments wise) if you dont have a local representative.
Based on my experience i would go for a EU company, open a EU EMI account and connect the website to stripe. If you are using any eccomerce platform like wordpress or shopify it would be real easy.
Let me know if you need any assistance.

 

[Wanderien]

If you run your business through a US LLC, you probably trigger ETBUS/EIC and the income becomes in scope for US tax.

Not necessarily.

 

[Sols]

Not necessarily.

That's the great thing about the word probably. It implies ambiguity or conditionality. Based on the limited information offered, this isn't a clear cut case. Hence the appropriate use of the word probably to let the reader infer that there is a significant risk of the income technically being under scope of some tax, but the reality is that the IRS doesn't spend time and resources on such cases in general.