Questions founders ask us

If you have nexus in the customer's state, yes. Drop shipping does not remove the obligation, it just means someone else ships the goods.

The arrangement creates a second question too, whether your supplier charges you tax on the wholesale purchase, which a resale certificate addresses.

A monthly penalty charged per shareholder for each month the return is late, running up to a cap. A two-shareholder company accrues it twice over.

Filing an extension on time avoids it. Our guide to the Form 1120 late penalty covers how the corporate penalties work.

BE-13 reports new foreign direct investment into a US business, filed when a foreign person establishes or acquires one.

It is triggered by the transaction rather than by a calendar, so it is easy to miss entirely. Penalties apply for not filing when required.

Because Stripe deposits net of fees, on a delay, and in batches. The gross sale, the processing fee, and the payout are three separate things.

Recording only the deposit understates both revenue and costs. Our revenue recognition guide covers how the pieces should be booked.

Yes. An LLC can elect corporate treatment and then S status, or file Form 2553 alone, which the IRS treats as both elections together.

It still has to meet the S-Corp rules on shareholders and stock classes. The LLC remains an LLC legally; only its tax treatment changes.

If you capitalise and amortise development costs instead of deducting them, your taxable income rises even though nothing about your cash position changed. That can produce a tax bill at a loss-making company.

Our Section 174 guide walks through the effect on a typical software company.

No. You register your existing entity as a foreign entity in that state, which is a filing rather than a new company.

Registration brings an annual report, a registered agent in that state, and possibly state income or franchise tax. One remote employee is often enough to require it.

Form 5471 is filed by US persons who own a foreign corporation. Form 5472 is filed by US corporations that are foreign-owned, reporting transactions with their foreign related parties.

One looks outward at a foreign subsidiary, the other looks inward at foreign ownership. Many India-US structures file both.

Corporations file the annual report and pay franchise tax by 1 March. LLCs and partnerships pay by 1 June and file no annual report.

Larger corporations also make quarterly estimated payments. Missing the date brings a penalty plus interest on the unpaid balance.

The three core statements, income statement, balance sheet, and cash flow, plus supporting reports such as AR and AP aging, expense breakdowns by category, and period comparisons.

Those are what investors ask for in diligence and what your tax return is built from.

Those payments still belong in your US books, recorded as expenses with a corresponding intercompany balance or capital contribution.

Leaving them out understates your costs and creates a transfer pricing problem. They are also reportable transactions for Form 5472 purposes.

Form 8938 reports specified foreign financial assets and is filed with your tax return. FBAR reports foreign accounts and goes separately to FinCEN.

Thresholds, scope, and destination all differ. Many people file both for the same accounts.

Yes, if you registered to do business there (this is called foreign qualification). Each state needs its own Certificate of Withdrawal, separate from the dissolution in your formation state. Closing your home state entity does not close those registrations, so any state you skip keeps billing you for annual reports, franchise tax and penalties. Withdrawal fees are usually $15 to $100 per state.

US TopCo means the Delaware entity sits at the top and owns the Indian one. India TopCo inverts it, with an Indian private limited company owning the US entity.

US TopCo is what American investors expect and what makes a US exit straightforward. Flipping later triggers Indian regulatory approvals and tax, so decide before incorporating.

Net income from a US trade or business operated as a sole proprietorship, partnership, or S-Corp. Some REIT dividends and publicly traded partnership income qualify too.

Wages, capital gains, interest, and dividends do not. Nor does income from a C-Corp, since it is taxed at the entity level. Our Form 8995 guide covers what counts.

They vary by state, set on sales revenue, transaction count, or both, and states revise them regularly.

Track them per state rather than carrying one number across. Crossing a threshold creates a registration and collection obligation going forward.

The IRS charges an underpayment penalty calculated per period, so paying double next quarter does not cancel the shortfall from the one you missed.

Pay as soon as you notice, since the penalty accrues with time. Safe harbour based on prior-year tax is the usual way to avoid this entirely. More on Form 1040.

Not reliably. The partnership return and its K-1s are built from closed books, so filing from an unreconciled ledger means amending later.

File an extension, finish the bookkeeping, then file. Partners need their K-1s for their own returns, so the delay passes through to them. More on partnership returns.

Delaware sets a minimum for corporations under each calculation method, plus a separate annual report fee, so there is always something owed even with no activity.

The figures are set by the state and revised periodically, so check the current schedule rather than relying on last year's number.

Yes. The IRS charges nothing for an EIN. Any site charging a fee is a third party filling in Form SS-4 on your behalf, which you can do yourself in about ten minutes.

Paying for help is reasonable if you have no SSN and are filing by fax, but the number itself is free. Our guide walks through the application so you can decide whether you need help at all.

No. Ownership of a US company carries no residency or tax ID requirement, and you do not need a visa either.

What the SSN affects is speed. Without one you cannot use the IRS online EIN application, so the EIN goes by fax or mail instead, which takes longer. Everything else works the same way.

Clerky focuses on legal documents and corporate housekeeping, aimed at companies working with US counsel. Atlas bundles formation, EIN, and banking into a single flow for a flat fee.

Both get you incorporated. The difference shows afterwards, in who handles franchise tax, Form 5472, and annual filings. Our Atlas comparison covers it.

Yes, and it is a real risk. Many countries apply their own tests on control, exclusivity, and working hours, and will reclassify a long-term contractor as an employee.

The consequences, back social contributions, benefits, and penalties, fall on your company. An employer of record is the usual way to avoid it.

Receives service of process and official state mail at a physical address in the state of incorporation, during business hours, and forwards it to you.

Every US corporation and LLC must have one. They do not handle your everyday business post, which is what a virtual mailbox is for.