Questions founders ask us

No. The 1099 is for US persons. A foreign contractor gives you a Form W-8 instead, and payments may be reported on Form 1042-S if the income is US-source.

Collect the W-8 before the first payment. Without it you may have to withhold at the statutory rate.

A K-1 reports your share of a pass-through entity's income, deductions, and credits. Partnerships and S corporations issue them; the entity pays no tax itself.

It matters because you owe tax on your allocated share whether or not any cash was distributed to you. More on pass-through returns.

Yes. Above a taxable income threshold the deduction is limited by W-2 wages paid and the value of qualified property, and certain service businesses phase out entirely.

The thresholds are indexed each year, so check the figure for your tax year rather than carrying one forward. Our Form 8995 guide explains the limits.

The IRS treats a paper return filed when e-filing was required as a failure to file, charged per return and increasing with delay.

Penalties stack across forms, so one administrative decision across 15 returns becomes a meaningful bill. Our guide to late filing penalties covers how they are calculated.

Yes. No visa, US address, or SSN is required to incorporate or to own shares.

You need a registered agent with a Delaware address, and you can obtain an EIN without a US tax ID by filing Form SS-4 by fax. India-resident owners should check whether FEMA requires an LLP holding structure first.

A subsidiary is a separate legal entity owned by the parent, with its own liability and its own tax filings. A branch is the same legal entity operating in another country, so the parent carries the liability directly.

Most companies choose a subsidiary, because a branch exposes the parent to local claims and local tax on its own profits.

LLCs pay a flat annual tax rather than a calculated one, and they file no annual report. The amount does not vary with shares, assets, or revenue.

That is a meaningful difference from corporations, where the calculation method chosen can change the bill substantially.

15 March for calendar-year S corporations, a month earlier than the C-Corp deadline. Extensions run six months from there.

The earlier date exists so shareholders receive their K-1s in time for their own April filing. More on corporate returns.

A monthly penalty charged per partner for each month the return is late. A four-partner firm accrues it four times over, which adds up quickly even on a dormant entity.

Filing an extension on time avoids it entirely. More on late filing penalties.

Form 1040 is the federal income tax return for US citizens and resident individuals. It reports all income earned during the year from every source, applies deductions and credits, and calculates the tax owed or the refund due. It is the central document in your annual personal tax filing.

FinCEN can charge civil penalties for wilful failure to file, with substantially higher criminal penalties for knowingly submitting false information.

Penalties are set per violation and accrue while the report stays unfiled. Because scope has changed, check first whether your company is currently covered. Our BOI page.

Yes, as a pass-through. Income is taxed once, on the owners' returns, whether or not cash is distributed.

That last part is the catch. Owners can owe tax on allocated income they never received, which is a cash flow problem if the business reinvests everything.

An SSN identifies a US individual. An ITIN identifies an individual who needs to file US taxes but cannot get an SSN, which is most non-resident founders. An EIN identifies a business.

They are not interchangeable. Your company needs its own EIN even if you already hold an ITIN. We compare all three and explain which one you need for banking, payroll, and filing.

No. It is disregarded for federal income tax, so its activity flows to the owner's return. It is still a separate entity for liability, for employment tax, and for excise tax.

Foreign-owned single-member LLCs are also treated as corporations for the Form 5472 reporting requirement specifically.

Not if you give them a valid resale certificate for the state, since the goods are being bought for resale rather than consumption.

Without one, the supplier has to charge tax, and you end up paying it twice over, once on purchase and again when your customer is charged.

Accrual, in almost every case. It shows a truer picture of the business, it is the GAAP standard investors expect, and it makes forecasting possible. You also have to move to it once revenue crosses 25 million dollars.

Cash basis is defensible with very little activity. The IRS does not allow a mid-year switch, so decide before the year starts. We compare the two.

An EIN is a nine-digit federal tax ID the IRS assigns to a business. It identifies your company on tax returns the way an SSN identifies a person.

You need one to open a US business bank account, run payroll, issue 1099s, and file a corporate return. Most banks will not open an account without it. Here is how to get an EIN and what the IRS asks for.

A benchmarking study establishes what unrelated parties charge for comparable services, which is how you justify the markup between your US parent and Indian subsidiary as arm's length.

Indian entities with international related-party transactions also need an annual accountant's report. Our transfer pricing guide covers both.

An FBAR with FinCEN if your foreign accounts exceed 10,000 dollars in aggregate at any point in the year, including accounts you have signature authority over but do not own.

Form 8938 may also apply, filed with your tax return. The two are separate and filing one does not cover the other.

Lifetime docs are the corporate records a company keeps permanently: charter, bylaws, board consents, stock ledger, and equity paperwork. Maintenance is the recurring work of keeping them current.

Diligence asks for all of it. Reconstructing three years of board consents under deadline is painful. More on Delaware requirements.

Form 2553 is the IRS election by which a corporation or eligible LLC chooses to be taxed as an S corporation.

It needs every shareholder's signed consent and has a deadline tied to the start of the tax year. Filing it does not change your legal entity, only how the IRS taxes it.

A Form W-8. Individuals use W-8BEN; foreign entities use W-8BEN-E. Both certify that the payee is not a US person.

Collect it before you pay, keep it on file, and note that these forms expire and need refreshing.

If the corporation is doing business in California, yes, regardless of where it was incorporated. A Delaware C-Corp with California operations files it.

Having a founder or employee working from the state is often enough to count. Our California Form 100 guide covers the test.

Inkle handles your Delaware C-Corp incorporation from start to finish. That covers forming the company, applying for your EIN, setting up your bank account, providing a registered agent, and issuing founder stock. You also get lifetime access to your documents and ongoing compliance support for the filings that follow.