Business planning

For U.S. persons outside the United States, business planning needs to be considered from the perspective of:

1. How

You will be taxed according to U.S. tax laws and that your business “entities” outside the U.S., will be considered to be “foreign”. (You will soon learn that from a U.S. perspective, “foreign” means “punitive taxes” and reporting.)

If you set up a corporation, it will probably be considered to be a CFC (“Controlled Foreign Corporation”). This can create a host of problems (including the Subpart F income, and the danger or the Corporation becoming a PFIC).

Bottom Line: It is essential that you plan very very carefully and get good professional advice. As a U.S. person, you will not have the freedom that other citizens do.

2. With Whom?

The U.S. reporting requirements (FBAR, etc.) have made U.S. citizens very undesirable as business partners. Your obligations as a U.S. person include the obligation (in many cases) to disclose the private banking information of others to the IRS.

Bottom Line: If you are a U.S. citizen outside the United States, you are subject to an added level of scrutiny and difficulties. You need to learn about these problems, sooner, rather than later.

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