Viewpoints from Kaizen

The Relevant Information about U.S. Corporation Dividends   A corporation may subject to double taxation. Specifically, a corporation must file and pay corporate income tax during each taxable year, and the shareholders must pay taxes on any dividends or other distributions during the taxable year when they got them from the corporation. However, the corporation can choose to retain the earnings to finance growth and reasonable needs of the business up to USD 250,000 (USD 150,000 for personal service corporation) to avoid double taxation temporarily. However, if the retain earnings exceed USD250,000 (USD 150,000 for personal service corporation), Accumulated Earnings Tax with tax rate 20% will be added to regular income tax.   A dividend is a corporate distribution to a shareholder out of current or accumulated earnings and profits (E&P). Dividends first come from current earnings and profits, then out of accumulated earnings and profits once the former are […]

Taxation on Unrelated Business Income for Non-profit Organizations   Non-profit organizations generally operate for charitable or other beneficial purposes, most income that they receive is exempt from tax under the Internal Revenue Code. However, when tax-exempt non-profits earn income through an activity that is unrelated to their exempt purposes (such as activity that is commercial in nature, like sales of goods) and the activity is “regularly carried on,” the revenue from the activity may be taxable income under IRS rules for “unrelated business income taxation”.   Generally, an exempt organization that has $1,000 or more of gross income from an unrelated business must file Form 990-T to IRS. Form 990-T requires the organization to disclose unrelated trade or business income, deductions directly connected with the unrelated business trade or income. An organization with more than one unrelated trade or business should attach separate schedules for each additional trade or business […]

Issues about Hiring Employees in the U.S. Company   A U.S. employer may sponsor a prospective or current foreign national employee who is inside or outside the United States and who may qualify under one or more of the employment-based (EB) immigrant visa categories. Generally, aliens with extraordinary ability in the sciences, arts, education, business, or athletics; outstanding professors and researchers; professionals with advanced degree or persons with exceptional ability, can apply an employment-related visa (e.g. H1-B, J-1) which allows the employee to work for a particular employer.   If you plan to sponsor a foreign employee for a work visa, you’ll need to fill out an Application for Permanent Labor Certification according to the U.S. Citizenship and Immigration Services website and prepare all the necessary supporting documents. Usually, you can get help from an immigration lawyer.   An U.S. employer should pay both federal payroll tax and state payroll […]

U.S. Individual Taxpayer Identification Number Guide In the United States, to facilitate tax collection, the Internal Revenue Service (IRS) requires that it is necessary to submit corresponding tax identification numbers when filing federal tax returns. If you plan to open a corporate bank account or a personal bank account in the United States, the tax identification number of the company’s responsible person or individual is also one of the required documents. Individual identification number includes Social Security Number (SSN) and Individual Taxpayer Identification Number (ITIN).   As the ITIN application is more complicated than the process of SSN regarding the required materials and procedures. This article will focus on explaining the use of the ITIN, individuals who are eligible for ITIN, application methods, application timeframe, the change of legal name on ITIN, and the expiration and renewal of the ITIN.   Compare of the ITIN and SSN   Social Security […]

Guide to Starting a Corporation in New York Unless otherwise mentioned, the quotation of U.S. Corporation specifically refers that the Corporation registration is in accordance with New York State Business Corporation Law.   Introduction   In New York, corporations and limited liability companies (LLCs) are the most prevalent business forms. Investors must consider each type of business form carefully because one business form may be an advantage to certain investors but not to others.   Due to the location advantage, New York is one of the most popular options for both domestic and foreign investors. Investors can choose to establish a corporation or an LLC subsidiary in New York. A corporation offers limited liability to its shareholder and has centralized governance structures. An LLC has the similar characteristics. While the corporation is the first choice for foreign investors, the LLC is an acceptable alternative. Whatever type of business is chosen, […]

Guide to Starting a Corporation in Delaware   Unless otherwise mentioned, the corporation mentioned in this article specifically refers to the C Corporation registered in accordance with Section 102 of General Corporation Law of the State of Delaware.   Introduction   In Delaware, corporations and limited liability companies (LLCs) are the most prevalent business forms. Investors must consider each type of business form carefully because one business form may be an advantage to certain investors but not to others.   Delaware is one of the most popular options for both domestic and foreign investors. Investors can choose to establish a corporation or an LLC subsidiary in Delaware. A corporation offers limited liability to its shareholder and has centralized governance structures. An LLC has the similar characteristics. While the corporation is the first choice for foreign investors, the LLC is an acceptable alternative. Whatever type of business is chosen, investors should […]

Guide to Starting an Incorporation in Canada British Columbia   Unless otherwise mentioned, the B.C. incorporation mentioned in this article specifically refers to a company incorporated in British Columbia, Canada, in accordance with Business Corporations Act.    Introduction   Many foreign investors would like to expand their business in Canada. However, starting a business for a foreigner is little complicated and restricted. Federal and many provinces/territories in Canada impose a resident Canadian requirement which provides that a certain number of directors of a company must be “Resident Canadians”. Options for foreigner to form a company are limited if they are not Canadian resident or cannot cooperate with Canadian citizens or landed immigrants.   Currently, British Columbia has the most flexible rules regarding non-resident business. According to the Business Corporations Act of Business Columbia, no Canadian resident is required to be appointed as a director. Therefore, non-Canadian residents can incorporate Canadian […]

Guide to Starting a Corporation in California   Unless otherwise mentioned, the corporation mentioned in this quotation specifically refers to a company limited by shares registered in California, USA, in accordance with California General Corporation Law.   Introduction   In California, corporations and limited liability companies (LLCs) are the most prevalent business forms. Investors must consider each type of business form carefully because one business form may be an advantage to certain investors but not to others.   Due to the location advantage, California is one of the most popular options for both domestic and foreign investors. Investors can choose to establish a corporation or an LLC subsidiary in California. A corporation offers limited liability to its shareholder and has centralized governance structures. An LLC has the similar characteristics. While the corporation is the first choice for foreign investors, the LLC is an acceptable alternative. Whatever type of business is […]

United States Sales and Use Tax Guide   When it comes to United States sales and use tax, foreign investors are surprised by the differences between U.S. sales and use tax and Value Added Tax (VAT) in other countries. U.S. sales and use tax is similar to Valued Added Tax (VAT) as both are indirect taxes. However, U.S. sales and use tax are imposed on the sub-national level because U.S. does not have a national system for sales and use tax. Each state has its specific authority to impose the sales and use tax with subjection of U.S. constitutional restrictions. Some local jurisdictions (including cities and counties) may also impose sales and use tax for economic and social considerations.   This guide provides an overview of the key concepts of U.S. sales and use tax, including the definition as well as Nexus standards, registration, criteria for sales and use tax […]

Introduction to Corporate/LLC Income Tax in United States   According to 2017 Tax Cuts and Jobs Act, United States adopts combined worldwide taxation and new territorial-style tax system.   Worldwide taxation means income accruing in and outside of United States are subject to United State income tax. Under a worldwide tax system, secondary jurisdiction over foreign-source income exists. If the tax in the foreign country is lower than the tax rate in the residence country, residual tax will be imposed. If the tax rate in the foreign country is higher than the tax rate in the residence country, the corporate will pay the higher foreign tax rate and get a credit for foreign-source income in the future.   New territorial-style tax system means U.S. corporations that own 10% or more of a foreign corporation can take 100% dividend received deduction on dividends paid out of foreign-source earnings but cannot have […]