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01
Nov 2019
  • BY: italiancpafirms
  • TAG: Documents, Business, tax
  • 01 COMMENT

Set up a company in the US thanks to Business Incubator.

Creating a new company requires hard work and plenty of motivation, and.. if you plan to do it abroad, it can be even harder. If you are considering this type of investment, please keep in mind that you need updated and detailed information as well as a reliable guide who will help you handle all connected aspects: from analysis to planning and implementation.

These projects, very often, are not carried out because people worry about not being able to face all the involved issues. They fear they won’t be able to deal with it.

Our studies have created the Business Incubator service to meet this need and help the development of new business ideas.

What is Business Incubator?

It’s the service we have set up to provide consultancy and support to entrepreneurs who wish to create a new business in the US. It combines procedures, infrastructures and skilled staff with the aim to support and guide the new company from the very early stages, providing all the necessary instruments to reach the stated objectives.

The US require a reduced bureaucracy to open a new business. There are fewer formalities to handle and reduced costs and time. These are great benefits to consider, but you shouldn’t underestimate the operation. It’s of the uttermost importance to have expert advice at disposal.

Thanks to our experience in the field, we can help with the study of the project feasibility and business plan setup, to clarify and define the type of business, the services or products offered, the goals and all necessary procedures to reach them, without forgetting to explore funding opportunities.

We examine and suggest the most suitable type of company, and then we take care of the incorporation, preparation of the company books and statute.

Our studies are associated with a network of professionals able to provide updated and precise information about all the involved subjects, from taxation to legal aspects, not forgetting about the cultural aspects. Opening a business abroad requires a deep understanding of local customs and practices. With our extensive knowledge of the market and our offices on site, we can help the new company to easily align with the US economic situation.

A personalized approach is at the core of our business.

Each single client, each project, has a different point of departure and requires customized solutions fitted to each one’s specific needs. We develop tailor-made strategies aiming to limit the costs and implement processes and new technologies to improve productivity.

Our goal is to help the new business get through the, usually, very hard early stages, providing assistance and support to minimize difficulties.

If you wish to know more about our Business Incubator service, please contact us. We’ll be glad to give you more detailed information.

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01
Nov 2019
  • BY: italiancpafirms
  • TAG: Documents, Business, tax
  • 01 COMMENT

Why businesses choose to incorporate in Delaware

There are many reasons why more and more businesses are incorporating in Delaware, especially non-resident companies wishing to expand into the US.

Let’s see why.

The legal framework in Delaware is particularly suitable for corps, boards, and shareholders.

There’s a separate court system, the Court of Chancery, whose corporate laws influence Supreme Court decisions. A great benefit is represented by the fact that Courts are expert in dealing with business problems.

Delaware offers reduced bureaucracy to form new companies fairly quickly. In some cases, it’s also possible to convert an LLC to a C-corp with just one state and one IRS filing.

The tax system is extremely favorable. Business transactions are not taxed. No value-added tax and no personal tax is applied in Delaware. Sometimes a county-level real estate property tax applies but it’s lower than other states. Also, there is no inheritance tax.

Delaware also doesn’t have a corporate tax on interest or other investment income earned by holding companies.

Incorporating in Delaware can be particularly beneficial to:

  • Non-us citizens or residents wishing to expand to the US market
  • Companies with high mobility
  • Publicly traded companies
  • Companies about to go public

From a legal and fiscal point of view, Delaware makes incorporating and management easier but it might not be the best solution for small startups who are in the early stages of their business.

Even if they incorporate in Delaware, they are required to register as a foreign entity in their home state (where they do business) too. They would save time thanks to reduced bureaucracy, but they would spend it registering their company in their home state anyway.

In addition to that, they would be required to comply with corporate government laws in both states. Also, in their home state, they would be subject to tax liability. Another consideration to make is that they would need help to form their business in Delaware, and that means they would bear extra costs to pay a registered agent to do that. Especially in the early stages, resources can be limited, that’s why start-ups should think about it very carefully and might consider incorporating in Delaware when they become larger, or when they receive venture capital.

Italian investors who need to choose the right type of business, have to consider a few fundamental differences among the different types.

LLC – LIMITED LIABILITY COMPANY

This type of business usually requires less paperwork and procedures. LLC accounting is simpler than C-corp accounting. Members get protection from personal liability.

Avoid double taxation: LLC is not taxed as an entity, members show the earnings in their individual tax returns, paying taxes accordingly. LLC doesn’t allow for shareholders, so it’s not the best option if the company’s plans include having outside investors. There are some types of investors whose structure doesn’t permit to invest in an LLC. In this case, the C-Corp would be a better solution.

CORPORATION

Both C-corps and S-corps are separate legal entities and offer limited liability protection. Both have shareholders, directors, officers and follow the same corporate formalities and obligations (bylaws, shareholder meetings, annual reports, annual fees).

The main differences are that S-corps can have one class of stock and have restrictions on ownership: they cannot have more than 100 shareholders and cannot be owned by LLCs, C-corps, other S-corps, or partnerships. The shareholders must be US citizens/residents.

C-corps are separately taxable entities – they file a corporate tax return and pay taxes at the corporate level. Double taxation can apply if corporate income is distributed as dividends, considered personal income. S-corps are pass-through tax entities, so they file an informational federal return but do not pay taxes at the corporate level. The profits/losses of the business are reported on the owners’ personal tax returns.

So, to recap, the LLC is probably, the easiest way to start. And afterward, when the business grows, it can be beneficial to convert to a C-corp or S-corp, considering that C-corps provide more flexibility when plans are to expand the ownership or sell.

Anyway, there are many factors to take into account when deciding to incorporate in a foreign country. We recommend getting advice from professional consultants who can help clarify doubts and suggest the best solutions according to each one’s requirements.

Our studies are at your disposal for any further information you may need, get in touch.

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01
Nov 2019
  • BY: italiancpafirms
  • TAG: Documents, Business, tax
  • 01 COMMENT

American Expats in Italy need to file their taxes in both countries.

Italy is a popular destination for many expats, and their new life abroad does impact them on several levels, not only from a cultural point of view!

It’s important to keep in mind that US citizens living in Italy need to declare their income in Italy and the US.

 

It doesn’t matter what country they live in, US citizens or permanent residents are obliged to file taxes with the federal government every year. In some cases, they also need to file an informational return on their assets held in foreign bank accounts.

There are some provisions to protect US citizens, residing overseas, from double taxation. An expert professional will help with the planning and tax preparation to avoid or minimize double taxation.

The Foreign Account Tax Compliance Act (FATCA), requires U.S. taxpayers (living abroad or in the US) owning financial assets outside of the United States to declare the value of those assets each year to the IRS.

FATCA also requires foreign financial institutions (banks, brokers, insurance companies, and mutual funds for example) to report information about financial accounts held by U.S. taxpayers.

Hence the need for accurate and up to date information from skilled professionals to comply with Italian tax laws and FATCA regulations and obligations.

When are expats considered residents in Italy for tax purposes?

Expats are considered residents in Italy when even just one of the following situations applies for more than 183 days:

  • They are registered in the Italian Resident Population database.
  • They are classified as Italian residents (place where the person has established an abode)
  • They are domiciled in Italy by the Italian Civil Code (place where the person has established the main center of business and interests)

In any of the above cases, Italian income taxes will apply. Several deductions can be applied, for example:

– Charitable contributions (recognized by Italian law)
– Family allowances
– Social security contributions
– Medical expenses
– Interests paid for loans (real estate, for principal residence)
– And more…

But it is fundamental to ask for help of expert professionals who can provide up to date and detailed information to file taxes (and deductions) correctly.

In addition to income tax, Italy applies other forms of taxation, like regional, municipal taxes, and real estate taxes, which vary according to the tax rate implemented by each municipality, and the value of the property itself.

The US and Italy have signed a tax treaty, to minimize double taxation of both categories of expats (Americans living in Italy and Italians living in the US). This treaty is fundamental to determine which country’s taxes apply.

When tax resident conditions apply to expats living in Italy, they will be taxed on their worldwide income. They need to report all their assets including properties and savings accounts, even if they are not held in Italy.

Another important fact to underline: regarding the estate and gift taxes, US citizens living abroad don’t benefit from the 5,490,000 dollars exemption. These expats are treated as non-residents, and in this case, the exemption amount is USD 60000. Above this amount, in case of death, their heirs should file taxes and pay an estate tax of up to 40%.

To avoid running the risk of not complying with Italy and FATCA regulations and obligations, it is advisable to reach out to competent and expert professionals in this delicate field.

Thanks to our professional network, we help US expats, providing optimal tax advice and solutions fitted to each client’s specific needs. Please feel free to contact us.

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