Guys, Please answer ONLY if you are SURE about your answer and what you are SAYING, I own a small web hosting company and its registered in my country (outside of US), In my country i don't have to pay any taxes legally, so i take every penny i earn, my website is international, and i do have clients from US. Currently i use Paypal and 2Checkout for credit card processing, with the following rates: 2CO: 5.50% + 45cents Paypal: 3.90% +35cents So every client who pay me, the processors take the above percent of the original payment. As you know a US merchant account cost LESS (2.04% + 19cents), so i went to US, and registered my company there, and opened a business bank account with Bank Of America, along with obtaining IEN (Federal Tax ID). And i have opened a US merchant account, with above rates. But unfortunately i made aware that now i have to pay federal taxes to US + $344/yr to the state of my company. Do you guys think it worth? I am just trying to save money in long term, and this was the reason i registered my company in US and opened a us merchant account. Do you have any idea about the taxes i have to pay to IRS? Do you think i will still save money? or it would better if i cancel my registration there and back to the old routine? in order to avoid taxes? So here is the options i have: 1. Stay doing business in my own country, without paying taxes BUT with above merchant accounts rates. 2. Doing business in US with low merchant account rates, BUT paying taxes. Which one do you guys recommend? Thanks in advance.
You would know if it is worth it. You have one figure that you mentioned ($344.00). So you need to basically get out your computer, see what you would be paying if you go back to your country for processing. The federal taxes will vary on the amount of income you make. Some websites to take a look at : Sales Tax Institute, Tax Foundation, Stream Lined Sales Tax, Information Reporting for Payments Made in Settlement of Payment Card and Third Party Network Transactions (REG-139255-08) (pdf). The best thing is to contact a CPA that is registered in the state of your business. He / she might charge you $100.00 or so for the consultation, but it is worth it. Usually, service taxes are different and sometimes you might not be responsible paying (it could be up to the consumer).