Are you a US business owner who operates internationally or is planning to expand to other countries? Doing business around the world is exciting. But being a US business owner operating in foreign countries can create tax surprises and complications.
We’re here to help. We specialize exclusively in international tax matters; it’s what every member of our team does.
The most common tax challenges we help clients with include:
- Determining the optimal structure and set-up for an outbound business, based on the business’s particular facts and circumstances
- Implementing tax strategies to minimize global tax exposure
- Restructuring the business entity to be tax-efficient in the new tax reform era of Global Intangible Low-Taxed Income (GILTI)
- Calculating or correcting the one-time Repatriation Tax
- Amending tax returns for businesses and business owners
- Devising transfer pricing tax strategies
- Resolving tax matters with the IRS
Not only do we help clients with the US side of things, but we also coordinate with foreign tax professionals in other countries on your foreign taxes. Whether you already have foreign tax advisors or need introductions, we’ve got you covered.
3 Tax Myths About Operating a Business Outside the United States
Myth 1 | I’m operating my business as a foreign company; the IRS won’t care.
Under most circumstances, US shareholders of foreign businesses are required to file US tax returns and pay US tax on the earnings from their foreign businesses. In fact, the IRS is VERY interested in the offshore activities of US citizens and residents, including the involvement of US businesses in foreign businesses. With proper tax planning, you can minimize your cost of compliance. And your tax liability can be projected ahead of time to ensure the most optimal strategies are put in place.
Myth 2 | The Repatriation Tax was a one-event time. I don’t have to worry about my foreign business paying any further US taxes.
The Repatriation Tax (also called the Transition Tax) was assessed on earnings that accumulated through the end of 2017; it does not affect future earnings. However, beginning with tax year 2018, a new tax came into effect. It applies each year to taxpayers’ global intangible low taxed income. You may have heard of this referred to as GILTI. This tax is not going away and has already caused big headaches for small businesses.
Myth 3 | I reported all of my foreign income on my tax return and paid US taxes on it. If the IRS audits me, I will have reported every nickel.
Great! But in addition to reporting your income, did you fill out all the proper informational forms and schedules? The IRS requires annual “international informational disclosures” on your foreign assets, including your foreign business ownership. And the penalties for not filing these are severe.
For instance, a US citizen who owns a consulting company in the UK will most likely have a Form 5471 filing requirement each year. This form, if missed, can generate minimum penalties of $10,000. And the form must be virtually perfect, or penalties can be assessed even on the smallest errors.
We see so many instances of taxpayers who weren’t aware of the reporting requirements (or whose CPAs weren’t aware of the reporting requirements). We can help.
Unlike most US CPA firms, we are a boutique firm that has been specializing in international tax strategies for decades. We’ve helped many clients expand internationally in a tax-efficient way.
And we can help you with:
Why The Wolf Group?
Since 1983, we’ve worked with clients in the United States and abroad on international tax matters. We have a long history of “cleaning up” complex tax returns, reporting foreign assets, and reconstructing financial records.
Check out our extensive team of CPAs, all with vast international tax experience.
Looking for a Nexia International Partner?
We’re an active member of Nexia International, a global network of independent accountancy, tax and business advisors with over 250 firms around the globe.