Your attitude on doing business with offshore companies

[FastNAwesome]

Hi everyone,

If you are US based and have a company, can you tell me what's your attitude on doing business with offshore company?

Do you stay away from that, are there any prejudice that it must be something shady?

Is it more complicated for you in administrative sense?

 

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[healthstatus]

For a vendor relationship they are tremendous. As clients it is marginal at best.

 

[mkzhang]

Anything outside of the border is a free for all, have fun going through the claims process to collect your receivables on a company that's across the pond. Same applies for ppl you sell to, and the ppl you collect from... there has to be a good relationship.

One benefit is that if you have your own offshore entity in a tax haven, you can defer the income tax on money that is stored there indefinitely.

Accounting wise it will be more expensive if you have your own offshore shell, but if you dont then its no different than doing domestic business.

 

[easymoney99]

I hired an SEO firm from India and they did a great job. But when I realized I was paying way to much I quit using them.

When it comes to stuff I know about I'm comfortable hiring off-shore, because I know what needs to get done and the ways they can do it. But if it was for manufacturing or something I'm clueless about I'd go really slow and do a lot of research before committing to any offshore company and giving them my money and the keys to my business.

 

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[mkzhang]

As easymoney said, it's much simpler when it comes to stuff you know and have experiences with.

 

[FastNAwesome]

Hey guys, hope you don't mind me bumping this thread, this is now in my total focus as I have to go ahead and create a company - here or there, but gotta do it, time for action

The focus of my question is - an invoice from a foreign country, for something that's not physical goods, but web design or seo services - is that a trouble for you as US based business (tax-wise).

 

[healthstatus]

No, it is just an outside service expense. My company is setup as an S corp, but an expense is an expense regardless of the point of origin. We are in Indiana, and services don't have sales tax on them either. Some states do charge sales tax for services. Getting $100.00 worth of advice from an accountant wouldn't be a bad idea.

 

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[GlobalWealth]

Anything outside of the border is a free for all, have fun going through the claims process to collect your receivables on a company that's across the pond.

Don't do payment terms. Payment up front only. Problem solved.

One benefit is that if you have your own offshore entity in a tax haven, you can defer the income tax on money that is stored there indefinitely.

Yes, but this is pretty complex. There are lots of loopholes here. Not as simple as it sounds. For the right business, this is ideal though.

Accounting wise it will be more expensive if you have your own offshore shell, but if you dont then its no different than doing domestic business.

Most likely, you will pay a bit more for your accounting process if you operate offshore, but it should more than offset the tax benefits. If it doesn't, there is no need (tax wise anyway) to do it. Doing business with an offshore vendor or customer is no different than a US one for accounting purposes.

But if you have a lot of offshore customers, you really need to consider setting up an offshore company to service those customers. It can save you a lot of money.

The focus of my question is - an invoice from a foreign country, for something that's not physical goods, but web design or seo services - is that a trouble for you as US based business (tax-wise).

No. If you are a Singapore (just an example) company and I hire you to do SEO work, there really is no problem. I would pay you via wire transfer or paypal anyway. Maybe the wire transfer fee is a bit hire for international than domestic payments, but I would most likely be paying a lower fee to more than offset the cost.

Personally, I would prefer to outsource offshore. In reality, I do outsource offshore frequently. I find the prices better and in many cases the quality of work too.

 

[FastNAwesome]

Most likely, you will pay a bit more for your accounting process if you operate offshore,

This one confuses me a bit - on so many websites zero record-keeping requirements are advertised, and no audit (for certain jurisdictions).

So to my understanding, you basically keep records just for your analytical purposes, so I don't get how it can be more expensive?

 

[GlobalWealth]

So to my understanding, you basically keep records just for your analytical purposes, so I don't get how it can be more expensive?

If you are an American citizen or resident, you owe taxes on worldwide income. It gets pretty complex when you start running a business offshore and deferring income inside that company.

The reporting requirements to prove you don't owe tax and the record keeping can get costly. But if the benefit outweighs the cost...

 

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[jacob]

You can hire different employee in many countries except India in terms of SEO. Another country that I personally suggest is Philippines with low rate and good communication skills. I'm sure It will save you a lot of cost.