Navigate tax season using Stripe Atlas(stripe.com)
stripe.com
Navigate tax season using Stripe Atlas
https://stripe.com/blog/atlas-taxes
50 comments
I really admire how Stripe atlas has the customer's best interest in mind. I recently incorporated my company through them and without much thought decided to do it near 20th Dec. Immediately I got an email from them that it would be in my best interest to wait till 1st otherwise I'll be paying taxes in March. That one email saved me a lot of work this year, so thanks for that. It's these little things that can be really helpful sometimes.
I hadn't seriously considered Stripe to take care of all the initial paperwork, but after reading a comment like this, I'm reconsidering.
Curious why you didn't wait 12 days (until Jan 1st) to save your self from one year's paperwork and fees? (assuming you're using the calendar year end as your fiscal year end).
EDIT: Oh duh I totally misread that. Sound advice indeed!
EDIT: Oh duh I totally misread that. Sound advice indeed!
tip: Jan 1st might not be the optimal start of the fiscal year. For example Christmas and new year season might be very busy. It should not matter if you have your accounting set up correctly though, but that is usually not the case for small businesses.
Howdy folks. I worked a wee bit on this and am happy to answer questions if you have them.
My issue is that it is still not clear how much you are going to pay in term of taxes. It seems like my first company that I created here in my country: You start discovering taxes as you move on.
Could you for example create an article that demonstrates these following cases:
1. Exactly 0 activity. Cost to incorporate + yearly cost.
2. Some International sales (credit cards). Say 20k in sales
3. US sales. Say 20k in sales.
4. Example of deduction and how much it saves in taxes.
These example can be very helpful. For example, if I'm expecting $20k in US sales, and have $15k expenses; I know that my taxes + accounting expenses will be between X and Y. I know that every situation is different but it kinda brings the feet back to the earth. It is not going to cost just to registration and the yearly franchising fee.
Could you for example create an article that demonstrates these following cases:
1. Exactly 0 activity. Cost to incorporate + yearly cost.
2. Some International sales (credit cards). Say 20k in sales
3. US sales. Say 20k in sales.
4. Example of deduction and how much it saves in taxes.
These example can be very helpful. For example, if I'm expecting $20k in US sales, and have $15k expenses; I know that my taxes + accounting expenses will be between X and Y. I know that every situation is different but it kinda brings the feet back to the earth. It is not going to cost just to registration and the yearly franchising fee.
I can give you reasonably firm quotes for tax preparation but I cannot give you quotes inclusive of taxes, because there is wide variance in situations and because "Estimate my taxes for me" is very firmly in the practice of accountancy and/or law.
Getting started with Atlas is $500 flat, in all cases. The ballpark numbersfor yearly running costs, inclusive of the Delaware franchise tax, registered agent fee, the bank fee, and a tax return through the appropriate Atlas partner but not inclusive of corporate income tax or your personal tax situation:
No activity: ~$1,000 $20k of sales, all US activity: ~$2,000 $20k of sales, cross-border activity: still rounds to ~$2,000 but the tax return preparation will cost ~$200 more
Getting started with Atlas is $500 flat, in all cases. The ballpark numbersfor yearly running costs, inclusive of the Delaware franchise tax, registered agent fee, the bank fee, and a tax return through the appropriate Atlas partner but not inclusive of corporate income tax or your personal tax situation:
No activity: ~$1,000 $20k of sales, all US activity: ~$2,000 $20k of sales, cross-border activity: still rounds to ~$2,000 but the tax return preparation will cost ~$200 more
Doesn't sound like you need to incorporate in the US given your bare-bones fact pattern (non-US company selling into the US) but you'd need to hire an accountant or tax lawyer to provide advice specific to your circumstances.
1. If you are already incorporated, is it possible to still use this service?
2. I know the world doesn't revolve around CA but a sure lot of tech happens here. Any chance you'll add CA franchise taxes too?
2. I know the world doesn't revolve around CA but a sure lot of tech happens here. Any chance you'll add CA franchise taxes too?
I'm also curious about this. We were accepted into Stripe Atlas but too late – we ended up forming our company while on the waiting list and couldn't partake.
Not that it is my intention to do it, but just for the sake of knowledge, what if I find that Stripe Atlas isn't for me and I want to close the company I've setup? What kind of work does that entail? Is it easy or hard? Thanks.
It depends. If the company hasn't generated revenue yet, then the process is relatively straightforward, and we have an option to work with an attorney to get it done for a fixed $500. https://stripe.com/docs/atlas/next#dissolution
You can probably imagine that closing a company with actual assets / liabilities / pending legal claims / etc can get much, much more complicated. That sort of thing would be solidly "you need to ask a lawyer" level.
You can probably imagine that closing a company with actual assets / liabilities / pending legal claims / etc can get much, much more complicated. That sort of thing would be solidly "you need to ask a lawyer" level.
I will be posting this on atlas forum soon but wanted to ask here as well :). We incorporated last November. Is the delaware franchise tax payable again this march.
Companies which incorporated in calendar year 2017 will owe their first franchise tax in March 2018.
Why no S-Corp? Couldn't find an answer myself.
S corps aren't a company type, they're a status you can elect for tax purposes.
We didn't automate the process of making that election because we felt it was not a fit for most Atlas users. A Delaware C corporation can still elect S corp status; that's a "talk to your accountant" question.
The primary reason people seem to want S Corps is to save social security taxes by putting their salary in one small bucket and their distributions in one larger bucket. Should we spend time enabling that, when our primary goal is accelerating the number and success of viable businesses creating wealth in the world? That does not sound like it is how we should spend a month of our lives.
We didn't automate the process of making that election because we felt it was not a fit for most Atlas users. A Delaware C corporation can still elect S corp status; that's a "talk to your accountant" question.
The primary reason people seem to want S Corps is to save social security taxes by putting their salary in one small bucket and their distributions in one larger bucket. Should we spend time enabling that, when our primary goal is accelerating the number and success of viable businesses creating wealth in the world? That does not sound like it is how we should spend a month of our lives.
>that's a "talk to your accountant" question.
I though it was the point here, to reduce such needs? Anything Atlas does can be solved by an accountant and a lawyer.
As to reasons, S-Corp allows deducting losses from personal income. This saves a good chunk of money in the early stages. In fact there few reasons to avoid S-corp until you start picking up serious investments.
I though it was the point here, to reduce such needs? Anything Atlas does can be solved by an accountant and a lawyer.
As to reasons, S-Corp allows deducting losses from personal income. This saves a good chunk of money in the early stages. In fact there few reasons to avoid S-corp until you start picking up serious investments.
any plan for atlas like program in asia?stripe is now supported in SG as well and taxes are way lower as compared to US.
We have a rule that we never announce anything before we're ready to ship it.
That said: the general scale of our ambitions is "incorporate a majority of all Internet companies, worldwide" and "materially impact global macroeconomic indicators." Anything needed to accomplish those things is in (eventual) scope for us.
That said: the general scale of our ambitions is "incorporate a majority of all Internet companies, worldwide" and "materially impact global macroeconomic indicators." Anything needed to accomplish those things is in (eventual) scope for us.
One of the main reasons I held back with Stripe Atlas back whenever it was in beta (been sitting on an invite for awhile) was that I didn't want the added tax burden while bootstrapping that an C Corp brings in, so I ended up going for a simpler LLC. These resources on taxes are good to see. The work Stripe has been doing with Atlas is really, really great.
One word of advice to everyone thinking about Stripe Atlas living outside of the USA: Please discuss plans to incorporate with an Accountant beforehand. You are still liable to pay taxes in the country where you effectively operate from.
Yup. It’s one of the reasons I didn’t go through them when incorporating... not that I didn’t want to. If they figure this one out, it would be a dream. Sort of like when Stripe first launched and was only available in certain countries.
Wouldn't that depend on the details of any tax treaty your home country has with the US?
Generally it would not. Under almost every US tax treaty, if you incorporate in the US but run your business from another country, you would be liable to tax in both the US and that other country for income earned by the business. (Concept of permanent establishment.)
It's even worse if you operate in a country that doesn't have a tax treaty with the US.
It's even worse if you operate in a country that doesn't have a tax treaty with the US.
Is there any legal way to avoid it?
Don't operate a US-incorporated business from a non-US location. Conversely, if you are going to be operated from a non-US location, don't incorporate in the US.
So setting up a company in the USA costs you a minimum of $400/ $500 a year just to exist.
In the UK once you have set up a company there is no ongoing cost paid to companies house.
In the UK once you have set up a company there is no ongoing cost paid to companies house.
I looked very seriously at using Stripe Atlas from New Zealand, but ultimately the uncertainty of the tax implications stopped me from using it. It was not only the short-term implications while running the company I was worried about, but also what kinds of reporting requirements it might trigger for years after. Things like FATCA, dealing with US foreign tax credits, and who knows what else that is lying just below the surface.
It would be great if Stripe could offer incorporation in another company with fewer unknown implications, or hire a lawyer to write an opinion for the implications of using Stripe Atlas in every country in the world.
It would be great if Stripe could offer incorporation in another company with fewer unknown implications, or hire a lawyer to write an opinion for the implications of using Stripe Atlas in every country in the world.
I was really hoping that this announcement was going to be related to collecting, calculating, and remitting sales tax (VAT) with Stripe. More and more countries are starting to charge sales tax on online purchases. There are third-party solutions that integrate with Stripe, but none of them are as clean or nice as it would be if Stripe was to handle it for you.
Wow, looks like they made it super easy to file franchise taxes. Directly through Atlas and no extra fees either!
I am based in Germany and would be required to pay my taxes in Germany (?). Going with Stripe Atlas, would I have to pay additional tax in the US as well?
Yes in your case you would be required to pay taxes in Germany with your entity. Why not incorporate a German entity? If you have any questions you can contact me any time on ck (at) firma.de. I’ve been running what stripe atlas is doing in Germany (firma.de) since 2012 and always love to chat.
Unless you really want a U.S company(maybe cause your target market is the U.S. and you plan moving there someday), does it really makes sense to use Atlas if you are based off in Germany? Germany being a Stripe supported country.
Atlas makes more sense for people living in countries where Stripe is not supported but still want to use Stripe, the perk is, you have to pay high U.S. taxes that you won't enjoy and you will still have to pay German taxes from your U.S. income because you are a German citizen?
Atlas makes more sense for people living in countries where Stripe is not supported but still want to use Stripe, the perk is, you have to pay high U.S. taxes that you won't enjoy and you will still have to pay German taxes from your U.S. income because you are a German citizen?
I run a SaaS business with almost all of the customers in the US from Germany, using a German stripe account. Credit card support is very limited, as any transaction will look like an international charge to the credit card vendor. This results in two situations that happen quite often: the card gets declined flat out (any kind of debit card, Discover, some AmEx) or the customer has to call their bank to allow for the charge. I had to build a customer support automation to help the customers understand that it’s not their problem. It is a bearable problem, but moving the accounts over to the US would reduce this friction, which happens at one of the most relevant times for retention.
Stripe Atlas solves this problem for you right, having a bank account with SVB? I'm an American, living in Germany, doing something very similar.
No. It would make more sense to incorporate in SG or HK and then use Stripe since it supports both of these countries. The only reason why you want to incorporate a C Corp in the US is if you want to go big: Get investors, sell ownership (stock), IPO, etc...
Can you open companies/bank accounts remotely in SG or HK?
Atlas incorporates companies in the U.S., and US companies will have a filing obligation for federal taxes and an obligation to pay Delaware franchise tax (which is basically a renewal fee for the company every year).
Whether it is "additional" tax depends on your circumstances, and is a good question to run by an accountant.
I've run US businesses from Japan for ~10 years or so. The net tax rate of doing is not obviously materially higher than just having a Japanese entity and doing everything through it; I'll avoid giving you the full blow-by-blow of why that is true, since it isn't relevant to your circumstances, but the short version is "foreign tax credits" and "social security totalization agreement " (a bilateral treaty).
Whether it is "additional" tax depends on your circumstances, and is a good question to run by an accountant.
I've run US businesses from Japan for ~10 years or so. The net tax rate of doing is not obviously materially higher than just having a Japanese entity and doing everything through it; I'll avoid giving you the full blow-by-blow of why that is true, since it isn't relevant to your circumstances, but the short version is "foreign tax credits" and "social security totalization agreement " (a bilateral treaty).
Do you know of anyone running an Atlas corporation in Sweden and how it works in conjunction with the Swedish tax system? I've been curious on the concept ever since I first read about it on your blog (which over all is a great read).
We have a variety of companies opened by folks operating in Sweden (and another 100+ countries besides).
I would love to give you an answer regarding the Swedish tax system, but it is not one of the two tax systems that I know enough about to model well and, unfortunately, if it were, I would be legally enjoined from doing any sort of interpretation about how our product interacted with it.
I recommend you talk to a local accountant.
I would love to give you an answer regarding the Swedish tax system, but it is not one of the two tax systems that I know enough about to model well and, unfortunately, if it were, I would be legally enjoined from doing any sort of interpretation about how our product interacted with it.
I recommend you talk to a local accountant.
No, Stripe forms a C Corporation which separates the company's income from your own (as opposed to an S Corporation or LLC), which will prevent Germany's Welteinkommenprinzip from having an effect on your German tax return.
I believe that is correct. However as he is operating the company from Germany, he would be required to register the company as operating a branch (Zweigniederlassung) in Germany.
The company would then be liable for German taxes on income generated from Germany. German Payroll taxes would also be required if they employ people within Germany. I am unsure if the Branch Office is also required to pay IHK fees but that may also be the case.
The company would then be liable for German taxes on income generated from Germany. German Payroll taxes would also be required if they employ people within Germany. I am unsure if the Branch Office is also required to pay IHK fees but that may also be the case.
Yes, it is separate. However, Ort der tatsächlichen Geschäftsleitung is Germany. That means you should pay taxes in Germany (if you do is another mattter, but if you don't and the Finanzamt finds out, you are in for a rough ride).
I think this is true. I would have to pay my taxes in Germany and make a "Zweigniederlassung".