Case A: I just started working on my app. Let’s assume I launch the app 6 months later and make money on 8th month. Case B: Or say I don’t launch anything for next 2 years. In both the cases what happens to the company? What are tax implications? I’m gonna hire freelancers outside USA and my target market and business is only within USA. Please help. Thanks #equity #startup
It’s an LLC, not an S Corp. if your company makes money, you’ll owe personal taxes. Launching or not is irrelevant. If you spend money, you can deduct it as business expenses. If you are truly hoping to do a startup, setup an S Corp. Doing things like giving employee equity and raising money from VCs will be much harder with an LLC.
Partially correct. You want an S Corp that does the actual business, and an LLC that owns the S Corp. Like this you get all benefits of both, and you can control how much money goes through the S Corp, but you run the risk of dual taxation unless your LLC equivalent is based outside of the US Source: advice from law firm in US when I was doing a startup
I heard VCs generally funded US based C Corps?
You would also need to register the company in California, as that is where you are performing the work and pay registration fees for both states. Until you actually have a need, just register in California.
C corp if you want to raise funding
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Hire a tax accountant Simple answer you report all your expenses and earnings. If you are not making money but spending money you report a loss which helps decrease your tax liability