FOREIGN NATIONALS STARTING U.S. BUSINESSES ARE MAKING COSTLY MISTAKES
Lack of planning and an inadequate understanding of U.S. rules can dramatically reduce
the odds for success, says Silicon Valley-based financial advisor
FREMONT, California, May 8, 2007 -- Although many government’s policies around
the world discourage offshore investors, the largest economy in the world still
remains relatively open to foreign investment. A growing number of new U.S. businesses—especially
start-ups in the technology sectors—are being started by foreigners.
Driving that trend even harder will be the coming void that is expected to be created
in the work force by exiting boomers in the next decade. According to Deloitte,
over the next 15 years 80 percent of the U.S. work force will be retiring. Who better
to fill that void than foreign talent and entrepreneurs?
In many cases, these highly motivated new U.S. business owners are less wise to
the ways of doing business here, and may not spend the proper time thinking out
issues that can affect their future financial success. Even seemingly obvious issues
such as whether or not to set up residency here in the US can present taxing problems.
In “DOING BUSINESS IN THE UNITED STATES: Foreign Corporations, Individuals and Trusts,”
Alan Olsen, Managing Partner at Greenstein, Rogoff, Olsen & Co., has prepared
a handbook designed to advise offshore investors starting businesses here in the
U.S. One of his firm’s primary focuses is developing innovative strategies for business
enterprises and individuals.
From his base in Fremont, CA, Olsen advises some of the most successful and recognizable
U.S. entrepreneurs in Silicon Valley. Whether it’s language barriers, unfamiliarity
with U.S. laws and customs, or any number of other reasons, says Olsen, many of
these new businesspeople are making mistakes that shorten their reach for the American
dream.
In the handbook, Olsen presents several of the most common mistakes foreign individuals
make when attempting to set up shop in the U.S:
Failure to understand tax treaties between countries.
Not understanding cross-border transactions and transfer pricing rules can cause
delayed taxation. Corporations and individuals doing business with other countries
need to know how to properly document transactions in order to stand up to scrutiny
by the taxing authorities on either side of the borders.
Non-compliance with tax reporting, compliance, and regulations.
The U.S. government requires multi-national companies and individuals doing
business around the world to disclose all of their activities on special reporting
forms. Failure to file the proper forms could subject taxpayers to penalties ranging
as high as $60,000.
Failure to plan prior to becoming a U.S. resident.
If they do eventually choose to become residents, transferring their assets
makes them subject to gift and estate taxes. Many domestic U.S. investors are well
aware that neglecting to give some forethought to proper estate planning can be
very costly. For foreign nationals the problems can be even more daunting.
Failure to set up the proper business structure.
Choosing the wrong business structure can also be expensive, both in terms of
managing the business and in taxes. The wrong structure could make the business
subject to unnecessary tax withholdings or even double taxation on assets. Companies
also need to be aware of the differences in individual state tax laws, and what
activities might make them subject to specific taxes.
Inadequate understanding of business tax categories.
Not understanding the U.S. tax structure can be devastating to a new business.
Even seemingly inconsequential issues such as those surrounding payroll taxes, income
taxes, and excise taxes are very specific and carry heavy fines if ignored. Businesses
need to be aware that there are special tax credits available as well.
To obtain the new Greenstein, Rogoff, Olsen & Co handbook, “DOING BUSINESS IN
THE UNITED STATES: Foreign Corporations, Individuals and Trusts,” access
http://www.groco.com/media/bookstore.aspx.
For more information on issues relating to estate and tax planning, please access
www.groco.com or call 877-CPA-2006.
About Greenstein Rogoff Olsen & Co., LLP
Greenstein Rogoff Olsen & Co. are the CPAs for Silicon Valley's most successful
people. Consistently ranked as one of the top accounting firms in the San Francisco
Bay Area, Greenstein, Rogoff, Olsen & Co is a full service CPA firm providing
accounting, tax, financial, and strategic planning for the highly successful. In
business since 1964, GROCO has offices in Fremont, Palo Alto and San Francisco,
California. We provide consulting services
to high net-worth individuals and closely held businesses and have special expertise
in providing accounting services to the
leading Venture Capital partners in the Silicon Valley.
Our primary services include income tax planning,
income tax preparation, strategic business consulting,
business valuations, bill paying, estate planning, estate administration,
trustee services, and financial statement preparation. Our clients have participated
in building companies like Google, Skype, America Online, Oracle, Sun Microsystems,
Compaq, Macromedia, Ebay, and Genentech. Access
www.groco.com for more information.
GROCO: Trusted Advisors to the Highly Successful - Since 1964.
FOR IMMEDIATE RELEASE
Media Contact:
Dennis Wolfe
P: 510.797.8661
F: 510.797.1791
dwolfe@groco.com
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