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Tax implications of conducting business abroad

As a business owner, you take great pride in your ability to provide your clients with a high level of service.

Regardless of your industry, if you own a business in the United States there may come a point when you find yourself conducting business in another part of the world. While there is nothing wrong with an international approach, it can alter your financial situation in a number of ways.

Here's the one thing you need to know: Just because you are operating abroad doesn't mean you can ignore U.S. tax laws. Instead, you need to do two things:

  • Familiarize yourself with how your international business is taxed in the United States.
  • Familiarize yourself with the tax laws and regulations associated with the host country.

Questions to address

When you first start conducting business on an international scale, it's only natural to have a variety of questions and concerns. Addressing these questions immediately will put you in a better position.

Here are some of the most common questions:

  • What is the best way to avoid double taxation? Many business owners in the U.S. worry about this, as they don't want to pay tax in the U.S. as well as the host country. Fortunately, the U.S. has tax treaties with most other countries, ensuring that you never run into an issue with double taxation.
  • Is income from abroad taxable? It's easy to believe that income earned abroad is not taxable in the U.S., but this isn't typically the case. If you earn income anywhere in the world, regardless of the country, it's best to report it on your U.S. tax return. This will help you avoid any potential issues associated with hiding income in another part of the world.
  • Will your tax preparer assist with filing all the necessary forms? There is no easy way to answer this question, as it depends largely on the type of business you own, the income you're earning, the countries in which you're doing business, and his or her experience.

In today's modern age, with, in a literal sense, the world at our fingertips via the internet, business owners have come to find that they can grow their organization by expanding internationally. As long as you understand the tax implications and what's expected of you, this may be the right approach.

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Friday, November 18, 2016

Chaya Kundra will be a panelist at the New England IRS Representation Conference on Preparer Penalties.

Preparer Penalties: Everything You Need to Know! Over time the IRS has increased its focus from individual taxpayers to tax preparers. When the IRS identifies a pattern of false or fraudulent returns, it does not hesitate to impose penalties on the return preparers. This panel will walk you through the various penalties and what preparers need to know to protect themselves.

Moderator: Amanda Evans, Green & Sklarz LLC, New Haven, CT

Panelists: Chaya Kundra, Kundra & Associates, Rockville, MD, Barbara Kaplan, Greenburg Traurig, New York, NY

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