Ok, you want to start making money with audiobooks on ACX, so you´ll need a legal entity in one of the countries currently supported by ACX.
Which type of business (LLC)?
Which type of service can do it for you and the costs?
How to get a legalized business address and bank account without psychical travel?
So let´s jump into it right away.
First question, which country?
In this blog series, I will discuss on how to create a business (a legal entity for tax purposes) in the US. If you are from outside one of those 4 countries: US, UK, Canada and Ireland, you can also choose for UK, Canada and Ireland of course.
All those countries will have advantages and disadvantages compared to the US. Maybe you already have contacts in the UK or Ireland who can help you create your company quickly, cheaply, and easily and offer you the proper legal and tax advice. Then please go ahead and use your own connections.
I have chosen the US because I could find the most online resources and services there. And another reason was that the European Bookkeeping requirements are highly demanding and very time-consuming.
In Spain, I had to inform the governmental tax organization every 3 months plus do the final declaration. So 5 times per year and I had to pay a monthly fee to the accountant for this. Adding this all together it becomes quite expensive.
In the US you have to file Form 1120 and Form 5572 once a year. My CPA/Lawyer charges $475 for this. So on first hand less money and way less time-consuming than in Spain.
The corporate tax rate in the US is 21% (2019 and 2020), the corporate tax rate in the UK is 18% (start April 1st 2020), the corporate tax rate in Ireland is 12,5% and on intellectual property even lower. These tax-rates are applicable on the corporate profits of a business. If you are from Europe, you might want to consider and investigate Ireland as well. But I don´t have experience with setting up a business in Ireland, so I cannot help you with this.
The main issue with Ireland and the UK was that I needed to fly to the country to open a local bank account. This besides having a local secretary service and business address. But this is the same in the US.
I didn´t want to spend a lot of time and money on flights. I wanted to have my legal business created fast. So that´s why I choose for the US.
So, I choose to set up an LLC in the US. There are different types of LLC and it cost me quite some time and money on advice to find the right type of LLC for your ACX Publishing Business.
Second Question, which state?
Besides the national taxes, some states also apply a state tax. This is something you can easily prevent by choosing the right state.
Other criteria to Select the best state for your US Business are:
Costs of creating a business in that state;
Annual file costs. Although you might not have to pay additional state taxes, most states require you to inform them yearly, or every 2 years, about how much money you have made and how much costs you had for your business;
Availability of a registered agent service (=same requirement as in Ireland and the UK) and the recurring costs of that agency service;
A service that can create the company on your behalf, without having to be fiscally present.
The 3 most popular states by foreign-owned LLCs are Delaware, Nevada, and Wyoming. Each of these 3 states has its own specific requirements and costs regarding company creation.
I have spent a lot of time comparing them and found the best state.
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