Hey there. I'm just about to start launching my business, but before I do so I have some tax questions for anyone that is not based in the US.
If I understand correctly, if you are a non-US resident and setup an LLC in a US state you are not liable to pay taxes in said state provided that you are not a physical entity, do not directly trade in the US or have any US employees (all of which would lead to nexus and make you liable to pay requisite taxes). However, in such a circumstance a) what is your legal jurisdiction? b) Where would you pay taxes - if any?
For instance, I am a UK resident wanting to launch a drop-shipping store. If I register as a sole trader in the UK, I am liable to pay corporation and income tax here and if I sell in the US, I am not subject to paying sales tax in the US (as per the UK-US tax treaty). This would make my jurisdiction UK-based, at least I believe.
However, say I am a UK resident wanting to incorporate as an LLC in the US. This would make my 'store address' US and, I believe, my jurisdiction also US-based. My understanding here is that I would be paying federal corporation tax in the US state I decide to incorporate (lower than the UK). However, as I am a UK resident I would be paying income + sales tax here.
Is my understanding of this correct, and if so is there anything I would need to do on my store to identify that, although my store address is in the US as an LLC, I am not a US resident so am not liable to pay those taxes? And would I be in UK or US jurisdiction when it comes to privacy policies and so forth?