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Is a Delaware LLC worth it for an European Founder?
Hey everyone,
I’m a European freelancer dev with clients in the US, and now my own apps are starting to generate some consistent monthly revenue.
With freelancing only, my tax setup was fine. But now, with income coming from Stripe and App Stores, things get complicated.
Europe is way behind in this sort of thing and filled with bureaucracy that only complicate things.
So I’m considering setting up a Delaware LLC via Stripe Atlas as an intermediary.
- The LLC would handle all international income/expenses and be used as a pass-through entity, paying 0% tax as a non-resident.
- Then I'd transfer a single amount to the Portuguese company each month, pay tax here and make it easier to report and hopefully simplifying most of the bureaucracy.
Here are the options I'm considering:
- Delaware LLC + Portuguese Company: Use the LLC for all online transactions, revenue and expenses, and transfer one payment to a Portuguese company monthly, and draw a salary from there.
- Portuguese Company Only: Use a regular Portuguese company and handle everything locally, including Stripe, App Store income and all expenses.
So I'm wondering if an LLC is worth it?
Or should I just do business as a Portuguese-based company?
I'd love not to be asking this stuff here, but unfortunately I can't find accountants that have experience with this.
So any advice or recommendations would be greatly appreciated!
Thanks!
I’m a European freelancer dev with clients in the US, and now my own apps are starting to generate some consistent monthly revenue.
With freelancing only, my tax setup was fine. But now, with income coming from Stripe and App Stores, things get complicated.
Europe is way behind in this sort of thing and filled with bureaucracy that only complicate things.
So I’m considering setting up a Delaware LLC via Stripe Atlas as an intermediary.
- The LLC would handle all international income/expenses and be used as a pass-through entity, paying 0% tax as a non-resident.
- Then I'd transfer a single amount to the Portuguese company each month, pay tax here and make it easier to report and hopefully simplifying most of the bureaucracy.
Here are the options I'm considering:
- Delaware LLC + Portuguese Company: Use the LLC for all online transactions, revenue and expenses, and transfer one payment to a Portuguese company monthly, and draw a salary from there.
- Portuguese Company Only: Use a regular Portuguese company and handle everything locally, including Stripe, App Store income and all expenses.
So I'm wondering if an LLC is worth it?
Or should I just do business as a Portuguese-based company?
I'd love not to be asking this stuff here, but unfortunately I can't find accountants that have experience with this.
So any advice or recommendations would be greatly appreciated!
Thanks!
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A US LLC is only going to make it easier for you to take US transactions and payments, but that's about it. You'll still need a US Bank + address to make taking US checks easier, you'll still have to file US taxes even if it's mostly passing through to you personally, and you'll still need to pay for the filing and possibly an accountant to handle it for you. The business (LLC) will still owe taxes on US income from businesses, even if your personal income doesn't have to pay US taxes out of what you pay yourself. I'm not sure how you get around that.
If you're relying on a service like Stripe to collect payment, does this still apply?
Taxes are unavoidable if you are collecting them in the US.
Could you go into what exactly is complicated? What issues are you trying to solve for? PT not able to account for Stripe income?
Don't forget PoE and CFC rules. You'll probably pay corporate tax in Portugal for your US LLC, since it will be managed from Portugal.
I always hire two. Find someone in Portugal to asses impact of the US-based entity in Portugal and find someone in US (Probably Atlas would be able to answer?) to assess impact on US-based taxes.
Honestly, if it's just "some" revenue I'd try to make it work as a freelancer and then probably start a Portuguese company.
Thanks guys, these have been the best answers I've gotten anywhere so far.
I think I'll just setup a standard portuguese company, and find an accountant that uses accounting software that links with stripe.
I'll leave the LLC for later
A friend of mine set up a Delaware LLC, when he started his SAAS company. Three years later, they still did not find a repeatable business model and are running out of money.
These facs could be correlated, or they can not.
I would focus on making more money, since the LLC problem can easily be solved with throwing money at it.
I helped several founders set up their first LLC, and it’s super simple, fast, and affordable.
As soon as you generate a bit of revenue to cover the cost, I don’t see why it wouldn’t be a viable option?
Hi Pedro.
I have experience dealing with Delaware C-Corps, but the process is similar for LLCs. Setting up an entity is super fast and easy, but it can become very expensive quickly and comes with many hidden costs later on.
I was super excited when I started a new entity in Delaware, but as soon as revenue goes down, you might find yourself stuck with an expensive entity in the future with high admin costs. I wrote about my personal experience on my blog, maybe useful to you? notesaboutstartups.com/blog/r…
Good luck.
Great points, Adrian! What’s your ballpark revenue threshold to go with US a) pass through b) corp vs other jurisdictions?
Hi Dmitry. The decision really depends on individual circumstances, but if I were to do it again, I’d consider setting up a C-Corp or LLC only if I had at least $3,000 in annual revenue just to cover the recurring admin and tax compliance costs. Also C-Corp makes only sense if you intend to have multiple shareholders and/or plan on raising venture capital. If it's just you it might be an overkill at the beginning and an expensive prestige project.
Regards to other jurisdictions I am not sure.
Thanks for the input, makes total sense!
FYI, a corporation in Estonia is about $1000-1500 annual full accounting and compliance support. Not sure how much is it in Singapore or Dubai.
Another point I forgot to make, as a non-us resident I noticed that foreigners are required to submit more and more paperwork (accountants usually charge 200-500 USD per form) to submit to the authorities. In essence more bureaucracy for foreigners which usually leads to more costs.
That’s interesting. I guess the market makes it so.
I already pay thousands for my US tax prep (CFC, FEIE and such), so it doesn’t shock me 😅
That’s interesting. I guess the market makes it so.
I already pay thousands for my US tax prep (CFC, FEIE and such),j so it doesn’t shock me 😅
If you ever plan to raise funds via VCs you will have a much easier time dealing with US investors. For quite a few a LLC is a must. Good example is YC.
After a Series A its really hard to raise funds within Europe so I really recommend any new founders to not start a company in EU.
I was under impression LLC is a no-go for funding and it almost always has to be a corporation due to the membership and structure limitations of an LLC, no?