The North American market is the main market for China's cross-border exports, of which the United States is one of the largest e-commerce markets in the world, with a large number of buyers, extremely strong consumption power, and a very large market capacity. Since local U.S. consumers are more likely to trust the products sold by domestic companies, many cross-border e-commerce sellers choose to register a U.S. company for online sales.
First of all, I would like to summarize several benefits of registering a U.S. company.
First, it's easy to register. A U.S. corporation can be an individual partnership corporation, or a Hong Kong or Chinese corporation can be used to control a U.S. corporation, but the requirements vary from state to state.
Second, the tilt of platform policies. If you register a U.S. company to apply for a platform account, for the Amazon platform, you are a local seller, because you use a U.S. company and a U.S. tax number, and even the platform will have a lot of tilt in policy.
Third, traffic support and risk protection. It would be better to register store traffic with an American company, and in the face of the account closure turmoil that occurred in previous years, as long as it is not directly associated with copying and swiping, it will basically not be affected.
Fourth, it is convenient to cancel the cancellation. If the operation of the U.S. company is not going well, it is also very convenient to deregister, as long as you make the last tax return, tell the tax office that you have deregistered the company, and then tell the state ** that the U.S. company is no longer doing business, you can deregister it.
Do these two steps well, basically the deregistration of the U.S. company is complete, and from the moment of deregistration, any debts incurred by your U.S. company are none of your business.
So, as a seller, registering a U.S. company, does it involve paying local taxes in the U.S.? In fact, in the determination of U.S. taxation, the tax bureau wants to determine whether the income of a U.S. company belongs to the U.S. income, but once you register a U.S. company, you are actually a tax resident of the United States, and the U.S. tax resident is subject to global taxation.
What does it mean to be taxed globally? For example, if you use an American company to do business in Europe, you also have to pay taxes to the US tax bureau. This does not refer to an individual, but to a U.S. corporation that is a U.S. tax resident, so his company's income minus his expenses is subject to income tax.
U.S. sales tax is a tax levied by U.S. states and localities** on goods and services based on a certain percentage of their sales**, and is a tax paid by consumers when purchases occur in the United States. The merchant is responsible for helping the local ** to collect on behalf of the local government, and then pay it to the local government once a quarter (once a year if the turnover is small).
Whether it is a Chinese company or a U.S. company, it must first register with the state** to obtain an EIN number. An EIN is very important and is used to file Federal Income Tax, State Income Tax, Payroll Tax and Seller Permit.
U.S. companies with a tax ID number can set up automatic sales tax collection from consumers in the Amazon backend. Amazon says Tax Collection is a service that will automatically calculate, collect, and deduct sales tax from third-party merchants who sell products to customers in certain states.
If you ask Amazon to pay the tax on your behalf, Amazon will collect 29% as a processing fee, as paying sales tax is the responsibility of the seller, not Amazon.
Many sellers think that Amazon has withheld and paid sales tax, so they don't need to worry about it, but in fact, when the seller's sales reach a certain upper limit, they must declare their own sales tax, and in some specific cases, they also need to declare income tax.
Under U.S. tax law, sellers are required to apply for a sales tax license and file sales tax returns in the state where the sales tax nexus is generated. At present, 46 states in the United States have set up sales tax, and sales tax has become the main fiscal revenue of the state, accounting for more than 40% of the state's tax revenue.
There are four states in the United States that do not have sales tax, namely Delaware, Alaska, Montana, and New Hampshire, and Delaware is one of the top destinations for cross-border sellers to register U.S. companies. Because Delaware does not charge any state sales tax to its residents or visitors. In addition, there are no jurisdictions in Delaware that implement any sales tax measures. However, Delaware levies a gross sellers tax on the total sales of goods and services sold by businesses, and Delaware has no sales tax and low land taxes, making it known as a corporate tax haven.