US Taxes and Accounting

Compared to the relatively complicated tax system, accounting and expense reporting have clear and simple rules in the US. Unlike most European countries, you can under certain circumstances deduct the costs of entertainment and food for your employees and potential clients from your tax bill. In addition, for most expenses, you do not need an invoice or receipt, records from a company credit card will be enough to pass an audit. However, these simple and clear rules are complicated by, for example, the need to pay sales tax, which varies from state to state and can be impacted by what products or services you sell, like physical products or certain types of software.

Our years of experience handling various bookkeeping responsibilities across the business spectrum means we can help you set up a simple invoice or record-keeping system for your needs. Together with a certified tax advisor, we will manage your accounting and fully support you in the event of an audit.  

As already mentioned, in most American states, companies and individuals usually submit two tax returns – state and federal, but some cities also require a third, city-specific return. Individual states differ not only in the number of forms that need to be filled out but also in tax progressiveness of income tax. Some states do not even have income taxes, like Florida and Texas. 

In US taxes and accounting, you will come across various types of taxation for different types of businesses. For example, LLC companies file a tax return but do not pay taxes. This obligation is passed through to the owner of the company. Let’s say, you have such a business in Florida, in that case, you don’t pay state taxes at all; in Pennsylvania, you will pay a flat tax rate, and in Connecticut, you will pay the highest tax from all the states. What may seem like a complication at first, can be used for tax optimization. Based on your goals and expected profits, we will advise you to choose the right type of company and state, including setting up your taxes and accounting processes.  

Owning businesses on two continents means that you should consider the following: which state is best suited for allocating the primary income taxation, how is your tax residence defined and how will the US tax authorities consider your business while you have different immigration statuses. We can advise you, whether you are a European citizen with an American company and you travel to the US on a tourist visa or ESTA, or if you have, say, an investor’s Type E visa (read about different types of visa).

We are prepared to file the US tax return for you if your income requires it. We will also explain how to claim the payment of this tax back in Europe, so you avoid double taxation. 

There is a myth that suggests that for foreign companies, the US tax system is very advantageous and the only thing you have to do is set up a company, for example, in Florida. This is an overly simplified way of looking at things. It’s true that some states don’t have individual income taxes (like Florida), but it does not have to apply to all types of businesses, and in many states you will have to pay at the very least a registration fee. Also, be aware that hiding or not disclosing the company’s real owners (and thus the revenues from the business) from the European tax authorities is significantly more difficult (not to mention illegal), as federal laws are becoming more and more transparent.  

Using the US taxes and accounting systems to your advantage will require a thorough analysis of your business plan. We will be more than happy to prepare such an evaluation of the best options for you as we cooperate with a wide network of certified public accountants (CPAs) and certified financial analysts (CFAs or Chartered Financial Analysts). Knowing your goals, the type of business, and the way you want to manage your profits and assets can help us advise you on the best way of setting up your company to utilize the US tax system to your advantage.