glenilling
New Member
I recently aquired a Foreign LLC incorporated in Delaware and I am the sole member. The LLC has a business license to transact in Hawaii and a bank account in Florida.
The LLC owns rights to some trademarks and has a technical service agreement with foreign companies to provide research project management, consultancy and other services. Within the Technical Service Agreements the LLC may provide or recruit personnel for short or long periods. The personnel are to be employed by the local foreign company who is responsible to fully and legally employ the personnel under local employment legislation.
One of the contracts is with a company in Thailand and the issue concerns three individuals who are green card holders or US citizens working for the Thai company contracted to the LLC.
Each have been working full-time outside the USA for a number of years and they have been working for the Thai company in Thailand for over six months. They are legally employed locally and in good standing. Each have apparently filed thier annual US tax returns.
The level of compensation these individuals require is higher than the local Thai company is willing to pay. The LLC has therfore paid a monthly amount to them into their USA bank accounts to make up the difference. The fees the LLC charge the Thai company for the Technical Service Agreement more than compensate for this.
The monthly payment from the LLC tyo the individuals is without dedcuction of Federal tax, State tax, Social Security Fedreal Unemployment tax or Workers Compensation.
The individuals beleive they are employees of both the local Thai company and the LLC. Apparently they declare their worldwide income on their annual US tax returns and take advantage of the foreign tax credit and foreign earned income exclusion.
The payments have been accounted in the LLC as "Payroll advances".
The LLC currently does not employ anyone (unless these individuals are deemed to be employees) and has never had an employer relationship with the IRS.
I would like to tidy up the relationship and would like to know whether they are they Employees or contractors?
If there is a choice which would be most advantageous for the LLC and the individual?
Should the payments be treated as payroll or should the individuals be paid what amounts to a gross to declare on their annual federal tax return?
I appreciate your comments.
The LLC owns rights to some trademarks and has a technical service agreement with foreign companies to provide research project management, consultancy and other services. Within the Technical Service Agreements the LLC may provide or recruit personnel for short or long periods. The personnel are to be employed by the local foreign company who is responsible to fully and legally employ the personnel under local employment legislation.
One of the contracts is with a company in Thailand and the issue concerns three individuals who are green card holders or US citizens working for the Thai company contracted to the LLC.
Each have been working full-time outside the USA for a number of years and they have been working for the Thai company in Thailand for over six months. They are legally employed locally and in good standing. Each have apparently filed thier annual US tax returns.
The level of compensation these individuals require is higher than the local Thai company is willing to pay. The LLC has therfore paid a monthly amount to them into their USA bank accounts to make up the difference. The fees the LLC charge the Thai company for the Technical Service Agreement more than compensate for this.
The monthly payment from the LLC tyo the individuals is without dedcuction of Federal tax, State tax, Social Security Fedreal Unemployment tax or Workers Compensation.
The individuals beleive they are employees of both the local Thai company and the LLC. Apparently they declare their worldwide income on their annual US tax returns and take advantage of the foreign tax credit and foreign earned income exclusion.
The payments have been accounted in the LLC as "Payroll advances".
The LLC currently does not employ anyone (unless these individuals are deemed to be employees) and has never had an employer relationship with the IRS.
I would like to tidy up the relationship and would like to know whether they are they Employees or contractors?
If there is a choice which would be most advantageous for the LLC and the individual?
Should the payments be treated as payroll or should the individuals be paid what amounts to a gross to declare on their annual federal tax return?
I appreciate your comments.
