Where is your company incorporated?

Ultimately, that is the key determinant of paying corporate taxes. If you are a Canadian company, you can easily set up a US$ bank account and have full merchant services via a Canadian bank or one of its subsidiaries, for example, BMO owns Harris Bank in the US.

Outsourcing "services" to another country, such as hosting or support has little to nothing to do with who/where you are obliged to pay taxes to.

Its also about what kind of taxes you are talking about: Payroll tax collection at source, business tax, collection of sales taxes ... etc..

If you are a small company in Canada, you may pay no corporate taxes if you are below a minimum income threshold.

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Robert Dubicki

It sounds like you are trying to set up a US$ bank account in the US itself. I actually wonder why/whether you need to do this in the first place given you are a small company based in Costa Rica with no business operations in the US.

I would suspect, any of the banks in Costa Rica could set up a US$ bank account for you in Costa Rica. Then... you would not need this EIN stuff. You would be then governed by Costa Rica tax laws because you are a Costa Rican-based company.

For example, our company does tons of business in the US (we are in Canada). We simply have a US$ bank account here in Canada. No need for EIN and any of the other things you are worrying about.

Setting up a company in the US, just to have a bank account in the US, is sheer overkill it seems unless you plan to setup operations in the US itself. There seems to be no real need to have an off-shore bank account at this point, unless you will have employees and a physical location anytime soon. I think you may be making this more difficult for yourself than it has to be. Have you talked to your local banker?

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Robert Dubicki

Hi Justin,
Can you please elabarate more on how can foreign company request an EIN on irs.gov? What form and which address? I searched on irs.gov but can't find it.
Thanks.

Echo

If you are a US citizen (even though you may live outside the country) it will cost you about $40 a month to lease the software to charge the credit cards... that is it! The only other requirement is that your business is incorporated or registered in the US. If it isn't, they can set up your business as a Nevada Corporation for about $500 (this can all be done within a couple of days).




Merchant services

Handles *what* kind of things? Are you asking about credit cards, or transfers from the US to Costa Rica?

Sorry, no. I know a fair amount about moving money around, thanks to my years in Mexico and Panama, but I'm a US citizen and never gave up my US bank accounts, so I don't know about opening a new one.

I suspect (but don't know) that it may be easier for one individual to set up the account, rather than a foreign corporation. Otherwise, that foreign corporation may need to establish a physical presence.

I will say that if you can swing it, I'd try to set up a bank account with one of the brokerage firms, like Schwab or TD Ameritrade. They offer much better currency conversion rates, in my experience, than "normal" banks.

Jim, rather than post a solicitation for phone calls, why don't you post some tangible information? (These forums are for the exchange of information -- not the advertisement of business services.) The OP was asking about exchanging money between a US account (which he does not have) and a foreign nation; my recommendation was only to say that the brokerage firms give the best exchange rates. Btw, when I say "brokerge firm," I mean the bank affiliated with them. E.g., I have a Charles Schwab brokerage account, but that is affiliated with Charles Schwab Bank -- which is what I use for ATM withdrawals when I'm outside the US. (Best exchange rate, and no ATM fees, ever.) The other big issue here is we don't know how much money the OP is talking about. If it's only a few thousand dollars per month, then, heck, I'd just use the ATMs in Costa Rica to get my money. :-)

No harm, no foul. :-)

And, actually, I did have a similar issue when I was living in Mexico and Panama and still doing freelance work for US clients. I had my clients deposit funds in my US account (via ACH), then withdrew as needed at ATMs. If I needed money from PayPal, it was easy to move to my US account. But, a) my income was small, and b) I had the US account before I left, and c) I reported all earnings to the IRS, since I'm a US citizen.

For small amounts of money, there is another potential workaround, though I hesitate to mention it because I don't want people to game the PayPal system. PayPal lets you create "student" debit cards which can be used in ATMs worldwide. Create the account, and they'll send you a plastic card -- but they'll only mail it to your US address. However, these are intended for students, children, and dependents -- not for business accounts.

Yes, you're right about PayPal's cautious stance re: questionable countries. Still, I always thought it odd that you could have a PayPal account in Colombia, but not in Panama.

Bottom line, I think, is that the OP really needs *some* kind of US presence to do what he wants.