USA Can I employ a part time contractor( 1099 MISC ) in US with me being In India with LLC in USA

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Hi , I am residing in India and plan to open a LLC in USA . My question is ,

1.can I employ a contractor in US who will be distributing the products to my clients in Only one state where I am opening an LLC and

2.what kind of tax form the contractor should get ( w2 or 1099 Misc ) Anything else I should take care.
 

Werner Reisacher

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In general - yes. Your LLC can hire a contractor to handle the distribution of your products in the US. His payments would be summarized at the end of the year and reported to the IRS by Form 1099. He would also receive a copy of the 1099 and it is his responsibility to report his income to the IRS. This Contractor Agreement must, however, be in line with the requirements set by the Department of Labor in the State where your LLC is registered. The Contractor must be truly "independant". You can only supervise the quality of his performance but cannot influence the timing and the workplace where he carries out his duties. Otherwise, that person is considered to work as an employee with all its implications. LLC has to apply for Employer ID, collect and pay Social Security and other State related employee charges such as Labor and Industry, etc. depending on the State and city you are operating in.
The real problem you are facing with your decision to hire a Contractor is the risk, that by doing so, the IRS decides that you have established a "legal residency for tax purposes and are trading within the US." for your LLC in the USA. Consequently, the LLC will become taxable on its worldwide income. This means the IRS will tax you on the profit you make on the sale of products in the USA and also tax you on the profit you made on that same product before you shipped it into the US. Assuming, you have manufactured that product in your company in India, the IRS will request disclosure of your Indian books and assess your LLC with an appropriate share of your profits in proportion to the amount of sales generated in the US compared to your worldwide business.
The best way to avoid this time consuming and costly problems, I always suggest, that companies in such a situation are using the services of a global logistics provider who is not related to their company and is capable of handling their distribution in the US as a truly independent, third-party service provider. Another option would be hiring a truly independant third party Company that is providing distribution services in the US and you would enter a Service Agreement with an unrelated third party independant corporation that is rendering such services to other third party customers.

https://www.accountantforums.com/at...=666339&hash=ecf8906addf735579adce6aef7b1cf79
 

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