[US Corporation] (2) Incorporating, Opening a bank, and Doing business in the USA without physical presences in the USA with ‘Stripe Atlas’ - Global Startup - Continued

Incorporating, Opening a bank, and Doing business in the USA without physical presences in the USA with ‘Stripe Atlas’ - Global Startup (2) Continued

* How the business law in Delaware is the most business-friendly

* What you do for US Taxation

How the business law in Delaware is the most business-friendly.

Category	Details
Delaware Court	The Delaware Court of Chancery (established in 1792) allows companies to resolve disputes quickly with a judge rather than a jury. Judges for the Court of Chancery specialize in corporate law, draw on hundreds of years of legal precedent, and hear only business-related cases.
Delaware’s tax system	Delaware’s tax system gives businesses several ways to legally minimize their tax bills. From example, companies that are incorporated in Delaware but do business in other states don’t have to pay state corporate income tax to Delaware. And Delaware also doesn’t tax profits on royalty payments, trademarks, or copyrights.
Delaware’s laws and policies	Delaware’s laws and policies make it easy for businesses to incorporate, avoid liability, and retain privacy. Delaware’s Department of State makes it convenient for businesses to fill out incorporation paperwork, which can be done in under an hour. Because they don’t have to give much personal identifying information, company officers who incorporate or set up business accounts in Delaware can also maintain privacy, ensure anonymity, and avoid personal liability.
Business-Friendly	Because Delaware has had a reputation for being friendly to businesses for such a long time, it makes sense logistically for businesses to incorporate in the state. Most corporate attorneys know Delaware’s business laws, and many IPO-minded investment banks prefer to work with companies that are incorporated in Delaware.

What you do for US Taxation

(1) Federal tax

Category	Tax	Details
Federal Corporate Income Tax	Federal Corporate Income Tax	All businesses must file an annual federal income tax return. The C-Corporation tax rate is the flat rate 21% for 2018 (By comparison, the federal personal income tax rate varies from 10% to 37% for 2018.) Generally, the C-Corporation must file its income tax return by the 15th day of the 4th month after the end of its tax year (April 15th) and the LLC must file its tax return by the 15th day of the 3rd month after the end of its tax year (March 15th).
Federal Employment Taxes	Federal withholding income and FICA tax	1) Reporting withholding income and FICA tax Generally, employers must report all compensations paid to an employee by filing the required form(s) to the IRS. You must also report taxes you deposit by filing Forms 941, 944, and 945 on paper or through e-file. The withholding tax rate varies depending on a filing status and the FICA (social security and Medicare taxes) tax rate is each 7.65% for an employer and an employee for 2018. l  Form 941, Employer's Quarterly Federal Tax Return l  Form 944, Employer’s Annual Federal Tax Return if received written notification about the Form 944 program l  Form 945, Annual Return of Withheld Federal Income Tax if you are filing to report backup withholding. 2) Depositing withholding income and FICA tax In general, you must deposit federal income tax withheld, and both the employer and employee FICA taxes if you’re required to file the forms and your employment tax liability for the preceding quarter or current quarter is $2,500 or more. (Exception: $100,000 Next-Day Deposit Rule). There are two deposit schedules, monthly and semi-weekly depending on $50,000 threshold during the lookback period.
	FUTA tax	1) Reporting FUTA tax Only the employer pays FUTA taxes (federal unemployment taxes); it is not withheld from the employee's wages. You must file Form 940 for the current year if you pay the wages you pay employees who aren't household or agricultural employees and you paid wages of $1,500 or more to employees in any calendar quarter during the prior year or the current year, or you had one or more employees for at least some part of a day in any 20 or more different weeks in the prior year or 20 or more different weeks in the current year. Generally, you're entitled to the maximum credit 5.4% for FUTA if you paid your SUTA taxes (state unemployment taxes) in full on time, and the state isn't determined to be a credit reduction state. l  Form 940, Employer’s Annual Federal Unemployment Tax Return 2) Depositing FUTA tax Although Form 940 covers a calendar year, you may have to deposit your FUTA tax before you file your return. If your FUTA tax liability is more than accumulated $500 for the calendar year, you must deposit quarterly.

Federal Report due dates

Report due dates	Paper	Electronically
1/31	Form 940, 941, 943, 944, 945, W-3, W-2, 1096, 1099 with box 7	Form 940, 941, 943, 944, 945, W-3, W-2, 1096, 1099 with box 7
2/28	Form 1096, 1099 without box 7, 8027
3/31		Form 1096, 1099 without box 7, 8027
4/30	Form 941	Form 941
7/31	Form 941	Form 941
10/31	Form 941	Form 941

Federal Deposit due dates

Deposit due dates	Quarterly Depositor	Monthly Depositor	Semi-Weekly Depositor
1/15		Form 941, 944, 945	Form 941, 944, 945 (1) Pay on Wednesday, Thursday, and/or Friday → Deposit until the following Wednesday (2) Pay on Saturday, Sunday, Monday, and/or Tuesday → Deposit until the following Friday
1/31	Form 940 if >$500
2/15		Form 941, 944, 945
3/15		Form 941, 944, 945
4/15		Form 941, 944, 945
4/30	Form 940 if >$500
5/15		Form 941, 944, 945
6/15		Form 941, 944, 945
7/15		Form 941, 944, 945
7/31	Form 940 if >$500
8/15		Form 941, 944, 945
9/15		Form 941, 944, 945
10/15		Form 941, 944, 945
10/31	Form 940 if >$500
11/15		Form 941, 944, 945
12/15		Form 941, 944, 945

* Must use Electronic Federal Tax Payment System (EFTPS)

(2) Delaware State tax
There are many activities - too many to list here - which create the jurisdictional right for the State to tax, referred to as "nexus". However, if the company is only incorporated in Delaware but does not have any property, payroll or do business (sales, service, leases, etc.) in Delaware then it is not required to be licensed, file gross receipts or income tax returns except for a franchise tax and an annual report with the Delaware Division of Revenue (DOR). And if you have no employees in Delaware then you would not be required to Unemployment insurance and Workers Compensation with the Delaware Department of Labor (DOL) either. Furthermore, merely creating an Internet site by a non-Delaware business does not, by itself, create nexus. But, locating a server in Delaware would create nexus/jurisdiction to tax the respective business.

Category	Tax	Details
State Corporate Income Tax	State Corporate Income Tax	If you form a corporation in Delaware, you must file and pay state corporate income taxes at a rate of 8.7% of federal taxable income derived from Delaware. (By comparison, the state’s personal income tax rate varies from 2.2% to 6.75% of federal taxable income.) However, companies that are incorporated in Delaware but do business in other states don’t have to pay state corporate income tax to Delaware. Generally, the C-Corporation must file its income tax return by the 15th day of the 4th month after the end of its tax year (April 15th) and the LLC must file its tax return by the 15th day of the 3rd month after the end of its tax year (March 15th).
State Employment Taxes	State withholding income tax	You must file and pay or deposit state withholding income taxes if you pay wages to an employee of $150 or more in a year for works rendered in Delaware. The filing frequencies and forms depend on withholding amounts during lookback period (see Note 1). You can file and pay withholding tax online using ACH Debit or Electronic Funds Transfer (EFT) or paper. You may be required to file and pay Only online by federal and states regulations.
	SUTA tax	An employer must only file and pay SUTA (state unemployment insurance taxes) with Forms UC-8 and Form UC-8A quarterly. The minimum and maximum tax rates are .3% and 8.2% respectively. You can file and pay with Online Employer Services (OES) Portal or paper.
	Worker’s Compensation	Workers' Compensation is a system, created by the Delaware Legislature, which provides benefits to workers who are injured or who contract an occupational disease while working.
Gross Receipts Tax (GRT)	Gross Receipts Tax (GRT)	Delaware does have a gross receipts tax that is imposed on the seller of goods or provider of services in Delaware, but companies that are incorporated in Delaware but do business in other states don’t have to pay state gross receipts tax to Delaware. GRT rates range from 0.1037% to 2.0736% and its returns and payments are due either monthly or quarterly, depending on the business activity and the lookback period rule. When determining the gross receipts tax due, most businesses are entitled to an exclusion of Min. $100,000 and Max. $1,250,000. You may file and pay online in Gross Receipts Tax (GRT) System.
Franchise tax	Franchise tax	A corporation in Delaware must pay an annual Franchise Tax. Delaware provides two different methods for calculating the franchise tax: the Authorized Shares method by which the minimum tax is $175.00 and the Assumed Par Value Capital Method by which a minimum tax of $400.0. It is due annually on or before March 1st and are required to be filed and paid online.
Annual Reporting	Annual Reporting	Annual Report Filing Fees is $25.00 for Exempt Domestic Corporations and $50.00 for Non-Exempt Domestic Corporations. It is due annually on or before March 1st and are required to be filed online.

(Note 1) Filing frequencies and forms

Withholding amounts during lookback period	Filing frequency	Form
$3600 or less	Quarterly	Form W-1Q
$3600.01 and less than $20000	Monthly	Form W-1
$20000.01 and greater	Eight Monthly	Form W-1A

* All withholding agents having no prior record of withholding, will file on a monthly basis.

State Report due dates

Report due dates	Paper	Electronically
1/15	Form W-1	Form W-1
1/31	Form DE W-3 or W-3A(annual withholding tax reconciliation), W-2, 1099-MISC, reporting non-employee compensation in box 7, W-1Q, UC-8 and UC-8A	Form W-2, 1099-MISC, reporting non-employee compensation in box 7, W-1Q, UC-8 and UC-8A
2/15	Form W-1	Form W-1
2/28	Form 1099-MISC, without non-employee compensation, 1099-R
3/15	Form W-1	Form W-1
4/2		Form 1099-MISC, without non-employee compensation, 1099-R
4/15	Form W-1	Form W-1
4/30	Form W-1Q, UC-8 and UC-8A	Form W-1Q, UC-8 and UC-8A
5/15	Form W-1	Form W-1
6/15	Form W-1	Form W-1
7/15	Form W-1	Form W-1
7/31	Form W-1Q, UC-8 and UC-8A	Form W-1Q, UC-8 and UC-8A
8/15	Form W-1	Form W-1
9/15	Form W-1	Form W-1
10/15	Form W-1	Form W-1
10/31	Form W-1Q, UC-8 and UC-8A	Form W-1Q, UC-8 and UC-8A
11/15	Form W-1	Form W-1
12/15	Form W-1	Form W-1

* Form W-1A: the 3rd, 7th, 11th, 15th, 19th, 22nd, 25th, and the last day of the month

State Deposit due dates

Deposit due dates	Quarterly Depositor	Monthly Depositor	Eighth Monthly Depositor
1/15		Form W-1	Form W-1A the 3rd, 7th, 11th, 15th, 19th, 22nd, 25th, and the last day of the month
1/31	Form W-1Q	Form UC-8 and UC-8A
2/15		Form W-1
3/15		Form W-1
4/15		Form W-1
4/30	Form W-1Q	Form UC-8 and UC-8A
5/15		Form W-1
6/15		Form W-1
7/15		Form W-1
7/31	Form W-1Q	Form UC-8 and UC-8A
8/15		Form W-1
9/15		Form W-1
10/15		Form W-1
10/31	Form W-1Q	Form UC-8 and UC-8A
11/15		Form W-1
12/15		Form W-1

GRT Report and Deposit due dates

Report and Deposit due dates	Quarterly filer	Monthly filer
1/20		GRT
1/31	GRT
2/20		GRT
3/20		GRT
4/20		GRT
4/30	GRT
5/20		GRT
6/20		GRT
7/20		GRT
7/31	GRT
8/20		GRT
9/20		GRT
10/20		GRT
10/31	GRT
11/20		GRT
12/20		GRT

* All new businesses are automatically set-up as quarterly gross receipts tax filers.

The following tax information is for your reference, and is not legally binding.

Source: Stripe, IRS, and State of Delaware