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shadow

Forming a Business Partnership?

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shadow

A friend of mine, for reasons that elude me, has decided to form a partnership and open a bar/resto. He is American married to a Filipina, his partner is European, and not married to a girlfriend. I understand that the partnership and business cannot be in their names, but could be put in the wife/gf names. They went to Dumaguete DTI to register the business name, and were told they had to go to Cebu to do it. They asked my wife to help them facilitate this, but it has been many years since we have been into this type of situation, so she is at a loss, and I am not far behind. 

Has anyone done something like this recently? Words of advice? Comments, positive or negative are welcome. 

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Jawny

I did not form a partnership when I opened a bakery.  One reason was to avoid issues with USA taxation.  The taxes paid were all paid to the BIR using the Filipino ownership. Just passing this along as a heads up regarding the consideration of tax liabilities to the USA. 

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Davaoeno
9 minutes ago, Jawny said:

I did not form a partnership when I opened a bakery.  One reason was to avoid issues with USA taxation.  The taxes paid were all paid to the BIR using the Filipino ownership. Just passing this along as a heads up regarding the consideration of tax liabilities to the USA. 

So the Philippines government collects taxes from the business  ?  And then the company pays you salary or income ?   I am under the impression that the IRS taxes all US citizens on their income anywhere in the world ?? If I am correct- how do you avoid paying the IRS ?

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shadow
1 minute ago, Davaoeno said:

So the Philippines government collects taxes from the business  ?  And then the company pays you salary or income ?   I am under the impression that the IRS taxes all US citizens on their income anywhere in the world ?? If I am correct- how do you avoid paying the IRS ?

I believe the first $100,000+ earned overseas is tax free.

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Jawny

I avoided the complexity of having income from a corporation/business. The BIR has its own ways of setting tax rates and such.  Not sure how the IRS handles corporate income and didn’t want to find out.  There are simpler ways to receive income such as salary or rent which is subject to taxation  

Obviously being a partner provides a means of control over the corporation/business. I’m only mentioning the tax liabilities as a consideration when setting up the business.  

 

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Paddy

From the website of a consulting company 

“A Partnership is a separate legal entity from that of the participants in the partnership. A partnerships consist of 2 or more individuals, and may either be a; general partnership, where partners have unlimited liability for the debts and obligation of the partnership, or a limited partnership, where one or more of the partners have unlimited liability and some partners have liability only up to the amount of their capital contributions. A partnership might be suitable for foreign companies wishing to venture into business in the Philippines.

Requirements:

Registration with DTI or SEC (depending on partnership’s capital)

Submission of duly notarized Articles of Partnership

Submission of SEC form F-105 (for partnerships with foreign members)

Procurement of licenses and clearances from necessary government offices

Registration with BIR

Registration with government offices (if employing individuals)

Acquisition of business permit and mayor’s license

Procedure:

Draft Partnership papers

Present accomplished forms and documents to SEC for processing and evaluation

Present verification from local bank of minimum paid up capital in trust account

Present other requirements (for partnerships with foreign or Corporation members)

Claim registration from records division

Complete necessary applications with government agencies”

So, if it’s truly going to be a partnership, step 1 is to establish the partnership - then worry about trading names, permits etc. 

Maybe Dumaguete DTI was referring them to SEC?

i have zero experience of this but the info above seems perfectly logical if “partnership” is the underlying legal business entity. 

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BossHog
On 6/16/2019 at 9:14 AM, shadow said:

I believe the first $100,000+ earned overseas is tax free.

For tax year 2018 (filing in 2019) the exclusion amount is $103,900.

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to_dave007
Posted (edited)
On 6/16/2019 at 8:49 AM, shadow said:

A friend of mine, for reasons that elude me, has decided to form a partnership and open a bar/resto. 

Eludes me as well..   Hope it goes well for them.

Edited by to_dave007
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