Hey everyone, I run a small LLC in San Diego with my business partner. We've been going for about 3 years now. He just told me he's moving to Portugal next month and wants to stay involved but obviously the time difference and everything will be tough. Has anyone dealt with a partner going international? I'm worried about taxes, liability, and just keeping things running smoothly. Any advice would be great.
LLC
My San Diego LLC partner is moving overseas
Oh man, that's rough. My cousin had a similar situation but with a partner moving to Mexico. The biggest headache was the tax withholding stuff. You might need to look into FIRPTA or whatever it's called. Good luck!
First off, make sure your operating agreement has a clause about foreign partners. If not, you might need to amend it. Also, check with with a CPA who knows international tax. It's a whole different ballgame. And for the love of god, don't let him handle the finances from overseas unleess you want an audit.
lol @GrumpyGus2020 'audit' – nah but seriously, I'd be more worried about the time zone. Portugal is like 8 hours ahead of San Diego. So your morning is his evening. Might work if you're both flexible, but expect delayed responses. Maybe set up a shared doc for decisions.
Thanks for for the replies so far. I hadn't even thought about FIRPTA. Our operating agreement is pretty basic, just standard stuff. I'll definitely look into amending it. And yeah, the time zone will be weird. He's an early riser so maybe we can sync up early mornings my time.
Is he planning to become a tax resident of Portugal? Because that could trigger all sorts of reporting requirements for the LLC. You might need to file form 5472 and maybe 8865. It's a messs. I'd hire an international tax attorney, not just a CPA.
I'm actually a partner in an LLC where one member moved to Japan. It's been fine for us but we had to appoint a US-based registered agent and make sure the foreign partner doesn't have signing authority on bank accounts. That was a big one for our bank. They freaked out.
BeachBumBetsy is right. If he's a non-resident alien for tax purposes, the LLC has to withhold tax on his share of income. That's a headache. And you'll need to get an ITIN for him if he doesn't have one. Good times.
Wait, why would he move to Portugal and still be a non-resident? If he lives there full time, he's a resident alien maybe? I'm confused. But yeah, definitely talk to a pro.
MoonlightMaven – no, if he's not a US citizen or green card holder and lives abroad, he's a non-resident alien for US tax purposes. That's the whole issue. But I'm no expert, just playedd one on TV.
This is all super helpful, even if a bit overwhelming. I'm going to set up a meeting with a tax attorney next week. Also, TechTrekker, good call on the bank account signing authority. I'll check with our bank.
One more thing – make sure you update your EIN responsible party if he's currently listed., And check if your state (California) has any specific filing requirements for foreign partners. I think they might require an annual report listing all partners' addresses. Just a heads up.