We recently hosted a webinar discussing the tax traps that cost startups tens of thousands of dollars—and how to avoid them. This article summarizes the key takeaways for tech businesses and founders operating outside the U.S.
Launching a startup in the U.S. is an ambitious goal for many Ukrainian founders. The American market offers not only a solvent audience and venture capital, but also prestige and access to the global stage. Yet behind the glamorous “launched a Delaware C Corp and raised a seed round” story lie hidden but painful tax liabilities—especially for non-residents.
This guide is for those who have already registered a company in the U.S., are planning to do so, or earn income from U.S. clients. We’ve gathered advice from international tax consultants and outlined common mistakes to avoid.
Yes, registering a company in the U.S. is simple—online and within a few days. But it’s just as easy to fall into a tax trap.
Most common mistakes:
These mistakes are costly. Failing to file forms with the IRS can lead to penalties of up to $25,000—regardless of your business size.
Most foreign startups automatically choose the C Corporation structure. It’s familiar to investors—but not always beneficial for the business itself.
C Corp = double taxation:
Additionally, branch profits tax of up to 30% may apply when profits are distributed outside the U.S. For instance, a company from the BVI could lose up to 51% of its profits just on taxes.
Alternatives:
Effectively Connected Income (ECI) refers to income connected with U.S. trade or business activities. And the definition is broader than you might think.
Your company may be registered in Estonia, but if you:
…it may be considered a U.S. economic presence—even if you have no formal office or employees on paper.
Result: ECI status → tax liabilities → penalties for unfiled forms.
LLC is a flexible structure, especially for solo founders. It’s considered a "pass-through" entity: the company doesn’t pay taxes, the owner does.
This works well in the U.S.—but not necessarily in Ukraine. The Ukrainian tax authority may not recognize such transparency.
Consequences:
Many startups think: MVP first, market and users second, investors third—and taxes last.
In the U.S., this approach doesn’t work. U.S. tax law is literal—and fast.
What to do before your first contract:
Model I Tax Risks
SaaS, streaming I High ECI risk, recurring payments → reporting
Know-how sales I Grey area, potential IRS disputes
IP licensing I Qualification issue: royalties or services?
Consulting, outsourcing I Possible permanent establishment status
License renewals I Often classified as services → ECI
Each model requires a tailored approach to legal structure and contracts. In 2025, the IRS is actively scrutinizing tech companies, especially in generative AI, SaaS, and digital platforms.
For non-resident individuals with ECI, quarterly estimated tax payments are required—at 37%.
After that, you must file Form 1040NR by June 15 of the following year.
Miss the deadline? Penalty—even if your profit was small.
The U.S. tax system is not your enemy—but it’s no grey area either. It’s a rigid system with clear rules. If your business touches the U.S. market in any way—even via Stripe, AWS, or a contract with a U.S. client—you need to be prepared.
In the U.S., “let’s make money first and figure it out later” doesn’t work.
The IRS does. And it works fast.
Need help with tax planning for your U.S. startup?
We work with advisors who have helped Ukrainian SaaS companies, EdTech startups, and AI products navigate this journey.
Contact us—we’re here to help.
How to Pay Taxes in the USA Correctly? AVITAR & iFindTaxPro
How to Pay Taxes in the USA Correctly? AVITAR & iFindTaxPro (Part II)
How to Pay Taxes in the USA Correctly? AVITAR & iFindTaxPro (Part III)
Contact us: business@avitar.legal
Violetta Loseva
,
