[rprasad]

Dividend withholding depends on your home country, so the actual amount that the company would be required to withhold is between 0% and 30% (inclusive).

Really, the best idea if you want to do something like this would involve two companies: a foreign (non-US) parent company that does the actual business operations, and a domestic US company that solely handles US-based payment processing. Dividends from the US company to the parent company can be exempt from withholding (i.e, exempt from US double-taxation), depending on the home country of the foreign company. This sort of structure avoids much of the transfer pricing mess mentioned above, and the self-employment taxes that consultant fees would incur.

Jibjab, you should talk to a tax lawyer or tax professional to help you structure your business and business activities to minimize your overall financial costs (taxes, operating expenses, and otherwise). The money you spend on business planning will pay for itself. I am a tax lawyer, as is Mr. Hodgen. I believe Mr. Hodgen is located in Pasadena, California. My office is in Century City (Los Angeles, California), but my firm has offices worldwide.

Circular 230 Notice: Pursuant to US law, the above communication is not intended to be actionable tax advice. It is intended as general information for speaking to a lawyer or other tax professional about the issues related to your specific circumstances.

[jibjab]

Thank you for your answer.

I understand I have to talk to a professional. Asking on a place like HN however, allow me to be better prepared when I eventually do so.