MK Tax is the premier Israeli-based US tax firm supporting high-growth startups and mid-size tech companies as they expand into the US and within the US.

Using our extensive knowledge and experience, we help clients navigate income, sales tax, and tax filings and obligations so they don’t pay more tax than necessary.

From setting up a US-based entity to international tax planning, MK Tax supports and guides you through professional managed services and consulting as you grow.

Some of the things we can help you with include:

• Setting up your company as a legal entity in the USA
• Annual federal and state taxes
• Sales taxes (which vary by state)
• Payroll and employee benefits setup
• State licenses
• Due diligence for mergers and acquisitions
• Ongoing consulting

There are several important reasons to set up a US entity when expanding into the US. Here are some of them:

• Raising capital: US investors have a very strong tax advantage when investing in a US company versus investing in an Israeli one. For example, they can make a 100% tax-free exit, which is not the case with an Israeli-based company.
• Sales taxes: If you have sales in the US, having a US company separates your sales and doesn’t drag your Israeli company into the US tax system.
• Hiring in the US: The simplest way to hire and pay an employee in the US is by setting up a US company and paying them through the company payroll. This is because paying US employees on an invoice-only basis from Israel can create long-term tax complications.

• License to do business
• State income tax
• State sales tax
• Payroll for that employee
• Sales tax

May or may not be required to register in any state where you sell (not necessarily the case) .

• Physical presence in the state (employee, office, warehouse)
  You are required to register in any state that you operate in. For example, a local business, warehouse, or employee working in a state is considered as though you operate there and must register your business activity there.
• Remote – even without a physical presence, but if you’re capturing a certain level of market share in a state, you might need to
• Market share is determined by a base (X in sales) this varies by state and it’s different for income tax and sales tax.

• Filing on time

Late filing in the US comes with significant fines. Therefore, asking your tax advisor for a list of deadlines at the beginning of the year is vital to avoid hefty fines for missing deadlines. (In Israel you can always stretch it a little further… in the US there’s no way you can do that)

A company registered in Delaware pays tax for the number of authorized shares, as opposed to only shares issued or profits. Companies must be aware of this when they authorize shares to avoid a significant annual financial burden. We recommend discussing this with your tax consultant to ensure your business takes the most tax-efficient method to authorize shares.

You can be audited for:

• IRS/Federal income tax: including transfer pricing arrangement between Israel-US companies
• State income tax: For example, having sales in a state but not having filed an income tax return (in that state)
• Sales tax – anytime you’re selling from a website, you may or may not be collecting sales tax. When you order from a company and they don’t charge you sales tax, and…. (one audit leads to the next – they audit the supplier, the audit you)

State audits are the most frequent and can be quite comprehensive. Audits go back up to 4 years. Most audits are done by email and do not require physical visits to local US offices. MK Tax has successfully guided many companies with their various audits and ensures that the company is perfectly compliant and up-to-date at any given moment.

IRS for federal income tax.

The prospective party will have multiple lawyers and accountants – both from within their company and outsourced – dedicated to reviewing all the aspects of the deal. They will verify all the details of your filings, compliance, and tax position. If they find risks inherent in your company, their valuation of your company will be lower, leading them to negotiate a reduced price.

MK Tax ensures that our companies are perfectly prepared for due diligence, and we remain on call to ensure that this exciting time is as smooth and profitable as possible.