How can a foreign person, not living in (or near) the united states, start and run a Kickstarter Campaign? Here are the basics of how it can be done:
There are many requirements to start a Kickstarter Campaign. Two big ones are to have a US Entity (LLC or Corp) or Social Security number, a US resident, and a US bank account. These two requirements alone would deter quite a few foreigners from trying, you would need someone you knew and trusted in the US to handle that for you. Even then, that person could face tax consequences for running that bank account for you if it is not properly planned (I will cover this in a later post). This leaves very few options to set one up.
A Difficult, but effective solution:
1. First things first, I had to start a corporation so that the foreigner(s) would be the sole shareholder(s): A Delaware Corp is a great idea, they are cheap, provide excellent legal protection, and have a small Franchise Fee for share holders (Typically $225). I can set these up for $550 with a 48 hour rush ($500 without), highly recommended for time constraints of setting up Amazon Payments. I highly recommend you DONT use any of the silly websites that charge you to set up the corporation, they typically charge a mark-up and sometimes yearly fee, most of them do not allow the rush either.
2. Second, I apply for an EIN number - This one is pretty simple and can be done once the Corporation is in place. If you already have a SS# or ITIN you can get an EIN here
3. Next step is to Get a US resident to be part of your team as a “Creator” or “Developer”. This is the tough part. If you are trying to run a Kickstarter campaign, you need to have one. Amazon Payments needs to confirm that your company name listed on the bank account is associated with your US address. Kickstarter also requires this in their own version of verification. The US helper must be available to use their name for Kickstarter. They must be considered a key “creator” in your team. You, as the foreigner can still hold signer privileges on the bank account, but it may be difficult – see below 4. After you get a helper, you need a US based Checking Account To set up a bank account without my help, you need:
- A tax ID number registered with the IRS. You can get one by filling out and mailing in this form: http://www.irs.gov/pub/irs-pdf/fw7.pdf You will need to provide a Notarized copy of your passport.
- Once you get that, find a bank that is located in the US, that has a branch in your country. You must be able to go there in person to set up your signature account. Use your ITIN and EIN number to open the account. Your helper in the US may need to provide documentation supporting this information to a local location. You MUST have a US address on the bank statement, but it can be managed online by you as a foreign person.
- Some banks such as wells fargo allow a notarized copy of the application and ID to be sent courier as long as your US helper is involved and in person at the bank when the account is set up.
- I have also heard that some foreign banks, who also have a presence in the US will help you set up a US account without the need for a US helper. I am not sure which banks offer this though.
- You can have a friend or family member that you trust who lives in the USA (with a SSN) open up a checking account and be an authorized signer on the account for your business.
5. After this process, you may ask: Can I get taxed in the USA for Kickstarter Funds? The easiest answer is a small portion of your funds will need to be taxed in the US order to legally run the Kickstarter Campaign. Your foreign company must eventually “pay” the US company for providing the service to run the Kickstarter Campaign for them. I would say a good safe number would be 1-3% of the Kickstarter proceeds for services. They must reflect the market value of the work that it took to complete the whole process. That 1-3% will be taxed in the US at the corporate income tax rate, then whatever is left over can be issued as a liquidating dividend to your foreign company, and taxed in your country appropriately. The amount that your company eventually received from the Kickstarter Campaign should be taxed in your country depending upon your countries tax laws.
Its a difficult process, and with Kickstarter’s tight guidelines, its a risk to do all of that work and find out that your projects does not meet those guidelines. Indiegogo, which offer the exact same service allows pretty much anyone to run a campaign.