This is definitely a different flavor of a common question. Here are the basic stats:
Online only startup -- no physical presence.
Everyone works from home.
We have 8 people in 4 countries (5 in USA in 3 states).
We have not chosen an entity type / location yet.
We are not generating revenues yet.
We are not looking for funding and wish to stay private (meaning we don't need a c-corp).
2 US owners, 1 Canadian owner
I understand that forming in the US will likely require us to eventually register in the 3 different states -- which to me seems like a complex amount of overhead as far as taxation is concerned. Sure we can go the 1099 route for a little while, but eventually we'll need real employees, real withholding, etc.
So maybe I have a crazy idea -- and that is "What if we form our corporation outside of the US? -- like Canada? If we did so, with only a single Canadian owner in the startup, could we do the following:
Avoid withholding taxes on everyone except the Canadian?
Keep everyone as a permanent contractor?
Have 2 of 3 owners inside the US?
Treat it like an LLC where all money is distributed as a pass-through entity regardless of revenue?
Maintain limited liability for all owners.
Only file taxes and register in a single location!
If this could work, it would greatly minimize our administrative needs. This isn't about mitigating taxes. Typically, an LLC just passes all revenues through to the employees where each employee declares and pays their own taxes, but when the employees are scattered all over the US and world, it gets particularly complicated.