Tag Archives: cloud business tax planning

Cloud Continues to Disrupt Business – 1,000s of Robots Laid Off

International tax planning compares last century's tax laws to this century's business. Then , it exploits the differences.

International tax planning compares last Century’s tax laws to this Century’s business. Then, it exploits the differences.

Cloud ecommerce tax planning changes as technology changes. The U.S. Senate reported that businesses that update their tax plan are taxed at only 14%..

You have to compete with the future. Blockbuster’s demise is old news from the beginning of this century.   Just ten years later, the killer of Blockbuster is dying.   Redbox has closed (laid off) 1,000s of it robotic DVD rental kiosks in the U.S.

 In 2015, it closed all of its DVD rental kiosks in Canada.   Netflix and other video streamers are slaying the king of the DVD rental kiosks. Redbox’s $1 a night became too expensive. Netflix is $10 a month, and you can watch as many hours as you want with 50,000 choices.   With Redbox, you had to rush to the kiosks to return the DVD.

American international tax laws were written and were designed for a 1930 economy.

Offshore tax planning compares the out of date concepts in our tax laws to 21st Century business. Then, it exploits the differences.  Your tax planner must forget last century’s tax planning and learn this century’s.  Even the first ten years of this century is partly obsolete.  

If this was 2005, you would not have a smartphone. Yep, no apps.  I don’t know about you, but I use my iPhone and iPad for business more than I use my landline and my computer combined.   

With the iPhone came the  streaming of music.  If the computer server hosting the music was located in the Cayman Islands, the income would be foreign source income and not U.S. source regardless of the location of the customer.

Cloud ecommerce tax planning changes as technology changes- Look at Banking

Great tax planning sees the trends and changes.

Look at banking.   Are ATM’s the next to be laid off?  Do you want to deposit your checks like this,  in the dark watching over your shoulder?

Internet businesses can decide who is going to tax them just by using the cloud.

Internet businesses can decide who is going to tax them just by using the cloud.

Or like this- At home with a smartphone app where it is safe. By changing your business, you not only survive, but you can also completely shift your tax profile.

For example, if you distribute a product, spend some time learning about 3D printing or using a fulfillment center.   If you have an e-commerce business,  consider streaming your product versus providing a mp3 file or a pdf file.  Internet tax planning starts with shifting the source of the income.

For some, it is merely a move to Nevada or Texas to escape California or New York taxation.  For others, it is outside of the U.S., such as Canada (yes, it is an internet tax haven) or Ireland.  By the way, California tax planning and New York tax planning just became more important.  State income taxes are no longer deductible. 

if you need help with your international tax planning, then contact me at [email protected]

E-commerce Internet Cloud Business Tax Planning and Strategy

Using last Century's infrastructure is fatal to you business. Using last Century's tax strategy is also fatal to your business.

Using last Century’s infrastructure is fatal to you business. Using last Century’s tax strategy is also fatal to your business.

Last Century’s tax concepts are not a viable  E-commerce Internet Cloud Business Tax Planning and Strategy.

I was traveling last summer and British Air demonstrates announced that its worldwide computers are down, again.

My question to you is: “Is your e-commerce and internet business tax planning like BA’s  XP style computer?”

Here is the problem with small business tax planning.  Your CPA is using the same tax plan as when your computer used Window’s XP.  You have updated your infrastructure for your business but not your tax plan.  Business in 2016 is nothing like in 1998.

Congress reported that U.S. business that legitimately plan their taxes have a 14% tax rate.  And there is more.  Half of those business paid legally paid no tax.
My question to you: “Are you paying more than your fair share in taxes?”

Here are four indicators that your CPA is stuck in the 1900’s XP tax planning:

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International Tax Strategy Sale of Cloud Web Based Know-how by Offshore Corporations

As little as fifteen years ago, the topic of International Tax Strategy Sale of Cloud Web Based Know-how by Offshore Corporations did not exists.  Nor did the iPhone or iPad exists.

However, now,  the correct configuration and design of your e-commerce website will make or break you.  In the 1800s and 1900s, practical know-how was born.  Often placed in a manual, practical know-how is the method employees would accomplish their work.

Imagine Henry Ford and his “discovery” of the assembly line.  Having never existed before, he had to train his employees.  He had to learn about managers and supervisors and assembly workers.  What he learned and how it was utilized is practical know-how.

I supposed over the years, assembly manufacturing has changed.  If so, the practical know-how has changed (to learn international tax planning for practical know-how, please see this blog post).

And so it is with a great e-commerce or other website business.   We learn by our mistakes and then we re-work the website.  Or, new technology forces us to re-write the website if we want to stay competitive.

International Tax Strategy Sale of Cloud Web Based Know-how by Offshore Corporations

Know-how can be property for U.S. tax law.  I know this may sound boring or not important but the classification as property allows you to shift income offshore and to convert your income into long term capital gain.

Let me give you an example of this international tax strategy for the cloud based e-commerce business.  Jeff, is starting a shoe store to compete with Zappo.  Now, if you have bought a shoe from Zappo, you know that they have a great website and business.

Jeff must beat Zappo and to do so, he creates an amazing website.  The website does every that you would experience in a store.  Before Jeff started on his amazing website, he formed a foreign corporation to develop and own the website.

Jeff’s warehouse is in the U.S. as is his employees and banking.  The website is hosted in Canada.  Jeff pays his foreign corporation for its know-how.  He deducts the payment. Canada’s tax law does not tax the income earned  by the foriegn corporation.

Digital Economy Tax Planning is Fantastic

SMOKE STACK INDUSTRIAL AGE

Ancient industrial tax laws are all the IRS has to tax the world of the “Internet of things.”  E-commerce and other internet marketing businesses have unique tax savings   opportunities.

The Industrial Age tax laws (from last century) are the only tax laws that apply to the cloud and e-commerce economy.

This allows fantastic tax savings for the digital economy business.

For Example– Last century, consumers wanted to own things.  I purchase VHS and then a DVD player for my favorite movies.  I got the James Bond DVD set.  But really, it sits in a box.  It is easier to watch movies on Netflix streaming.  

Take music. It is just easier to stream versus buy a DVD or even an MP3 file.

Digital tax planning strategies include:
1.  Avoiding sales tax (and outside the U.S., VAT tax) by organizing in sales tax-free state such as Oregon or sell intangible products (such as a mp3 file) versus tangible (a DVD.
2.  Avoiding state income taxes by organizing a trust in Nevada.
3.  Avoiding federal income taxes by organizing your corporation in a tax haven country such as the Isle of Man or Canada.

This blog will look at the American sales tax.  If you are looking for income tax strategies, then get my easy two hours read my book, International Taxation in America for the Entrepreneur.  It is only $9.50 at Amazon on this link.

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The New IRS Solo 401K is like Your Own Mini Tax Haven Trust

Using your Self-Directed 401K to buy or expand your business.

Using your Self-Directed 401K to buy or expand your business.

Sometimes the Government is on your side. However, finding the tax breaks (also known as loopholes for the rich) is not easy.

Like a tax haven trust that you can control, the Solo 401K can invest in your corporation, real estate (including debt-financed), gold, stocks, bonds and on and on.  Like an offshore trust, the Solo 401K pays no income tax until it makes a payment to you.
And, as you will discover below, it does not file a return for the first five years.

But, unlike the tax haven trust, a Roth Solo 401K’s income is never taxed.  Never means “never.”  Not to you, not to your children, not to your grandchildren and so on until the end of time. 

You can learn more with this video below or contact me, Brian Dooley, CPA, MBT at 949-939-3414 for a private consultation with our Solo 401K Retirement Plan Team.

When the Solo 401K invests in your corporation, you will have a double deduction.   First, you deduct the money funding your Solo 401K.

Second, the investment in your corporation by your Solo 401K is not taxable to the corporation. When the corporation used that money to pay expensed, the corporation is allowed a tax deduction.  So, yes, a deduction to fund the 401K Retirement Plan.  And again, some money is deducted by your corporation when it pays expenses.   The 20 minute video below provides more information.

But first let me tell you why your Solo 401K may not file a tax return for at least five years.  The tax law states that until your  Solo 401K is worth more than $250,000 you do not file a return.  For most of you this will be after five years of contributions.

The 20 minute video below presents two little known legitimate tax loopholes for the small business.  You will learn two too good to be true tax strategy that your CPA will tell you is impossible.  But when your CPA watches this, he will know how you can save taxes.
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