Tag Archives: cloud 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.

This innovative tax planning blogger wants your business to survive.  Using your knowledge of the past to help you in the 21st Century not only causes you to pay more in taxes, it can put you out of business.

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.  In 2014, Redbox closed (laid off) 1,000 of it robotic DVD rental kiosks.

 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.

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Offshore tax planning compares the out of date concepts in our tax laws to 21st Century business.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.

Great tax planning sees the trends and changes.

For example, if the computer streaming of music was located in the Cayman Islands, the income is foreign source income and not U.S. source regardless of the location of the customer.  On the other hand, if you sell the mp3 file or ship the DVD, the income is U.S. source.

Look at banking.  Do you need an office in California to have California customers?      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 want to brainstorm your idea and dream about your future, then call me, Brian Dooley, CPA, MBT, at 949-939-3414 for a free one-hour consultation.  

How to Start a Business in the United Kingdom Headquartered in London

England is a great place to start the internet or cloud-based business such E-commerce or another web app.

With the exit from the European Union, Britain has been able to have its own tax policy.  The U.K. plans to reduce its corporate tax rate from 20% to 17%.   Unlike the U.S., the U.K. does not have a state income tax.

E-commerce and other cloud-based business have a special tax planning advantage by being in the U.K.   The can provide their web-based products with little or no European tax.  In some cases, they can avoid U.S. income taxes, too.

Here is the best business and tax structure for an Ameican doing business in the United Kingdom.

United Kingdom claims U.S. LLC is a tax haven company

The United Kingdom is beating America as the better business country

The first goal of a business structure is to protect the owner’s assets.  At the end of the 1800s, corporations were invented.   Corporations exist only because a government allows them.  Capitalist need corporations to take a limited amount of risk.

The problem for Americans is that we are starting to use limited liability companies.   U.K. courts may not accept an American LLC as an entity that protects the LLC’s owner from the LLC’s debts.

Thus, a corporation is my favorite choice for doing business in the U.K.  If you use an American corporation, you have a choice of being taxed under two different parts of the U.S. tax laws.

In the U.K., you have no choice.  The corporation pays the U.K. tax.  For tax planning, I prefer the U.S. corporation to open a branch in the U.K.

A U.K. Branch allows for large tax saving because of the “foreign tax credit” and the U.K. Tax Treaty.

Your U.S. income tax is reduced by the income tax paid by the corporation to the United Kingdom.  In effect, you get a full refund for the foreign income taxes.

Another choice is to create a U.K. corporation.   The advantage is a deferral of U.S. income taxes on your foreign (U.K. or EU) profits.     However, there is a tax cost.  You will not be allowed the foreign tax credit for the foreign income taxes paid by the U.K. company. `

The other issue of a U.K. company is the cost of filing an IRS information return.  This return is Form 5471.  The Form is complicated because of the many tax saving elections that you can make.    While the cost of this return is about $5,000, the tax savings are in the $10,000s of thousands.

If you need help in deciding which business entity is best or in preparing the Form 5471, then please, give me, Brian Dooley, CPA, MBT a call at 949-939-3414.

Saving Taxes – In the E-commerce & the Cloud (Virtual) Computer World

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E-commerce businesses are saving taxes with cloud computer tax planning.

Saving taxes in this century’s cross-border business environment is easier than ever.  Small businesses are saving taxes with eCommerce tax planning and cloud computer tax planning.  

The cloud has level the playing field between small business and big business.  Amazon is leading the way.  At the bottom of this blog are my Amazon favorites.  Small businesses can benefit from cloud computer tax planning.  

Cloud tax planning allows big state and federal tax savings.  A popular term for this is “third wave” tax planning.
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The Best International Taxation Planning Audiobook and Kindle for the Entrepreneur

Chairman Robert Lee Doughton of the Congressional House Ways and Means wrote today's tax laws. , This Civil War baby wrote today's tax law. High school educated in the 1870s!

Chairman Robert Lee Doughton of the Congressional House Ways and Means wrote today’s tax laws. , This Civil War baby wrote today’s tax law. High school educated in the 1870s!

Just how good is Congress doing?.  Today’s tax laws follow the blueprint designed by this man, named after General Robert E. Lee.   Born in the 1860s, his view of the World is in today’s tax laws.  Text messaging was via the Telegraph.

His ancient concepts have created legal loopholes for the cloud based business,  E-commerce small business, and the business selling merchandise without the need for inventory.

Take a three-minute test drive of the audiobook below, at the end of this article.    

For example, did you know that by placing having a British Virgin Island corporation own your website, you may reduce or eliminate U.S. taxation?  You will learn how this is done in my book.

The audiobook edition of  International Taxation in America for the Entrepreneur,  available at Amazon on this link along with the paper and Kindle versions. My Book that is changing tax planning for the E-commerce and cloud-based business.  Easy to read in less than two hours.  Learn our tried and true innovative tax plans with my book,

Myths that restrict your offshore tax planning include:
1. Income deposited into a foreign bank account is foreign source income. Place of bank deposit does not determine so the source of income.  Deposits into U.S. banks can still be foreign income and deposits in a foreign bank can be U.S. taxable income. 

2.The “Dutch Sandwich” helps U.S. firms avoid U.S. taxes.  This ancient tax treaty plan is used to prevent European tax.  E-commerce and cloud base businesses do not need to use tax treaties to avoid taxes.
3. Switzerland is a tax haven.  Switzerland is a high tax country.  Each canton (which is similar to a state) determines the income tax for businesses in that canton. There is no Swiss federal income tax.  

Please enjoy a sample of the audiobook below by clicking on the play button.

If you are turning off the lights, you’re paying too much income taxes

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LED light bulbs cost less than one cent per day and last 20 years. Yet, I continue to turn off the lights when I leave a room. I notice I am thinking about taxes the same in the same way.

I am always turning off lights.  It bugs my wife. The electricity for a LED light bulb is a penny a day.  She prefers coming into a room with versus darkness.

Many small businesses owners have pre-LED light bulb tax plans.  Yet, they have a 21st Century business.   For example, hosting an e-commerce business in Nevada can reduce state income taxes.

Importers can now use a new type of IRS approved foreign corporation to eliminate taxes.

Ten years ago, Congress created the “solo 401K plan”.  This plan is exempt from many of the “prohibited transactions rules.

The Internal Revenue Code was written in 1954 (with small changes in 1986)  closing 1940 loopholes. The 1954 Code provides the framework of how we tax business.

The million of pages of new laws use the 1954 frame. The new laws try to close the loopholes caused by flaws of the 1954 Code. Yet, they do not close the biggest loophole of all, e-commerce. Why? It did not exist until this Century.

Cashing in on this big loophole requires thinking in the 21st Century and not in the 1900’s.  For example, are you still seeing your CPA for year end tax planning?  It made sense in the 1990’s.  Now, tax planning is long term and strategic.

This weekend I backed up my car just like I did in the 1980s.  I looked over my left shoulder. I also ran over a curb.  Sitting next to me was my wife. She saw me approach the curb on the video from the car’s backup camera (required in new cars because of the death of children who were behind cars backing up).

 Thankfully, she told me to look where I am going. This is also good advice for tax planning.

Lesson: Doing the things the old fashion way is natural to us.   This includes our tax planning. Domestically, the Roth IRA / 401K is substantially smarter than the traditional IRA or 401K plan. Yet, many of us still have the traditional IRA. 

For example, E-Commerce businesses can become international merely by placing their computer server in a foreign country.  Nations, such as Canada,  do not tax this income (except for sales to Canadians).  Puerto Rico charges a four percent income tax.  If you are in Puerto Rico for more than 183 days a year for two a years in Puerto Rico, you can collect your profits tax-free (more on this link).

This blog has only two ideas.  To be honest with you, Americans 19th Century Tax Code is creating thousands of new loopholes.  Few are found on the internet.  The loopholes are unique to your business.  The point is to get your CPA to keep the lights on and not to look over his shoulder when he backs up.   

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Learn how to save taxes with “International Taxation in America for the Entrepreneur” using tried and true methods.

If you have an eCommerce business or doing business outside of the United States, then check out my easy to  read book on Amazon.  The Kindle on sale for $9.50, on this link.

Innovative tax planning looks at the advantages of the million page of tax law written for the last century.  If you would like to brainstorm your ideas, then please call me, Brian Dooley, CPA, MBT at 949-939-3414 for a free consultation.