Tag Archives: e-commerce tax planning

Robots, Apps, Video Streaming and 3D Printing Small Business Tax Planning Strategy for Robots, Apps, Video Streaming and 3D Printing

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international tax planning for eCommerce,

 Robots, Apps, Video Streaming and 3D Printing Small Business Tax Planning Strategy is unique. Our tax laws never imagined this technology.

  21st Century business is nothing like 20th Century business. It is as easy as comparing the cell phone you owned in 1999 with your smartphone now.

 The tax planning on the internet is that 1999 style tax planning.  You know, that year-end meeting where you are told the same stuff year after year.

But you will never achieve the 14% tax rate paid by Big Business if you think like a small business (more on the 14% tax rate here).

The business news headline “Bank Of America Opens Branches Without Employees” got my attention.  B of A also has one of the better smartphone apps for online banking.  The important tax planning and business trend are “no people”.  Instead, machines that work 24/7 with no sick pay, employee suites, or family leave.

Next, Ford Motor Car announced it is using 3-D printing in manufacturing instead of robots, to produce much of their cars.  Ford is not the only big business moving beyond Robots.  Redbox (the DVD rental kiosk franchise) is closing thousands of kiosk and is streaming the videos.

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Why JFK Said Tax Planning to Avoid Taxes is Patriotic & Good for America

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President John Kennedy (Democrat) is the most respected president of last century. 

International tax planning small business offshore tax strategies can legally avoid taxes.  When you avoid taxes, you help America.

JFK  said that  “Every dollar released from taxation that is spared or invested will create a new job and a new salary.”

You, the business owner, are the only one that creates real jobs.

The more you avoid taxes, the more money you have to expand  and create jobs. 

President Kennedy and Supreme Court Justice Hand agreed that patriotism does not mean paying more than your legal share.

And  Supreme Court Justice Holmes Justice Holmes rebuked the IRS by saying: “The only purpose of the [taxpayer] was to escape taxation . . . . The fact that it desired to evade the law, as it is called, is immaterial, because the very meaning of a line in the law is that you may intentionally go as close to it as you can if you do not pass it. Continue reading

What You Need to Know to Do Business in the United Kingdom

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

Saving taxes with international tax planning in the UK

The U.K. is a fantastic European headquarters.  Of course, they left the EU and despite this, the U.K. is my first choice.   Both Switzerland and The Netherlands would like to be your headquarters.   But they are missing the tax infrastructures that best fits the American tax laws.

The Big Tax Strategies of the U.K. are:
1.   They treat the U.S. limited liability company (LLC) as a passthrough.  The U.K. is the only country that has the identical treatment as the United States.   The cornerstone of small business international tax planning is the foreign tax credit.  

The foreign tax credit is the method of avoiding double taxation.   For example, you earn a $1,000 in the U.K. and the tax is $2,000 (the U.K.  has a low tax rate).   The U.S. tax on the $1,000 is $3,900.   The $3,900 is reduced by the $1,000.

U.S.-U.K. Income Tax Treaty and the Friendship, Commerce and Navigation  (FCN) Treaty Tax Planning and Strategy

This is big.  You can use domestic (I prefer Nevada) LLC for your international business.  An early  1900 treaty (FCN) allows the LLC the same rights in the U.K. as a U.K. company.

The British Inland Revenue changed their regulations to match the IRS regulations regarding the American LLC.    This allows the income tax treaty’s permanent establishment clause to protect you from U.K. taxation.    While the foreign tax credit does mitigate U.K. taxes, it is nice to be exempt from taxation.

The U.S. LLC Without a U.K. permanent establishment is treated as if it was only doing business in the U.S.    As you read below, the word term that is vague is “office”.    When tax treaties were envisioned, an office would have staff completing orders along with a “place of management”.  With E-commerce websites placing orders, I suggest that the computer server is kept in the U.S. 
The term “permanent establishment” includes:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop; and
f) a mine, an oil or gas well, a quarry, or any other place of extraction of natural
resources. 

The term “permanent  establishment” does not to include:
a) the use of facilities solely for the purpose of storage, display or delivery of
goods or merchandise belonging to the enterprise;
b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or of collecting information, for the enterprise;

Avoiding IRS Form 5471 Controlled Foreign Corporation

Form 5471 is a complex tax return.  CPA fees start at $5,000.  Next, tax planning for the controlled foreign corporation is tricky.   Even the best tax planners can miss the target.

Using the foreign tax credit to reduce your taxes is by far the best way.   When a domestic LLC is used you do not file the Form 5471.  Matter of fact, if you are the only owner, you do not file any IRS form.  The LLC  files a partnership return,  Form 1065, when more than one person owns the LLC.

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.