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.
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.