Tag Archives: e-commerce tax strategy

The 2018 International Business Income Amazing Tax Savings

The amazing tax savings of international business income has been used by firm such a Google, Amazon, Ford and other big businesses for a century.  Now, small business get the same big tax break. 

What are the tax savings of international business income?

No U.S and no state income taxes for a start.  And there is more in the form of compounding growth.   Privately owned businesses do not have access to capital (money) from the public.  Money is from banks (yuk) or  from after tax profits.

The faster a business grows, the more money it needs to cover increase payroll, more rent and the cost of additional inventory.   Bank debt is risky because a few slow paying customers can cause you to go into default.

After tax profit is greater when the tax is smaller.  International business income can be taxed at zero; however, the usual tax rate is about 17%.

Ian has a business in the United States and in Canada.   They both make $100,000 a year.   With a 15% Canadian tax, the Canadian business has $85,000 after tax to purchase more inventory.

Back in the United States, with a combined U.S. and state tax rate of 40%, the business has only $60,000 to purchase more inventory.

The Canadian business sales more inventory because it has more inventory.  The profits keep compounding faster in Canada.

The Zero percent tax rate applies to international business income from  ecommerce businesses that sale intangibles (such as travel services, music, cloud storage, e-books, entertainment and information).

These business’s hub is their computer server.  The source rules (on this link) provide that many (not all) e-commerce income is foreign source when the computer server is located outside of the United States. 

E-commerce tax planning is new only because ecommerce is new. 

International business income from intangibles has unique tax laws.  With property planning,  the international business income can be foreign source income.   I want to emphasize proper planning.

Planning needs to start when you start the business.  When  a firm like Google plans  a new product, they have also  completed the tax plan.   While small businesses start the business and bungle along until year end.  Then they discover they owe lots and lots of tax.

If you want to learn more, then please check out this blog on the topic.

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

tax planning, international tax strategies, foreign tax strategies, foreign tax plan, international tax plan, offshore tax, cloud tax planning, ecommerce tax planning, internet tax planning, small business tax planning,

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.

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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Presidential Tax Loopholes for Small Business and Entrepreneurs

From President Reagan to President Obama, the White House is the source of small business’s best tax loopholes.  The White House calls them “incentives.”   These loopholes become tried and true small business tax strategies.

small business tax planning,

President John Kennedy (Democratic) is the most respected President of last century. The President and Supreme Court Justice Holmes agreed… it is your duty to pay the least amount of taxes.

The episode of my blog tax talk show, below, explores how this is done without Congress’s knowledge or approval.  

The White House runs the Department of the Treasury.    The Treasury owns the IRS (the IRS is an agency of the Department of the Treasury).  

For example, President Obama wanted jobs at the start of the Great Recession.  He had the IRS  changed the tax law to allow investors and small business to expense the cost of renovating real estate.

President Bush wanted outsourcing in Asia to reduce the cost of goods in the U.S.  He had the IRS write a law providing a special international tax break for contract manufacturing.

 

For President Reagan, it was small business captive insurance companies. The list goes on and on. This episode of my blog tax talk radio will give you new tax strategies.