Tag Archives: E-COMMERCE TAX

The United Kingdom Headquarters for your Business

Having a United Kingdom headquarters for your business can save you taxes. With the new tax law,  the U.K. has a special tax advantage. 

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

United Kingdom is beating America as the better business country

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 U.K.’s income tax treaties with Western Europe  and the United States will remain even after the British Exit

Hosting your  Ecommerce business on a computer server in the U.K. can avoid income taxes in Western Europe.

The key is to keep your inventory in the U.K. or to sale web based intangible assets.

For example, if your site is a similar to Travelocity, the site is providing a service (similar to a travel agent).  Service income is sourced where the service provider (you computer server) is located at the time the service is provide.

The same result applies if you are selling a product like an E-book, a video or music or providing a big data service.

In many cases, your U.K. corporation will avoid both  U.S. income taxes and state income taxes.

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

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.

Here is some  more information on international tax law for the American small business.

If you need help in deciding which business entity is best or in preparing the Form 5471, then please, contact me, Brian Dooley, CPA, MBT at [email protected] 

International Tax Issues for the E-commerce Business

International tax issues for the E-commerce business are increasing.  In the U.S. the

internet tax planning, saving taxes, cloud tax planning ,

Saving taxes with the cloud based and e-commerce business.

IRS is slowly learning how an E-commerce business can generate tax free foreign source income by having have a specific type of software code and by having the computer server in a foreign country.

The low cost of renting space on a virtual computer server is inexpensive. 

The virtual server resides inside a real computer.  The real computer has massive memory.  The virtual server resides in that memory.   Virtual computers run faster than a real computer.

International Tax Issues in Europe for the E-commerce Business

In Europe. the EU nations are confused and bewildered by the shifting of profits to low tax countries such as Ireland.  If you are doing business in Western Europe, the international tax issues are centered on the use of tax treaties.   The income tax treaties use the “permanent establishment” rule to avoid tax in the high tax European countries.

If you own an E-commerce business, you have a unique opportunity to move your profits to a low tax state, such as Nevada or to a foreign no tax  country , such as the Isle of Man.   This tax haven country has a good source of dependable electricity.  The Isle of Man in the Great Britain power grid.

Other tax havens produce their own electricity with diesel generators.  During storms, the power goes out and so does your computer system.

International Tax Issues for U.S. owned E-commerce Businesses

The IRS would like your foreign corporation to have U.S. source income.  The e-commerce business that provides a service (such as Travelocity, the service of a travel agent), streaming content such as a podcast, music, video and radio) and E-books may like using Canada instead of the Isle of Man.

A foreign corporation that merely has its computer server in Canada is not considered doing business in Canada.  Canada has good source of electricity.

My only issue with Canada is that someday they may change their tax law.    But for now, the set-up costs for a British Virgin Island company hosting their E-commerce website in Canada is cheaper than the Isle o f Man.  Additionally, it is faster.

Setup time in the Isle of Man is about four months.  Setup time is Canada is a few weeks.  Canada is cheaper and faster and the isle of Man is more stable from the point of future international tax issues.

The video below is from my international tax seminar of the Society of Certified Public Accountants.   I explain with easy to understand examples the theory of tax law that allows an offshore ecommerce business to avoid taxes.

While the seminar is from 2011, the tax law remains unchanged.

If you want help with your international tax issues, then email me, Brian Dooley, CPA, MBT at [email protected].

You can learn more about tax planning in the cloud on this link.

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

international tax planning, ecommerce tax planning, cloud computer tax planning, offshore tax planning,

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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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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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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