Tag Archives: ecommerce business tax planning

Tax & Business Planning for an Offshore International E-commerce Computer Server During a Natural Disaster

internet tax planning, saving taxes, cloud tax planning ,

Internet tax planning for the international business is just a click away from big tax savings.

Seems like unexpected natural disasters are occurring more often. The loss of an e-commerce website for a few weeks is like a store being flooded. Yet, you do have an inexpensive solution.  Cloud computers can provide a redundant system and save you taxes. 

For example, privately owned e-commerce businesses are saving taxes by hosting their store on a foreign computer server.    These businesses sell an internet product such as an e-book, video, database, entertainment and other personal services.

For example, an e-commerce site that booked travel arrangements is much like last century’s travel agent.   With proper planning and corporate formation, this type of an e-commerce business earns foreign source personal service income (that of a travel agent).  If your tax team has properly planned this, the income can be earned tax-free by a foreign corporation.

We have read about firms that are like Google, Apple, and General Electric legally avoiding taxes; but what happens when there is a natural disaster?

I was at the Apple Store yesterday in Newport Beach, California.  I wanted to get Applecare for my iPhone.    The Apple Store is located in a large outdoor mall.  As I approached the store I saw the Apple employees hanging around the front door and the Apple store was empty.  A fire nearby had caused a loss of electricity for the mall (of about 100 stores).

The young millennial Apple employees were lost or as one said, he was a fish out of water.  I told them what I needed and they debated among themselves what I should do.  None of them knew until 40-year-old supervisor spoke up… use paper!!!

The staff was amazed at such out of the box thinking but still looking scared.   We walked inside and the supervisor handed a millennial a credit card slip and the mechanical machine to process the charge.    To no avail, it was out of their capacity.. which brings me to your tax and business planning.

To make wealth with an offshore ECommerce business you need redundancy.  You need a second system that can take over.  For example, the Bahamas is now the go to place for an offshore e-commerce business.  Hurricanes and storms are common.  Canada allows computer hosting without the creation of a tax situs.

You may want to consider to have your  Bahama corporation own the computer server in the Bahamas and with a backup cloud server in Canada.   If you need help establishing your e-commerce business, then contact me, Brian Dooley, CPA, MBT at [email protected],

 

 

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.

Using your knowledge the 1990s and the beginning of this Century will cause you to pay more in taxes and 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.   Redbox has closed (laid off) 1,000s of it robotic DVD rental kiosks in the U.S.

 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.   With Redbox, you had to rush to the kiosks to return the DVD.

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.  Even the first ten years of this century is partly obsolete.  

If this was 2005, you would not have a smartphone. Yep, no apps.  I don’t know about you, but I use my iPhone and iPad for business more than I use my landline and my computer combined.   

Great tax planning sees the trends and changes.

With the iPhone came the  streaming of music.  If the computer server hosting the music was located in the Cayman Islands, the income would be foreign source income and not U.S. source regardless of the location of the customer.

Look at banking.   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 with you and your CPA,

Selling a Small Business Tax Planning and Saving Taxes with the Open Transaction Doctrine

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President John Kennedy (Democrat) is the most respected president of last century. The President and Supreme Court Justice Hand agreed that patriotism does not mean paying more than your legal share.
Supreme Court Justice Holmes said tax planning means you get as close to that legal line as possible

The money you get from selling short on a stock is not taxed.  Yep…  no tax, at all.  A short sale is an open transaction.  When you “close” the transaction by purchasing the stock sold short, you report the gain or loss.   

A sale of a business is an open transaction if the total sales price is not known.  This is called a “contingent” sale price.   

For example, I have a client that creates eCommerce businesses.  He gets the website establish, does a fantastic job optimizing the site on Google and Amazon.   Once the business is making money, my client sells it.  The sales price is dependent in the businesses gross income for the next five years.  
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IRS Helps U.S. Headquarters Earn Tax Free Internet Income and E-commerce Income

Domestication of a foreign trust

Applying for an IRS ruling on your international tax planning will save you taxes in the long run.

The Department of the Treasury is keen on getting more business in the United States.  It knows e-commerce, cloud-based businesses are producing most of the world’s new income.  From Netflix to Ebay to Apple music, the world is seeing a change in business.

It is here that the Treasury and IRS foresight into the future pays off.  Before I give you the blueprint, I want to emphasize the skill that our Government used in drafting this tax law in 1972 with a concept that works almost a half century later.

So, let’s pretend that I am starting a business to compete with Netflix.  Of course, I am an American, so all of the controlled foreign corporation laws apply to me.  My capital source as my long time banking associates.  Like so many ‘I” (internet) businesses, I have decided that Ireland is the best location.  
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