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],