Tag Archives: small business tax

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.

This innovative tax planning blogger wants your business to survive.  Using your knowledge of the past to help you in the 21st Century not only causes you to pay more in taxes, 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.  In 2014, Redbox closed (laid off) 1,000 of it robotic DVD rental kiosks.

 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.

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Offshore tax planning compares the out of date concepts in our tax laws to 21st Century business.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.

Great tax planning sees the trends and changes.

For example, if the computer streaming of music was located in the Cayman Islands, the income is foreign source income and not U.S. source regardless of the location of the customer.  On the other hand, if you sell the mp3 file or ship the DVD, the income is U.S. source.

Look at banking.  Do you need an office in California to have California customers?      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.  

Save Taxes, Lots of Taxes, with Donald Trumps New Tax Laws for Small Business and the Wealthy

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Excellent small business tax planning looks ahead. Be like Mr. Trump and get significant savings this year and next.

Well, many of us are “shell shocked.” His tax reform is substantial.  Every business (big or small) will have more to invest in growth.  But, the companies must make significant changes to their structure. 

 You can profit by using the current tax laws this year (2016) and flip to the Trump tax law next year (2017).

Here’s  Donald Trump’s tax agenda.

Individual tax rates:  Eliminate the seven-tier tax rate structure. Currently, the lowest tax rate is 10 percent, with a high of 39.6 percent.
The new three-tier bracket structure is to be 12 percent, 25 percent, and 33 percent.  Business owners will pay more income taxes on their salaries.  Apparently, Trump wants you to keep more in the business for growth. 

Itemized deductions: Trump intends to curb most itemized deductions but would allow certain exceptions, such as deductions for charitable donations and mortgage interest.   

Taxes would not be an itemized deduction. Residents of states with high-income tax rates could be hurt, but not by much.   The housing market could drop because of this and the higher standard deduction (more on this in our next newsletter).

Repeal the AMT (Alternative Minimum Tax).

Child care expenses: Replace the existing child care credit with an above-the-line deduction available to both itemizers and non-itemizers, while creating tax-favored accounts for child care.

Corporate taxes: Slashing taxes for corporations. The corporate tax rate will plunge from 35 percent to 15 percent.   As I wrote above, Trump wants you to keep more money business for growth.   Just announced, the lower tax applies to sole proprietorships, limited liability companies, and s-corporation. 

Eliminate estate (death) taxes: The new President will remove the federal estate tax.
At the same time, he will end the step-up in basis on assets (with a special tax law for farms and small business).  Heirs will owe income taxes on future sales of homes, real estate, and investments.  Currently, these sales can be tax-free. 

Small Business: Trump is not for a higher minimum wage. He will cut red tape and eliminate regulations. He will repeal and replace Obamacare.

Why JFK Said Avoiding Taxes is Patriotic & Good for America

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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

John F. Kennedy stated,  “My fellow Americans, ask not what your country can do for you, ask what you can do for your country.”

He also said that  “Every dollar released from taxation that is spared or invested will create a new job and a new salary.”

You, the business owner, are the only one that creates real jobs. The more you avoid taxes, the more jobs you can create. Continue reading

How the Rich Pay Lower Taxes and How Can You Do It?

Smart business owners are not too busy to save taxes.

Smart business owners are not too busy to save taxes.

The Wealthy are not like us.  They are willing to spend money to make money.  They are willing to pay their tax team a $1 to save $10 in taxes.

This Wealthy (called the “one percent”) create most of the jobs in the U.S. They pay  half of all income taxes.  But, at the same time, they usually in a lower tax rate than the rest of us. 

The Wealthy use long-term tax strategies.  These strategies tweak their business structure.     Different parts of a business have different tax laws.  For example, if you have a sales force, they should be in a different corporation than your business. Continue reading

What Billionaires are doing that small businesses are not.

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Small business pays more in taxes than Big Business due to a lack of tax planning. Small business thinks of year-end tax plans.
Big business thinks of tax strategies. The average tax rate of big business is 14%.

In a recent report, Congress blamed Americans for paying too much tax.  Congress reported that the average tax rate of tax planning businesses is 14% (more on this link).

 Matter of fact, Congress reported most tax planning businesses paid no income taxes. 

  For decades fools .” shelters.  They “invest” their money and are told that the investment will give them deductions or a tax credit. These fools do no work hard to pay the as little taxes as possible.  They just wrote a check.

 This is not what Billionaires do.  Billionaires work hard to pay  fewer taxes. 

They avoid taxes by structuring their business deals in what is known as a “tax efficient strategy.”    This allows all of their profit to be used for growth or for saving for that “rainy day”.  

So, why is the small business owner not taxed at 14%?
– Are they too busy for tax planning?
– Can’t find the right CPA or attorney?
– Don’t want to spend money on professional fees?

Congress’s report has some answers.

Continue reading