The U.K. Financial Times reports that in the UK, alone, robots will be replacing 15 million British workers. In the U.S., we estimate 100 million workers.
The Newspaper’s article points out that lower paid workers are most at risks. Well, we have seen this a the supermarket where the computer checkout is more attractive than the human ones.
Exploiting the tax savings require you to think outside of the brick and mortar world.
But, there are more robotic changes. All of the Blockbuster employees lost their jobs as Netflix streams movies. The point is the robot may be virtual. For example, my long time travel agent has been replaced by internet Travelocity type websites.
Small Business Tax Savings with Robots
Payroll tax elimination is, of course, significant tax saving. Consider no health insurance, no sick days and no retirement plan contributions.
But there is more…, especially for the virtual robot. Shifting income to a tax-free state (such as Nevada) is a significant tax saving… especially if you are in California or New York.
How about shifting your income into a tax-free foreign corporation?
Some states, determine your taxable income by the amount of your payroll in the state and by the amount of rent paid. Relocating employees to a warehouse to Nevada or Texas is difficult and costly. However, robots do not mind the 100-degree weather, they work 24 hours -seven days a week.
The Amazon’s innovative robotic warehouses are being duplicated by smaller businesses.
In part, it is this robotic warehouse that has allowed Amazon to have a successful fulfillment center. These centers have allowed small business to thrive without the cost or the risk of a long-term investment of their own warehouse. The point is that thriving small business owners are abandoning both employees and the related fixed costs (such as the warehouse or office space).
The biggest tax savings are for the small businesses that can use the virtual robots (see this link). They are easy to move offshore to tax havens such as the Bahamas or Puerto Rico.
This where the entrepreneur needs to place on his innovation thinking cap. Can you convert your accounting department to independent contractors using one of the newest cloud office management and bookkeeping systems?
My book, International Taxation in America for the Entrepreneur, explores the tax aspects of the virtual robot. I have the first chapters on this link and the first five minutes of the audiobook on this link. You can purchase the Kindle edition for as little as $9.50, on this link.
If you would like to brainstorm your tax ideas, then please call me Brian Dooley, CPA, MBT at 949-939-3414 for a free consultation.