|Offshore Banking for Affiliate Marketers?|
Now that you can feel the effect of taxes, would you do it?
I dont think links are allowed here, so I am going to provide instructions to find the article that I am referencing. Search for the following on google and the correct article should come up first.
"5 things about offshore banking every online business should know"
I just met with my accountant today, and did it ever make me feel depressed. All the things I could have done with all that money...
As a result, I have been spending much of the day researching offshore corporations and offshore banking. I called a couple of companies but they were all out for the weekend. I will be speaking with them on monday.
I also considered setting it up so that my affiliate marketing company pays myself a salary. That way I can have a financial standing in the US, get loans, get credit cards, and pay taxes in the low brackets. This still poses the problem that what good is that tax free money if i cant legally bring it into the US without it being taxed?
Anyways, I will be consulting a lawyer on this matter as well as speaking with several companies that deal with this, but I would like to get a discussion going about it and hear all of your thoughts.
So... what do you think? Does it appeal to you? Do you have any additional ideas how things could be handled?
My post would not submit in its entirety... so I had to break it into multiple posts and leave out the actual article.
I don't think it's tax free money. If you pay yourself a salary, you pay personal taxes on it, but no corporate tax. If you take it out as dividends, you pay both (though at lower rates).
After doing a bit of reading on the Canadian tax system, I found out that corporate and personal taxes are designed in such a way that it doesn't matter which way you take the money out, you pay roughly the same amount in tax. I'd suspect the US system is similar.
What a corporatation does (aside from the whole liability thing) is let you spread out your earnings to pay less tax over time. If you earn $80K the first year and $40K the second year you're in two separate tax brackets. By having the corporation earn the money you can split it into two years of $60K and pay less tax overall.
A corp might also provide some retirement help. If you save money inside the corporation, you can pull it out slowly after you retire. For example, in Canada we can earn around $12K tax free. Dividends are taxed at 50%, meaning you can pull out $24K/year in dividends tax free. Had it been a salary you'd only get $12K.
When I said pay myself a salary, I didnt mean that would be tax free. I would intentionally pay myself a smaller salary to get into a lower tax bracket, while still having a proven "income" in the US.
The tax free money that I was referring to was the money that is in the offshore bank.
If you're a citizen or permanent resident of the US, offshore companies or banks are NOT for you.
You can't rely on secrecy (banking information is widely exchanged nowadays), so anything you arrange has to be legal. And for a US taxpayer, they very rarely are.
See "Abusive Offshore Tax Avoidance Schemes" and similar on the IRS website. They know all the tricks already.
Sounds like a great way to improve outsiders' opinions of affiliate marketers/ing.
And as for setting up a "dummy" corporation you have to be careful to follow strict rules & regulations (i.e. regular meetings, take minutes, keep it capitalized, etc.) or they'll pierce the corporate veil.
Be a good citizen and pay your US taxes. If your STATE taxes are killing you, you can always pack up and move to another state. I did - moved from the "Peoples Republic" of New Jersey to Florida.
Read the posts from other members; some affiliate programs wont even let them join because they live outside the US. Living in US gives you both good and bad experiences. Take the bad with the good and accept it. Would you rather live someplace else?