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"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.
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?
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.
The tax free money that I was referring to was the money that is in the offshore bank.
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.
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.
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?