I HATE paying taxes! Interesting story for (I guess) almost anybody!

[Darrel Hawes]

Originally Posted by Teenage Genius

Do you guys realise you don't actually have to pay taxes... Theres a MASSIVE thing about this on youtube, about how the government refuse to talk about it and how they refuse to show evidence that you are in fact obliged to pay taxes. Look it up

Let us know how that works for you.

[Steadyon]

Originally Posted by Rachel Zaouche

Hi everyone

Firstly let me say I am a qualified financial planner so am very aware of tax issues etc. Being a CFP, I can be authorised to give advice anywhere in the world but I wouldn't do it. Why? Because I don't know enough about the local laws and I could cause serious financial harm to my clients (never mind get myself a little holiday paid for my Her Majesty!)

I was one of the first Chartered Financial Planners in the UK and am in the rare minority of having both that qualification and the Certified Financial Planners qualification.

I am not telling you this to boast - I am just trying to highlight that I know what I am talking about and the advice I would give you is

STOP taking advice from people who are not qualified to give advice on a very complicated subject - this is not just aimed at some of the posts on this thread but also at some of the so called professionals who populate the tax planning world.

Despite the fact that I am very well qualified in tax planning (IN THE UK ONLY) I couldnt advise you properly as I dont know your personal circumstances, the rules of your jurisdiction, how your business has been set up (legal structure etc) etc etc etc etc etc

Everybody who is serious about their IM business needs to seek advice from a properly qualified individual, preferably one who understands the IM world.

As other posters here have said, you can get into seriously trouble trying to commit fraud which is what tax evasion is. There has been some very valuable comments made and a lot of relevant examples used eg Wesley Snipes.


Here in the UK, you can go to prison which may be slightly preferable to having the tax office investigate your tax affairs from the day you started earning anything.

In the US, you might want to consider that Al Copone went to prison for income tax evasion and not his mobster activities.

There are very legitimate ways of reducing your tax bill and giving up your nationality doesnt have to be one of them! I don't know anything about tax planning in Canada or the Netherlands etc BUT most governments work the same way in that they allow, sometimes very generous, ways of reducing tax bills. Some countries give additional tax breaks to new business people. And guess what - IM is a business or at least it should be.

In the UK people are often advised to start a company when they go into IM and that is good advice for some. BUT it is awful advice for others.

For example, as soon as you set up a LTD company you become potentially liable to employers national insurance as well as employees national insurance. So Joe sets up Do it my way LTD and earns £30,000 via his new company. He wants to pay himself a salary - that salary is liable to national insurance in the usual way. BUT Do it My Way LTD also has to pay employers national insurance on that salary. There are ways around this but it is complicated and I am not going to do into them here.

If Joe had set up a limited liability partnership, he is still classified as self employed so there is no employers National Insurance. Also if he is married, his wife can become involved in the business and as it is a partnership can benefit from tax savings.

BUT there are serious disadvantages on partnerships as well for some people so again TAKE ADVICE relevant to your circumstances.

Perhaps more relevant, a lot of people make a loss in IM when they start. If they remained self employed this loss can be offset against the income that they earned in previous years and can trigger a tax refund.

Hopefully I have made my point. I don't mean to offend anyone who posted but if I gave some of the advice given on this thread to my clients, I would be accompanying them to jail!!!

As one of my friends who lives in Australia put it, "if you gave me the choice between being investigated by the Australian Tax Office or being bitten by a snake, I would take the snake!"

Finally, it should be remembered that you only have to worry about tax if you are making a profit. Please dont let the tax tail wag the dog i.e. set your IM business up properly, PAY for decent advice (tax deductible in most cases) and go out and make a lot of money.

Take care

Rach

ps I really hope that I haven't offended anyone. Believe me, not paying your correct taxes is a HUGE mistake and not worth the effort and time involved. Reduce your tax bill by all means but use the many legitimate and clever ways to do it.

I fully agree with what you said, the main point being "seek professional advice".

However, I don't think this thread contains exact specific advice for anybody.

On a forum like this, there is nothing wrong with throwing a few ideas around and getting people to at least consider that there may be other options available to them.

Then they can do some more research and also go and see their advisors with at least some general background understanding. Only by doing this will they be able to ask the right questions of their advisor and so then get the proper advice.

Once again I stress that a person's tax affairs are his responsibility, no matter what advice you get from a professional. If you get bad advice, even from a pro, it is you that is responsible.

So in other words you owe it to yourself to try and learn at least the basic options available to you in your country and then hopefully the professional advice you get helps fine tune your legitimate tax planning.

[Rachel Zaouche]

Originally Posted by Steadyon

I fully agree with what you said, the main point being "seek professional advice".

However, I don't think this thread contains exact specific advice for anybody.

On a forum like this, there is nothing wrong with throwing a few ideas around and getting people to at least consider that there may be other options available to them.

Then they can do some more research and also go and see their advisors with at least some general background understanding. Only by doing this will they be able to ask the right questions of their advisor and so then get the proper advice.

Once again I stress that a person's tax affairs are his responsibility, no matter what advice you get from a professional. If you get bad advice, even from a pro, it is you that is responsible.

So in other words you owe it to yourself to try and learn at least the basic options available to you in your country and then hopefully the professional advice you get helps fine tune your legitimate tax planning.

Spot on - Steady on (love the name) - I get a bit passionate about this stuff - I am the same when it comes up in the pub and the best tax plans is to hide the cash under the mattress.

I got a little worried about some of the comments in particular those that said that the government cant make you pay taxes and that you should move abroad.

But yeah - the point is get proper advice and when seeking advice always ask for testimonials from the tax planners other clients. A good qualification to look for here in the UK is a Chartered Tax Adviser as not all accountants or financial planners specialise in tax.

And I believe there is a warrior on here that specialises in tax planning but I cant remember his name.

Websites that may help are;

UK http://www.financialplanning.org.uk
Canada https://www.cifps.ca
US http://www.fpaforfinancialplanning.org/

Best wishes

Rach

[mormel]

That might be so, but even within the European Union - where we have a free exchange of people and money, like in the federation of the US - the differences in tax levels are so immense, that the real big moneymakers tend to move to - for instance - Ireland en Belgium, where the income taxes are a LOT lower than - for instance - in the Netherlands (also know as Holland, with capital Amsterdam).
Someone who earns on a top level here in Holland pays up to 72% taxes in the top scales of his income. Lots of them then make the choice to move a few dozen kilometers to the south, to Belgium, where the income tax climate is much more capital friendly.
And that's only a small step, compared to people who go to live in Monaco or on the Cayman Islands to protect their fortune from the Horrible Taxman (he exists: I've seen him!).

Such differences don't exist within the US. Happily for the most of you...

Yours, dutchly, Ed

PS 'Dutch' means: 'from the Netherlands'

[lburrell]

Whew what a thread!! But have no fear, the tax professional is here!!

Ok I cannot vouch for European tax rules, but I IMAGINE they are somewhat similar to the US's. Plus, in about 5 years, under IASB rules, we will all have the same accounting practices and procedures so I will be more valuable to everyone then I guess.

ANYWAYS...

Your problem is that you are paying taxes at an extremely high rate, your personal income tax rate. You need to set up a passthrough corporation (Partnership or S Corp) so you will pay a lower tax percentage. Plus, you will be able to be much more liberal with your expense deductions. That 50% you pay your JV's, totally deductible as COGS. It is now their responsibility to claim that income (they are essentially an independent contractor). If they sell alot of products for you, (in the US atleast) you would issue them a 1099 form so they can claim that income and pay taxes on it.

Go speak with a tax pro in your home country for more specifics, but I just gave you a general idea of what you can do to lower your tax burden (alot). Think about it this way. You might pay your tax pro $1000 to give you advice and do your return to minimize your tax liability, but he may SAVE you $2500 in taxes b/c he knows his **** (hopefully).

Is it worth it then?? HELL YES IT IS! Alot of ppl can't see the forest through the trees.

There are alot of idiosyncrasies with tax issues relating to online income. It is your right as a citizen of your respected country to pay the least amount of tax legally possible, but DO NOT try to evade them. You will get caught and it will suck big time.

[artwebster]

Ye Gods and little fishes - if ever there was bad 'advice' - this is it - If so since one of your goals is to get a nice house, just make the business responsible for making the house payment instead of you. You would still get the house and maybe lower your tax liability.

The only way for a company to buy a house is for the company to own it.
If you use company money to pay your mortgage on your house, that is simply classed as drawings and taxed as income.

There are inherent dangers in living in a company house. For a start, you will be taxed on the estimated rent that the house would earn as if you were simply a non related tenant. Secondly, as a company asset, it is vulnerable if the company goes down. Third, selling a private house has distinct tax advantages since you will be expected to be using the proceeds to buy another one. Selling a company asset is taxed at whatever rate the company is taxed at and, in some cases, could create phenomenal marginal tax rates.

Best advice - go to the tax office and get advice and as much literature relating to your situation as is available then, after educating yourself a little, seek a good local accountant who also has a tax consultancy.

[lburrell]

Originally Posted by artwebster

Ye Gods and little fishes - if ever there was bad 'advice' - this is it - If so since one of your goals is to get a nice house, just make the business responsible for making the house payment instead of you. You would still get the house and maybe lower your tax liability.

The only way for a company to buy a house is for the company to own it.
If you use company money to pay your mortgage on your house, that is simply classed as drawings and taxed as income.

There are inherent dangers in living in a company house. For a start, you will be taxed on the estimated rent that the house would earn as if you were simply a non related tenant. Secondly, as a company asset, it is vulnerable if the company goes down. Third, selling a private house has distinct tax advantages since you will be expected to be using the proceeds to buy another one. Selling a company asset is taxed at whatever rate the company is taxed at and, in some cases, could create phenomenal marginal tax rates.

.

Not only that, but if for some reason the biz gets sued and the house is in the biz's name, WHOOP your house is GONE just like that

terrible advice whoever thought of that one

[Steve Peters Benn]

Steadyon:

I'm sure you meant nothing wrong in what you wrote, but I worry it might put off newbies as it is misleading as it portrays taxs as all being one lumped together, which can seem quite scary.


Quote: "I'm paying around 20% in the UK right now"

-------

What about National Insurance? - That would come before profit - so doesnt affect business tax except to reduce it.

What about VAT? Could well be zero rated, unless all sales were in the UK..

What about property tax? ???????

What about Excise Duty? He isnt importing....

What about Stamp Duty? - Is the guy buying property?

Also, once you hit higher rates you can double the 20% tax rate. -

If he is a sole trader - which he would be insane to be. Its best not to make blanket statements about tax, as it can confuse beginners, particularly if you don't deal with these tax issues yourself.

If you are talking about total tax burden, then yes, but that applies anywhere. This guy wants to reduce the tax he pays on profit. Over and above social government commitments we all face.


Once you start making higher rate tax incomes or once it looks like you will, you really ought to seek proper tax planning advice.

Amen to that.

[Steadyon]

I won't argue the toss about what you are saying, because it would take me too long. Let me just say without sounding pompous that I am well versed in UK tax law and company tax law in particular.

I have set out some common strategies in some of my posts in this thread.

I can't see how any of it can put off a newbie, whether earning income via the internet or any other offline business they may start.

At the end of the day, certainly once your income is high enough, you owe it to yourself to seek proper tax advice. Amongst other things, usually this will entail trading via a Limited Company (same in the US).

Better protection and potentially better tax planning.

[ShayRockhold]

Originally Posted by artwebster

Ye Gods and little fishes - if ever there was bad 'advice' - this is it - If so since one of your goals is to get a nice house, just make the business responsible for making the house payment instead of you. You would still get the house and maybe lower your tax liability.

This sounds like a Robert Kiyosaki saying/advice. (Rich Dad, Poor Dad) Am I right? Seems like I read that in one of his books.