Tax Reduction Question?

by YourBizAid Banned
26 replies
Hey Guys and Gals,

We need your input/advice. Last year we grossed over $289,000 in one of our businesses. And we hope to double or triple that number this year. The problem is we are doing business as a partnership and we paid a lot on tax.

So my question is for folks doing over 6-figures who live in America. How do you reduce your tax in your online business and what measures do you take to reduce this?

What states offer the best tax rates for online businesses and how to go about implementing this in our business.

Thanks in advance!
#reduce #tax
  • Profile picture of the author salegurus
    You own multiple businesses and can't afford a qualified Tax consultant?
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  • Profile picture of the author Oziboomer
    I'm not sure about the USA...

    ...but we use a Company as a Trustee for a Family Trust here in Australia to distribute income when it is required.
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  • Profile picture of the author PopeMarketing
    Don't wanna be a downer or anything but I would NEVER ask for tax advice on a marketing forum. . .

    Speak to a professional pal.
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  • Profile picture of the author Dan Riffle
    Talk to a CPA in your area. The cost of his advice will be a pittance compared to the money you'll save by structuring your businesses correctly.
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    If you want me to go on arguing, you'll have to pay for another five minutes.

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    • Profile picture of the author discrat
      Originally Posted by Dan Riffle View Post

      Talk to a CPA in your area. The cost of his advice will be a pittance compared to the money you'll save by structuring your businesses correctly.
      Dan is that you?
      Nice to see you up in these parts.

      You need to make yourself more at home here and add to the discussion with your infinite wisdom.

      Btw, baby coming soon ??
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      • Profile picture of the author Dan Riffle
        Originally Posted by discrat View Post

        Dan is that you?
        Nice to see you up in these parts.

        You need to make yourself more at home here and add to the discussion with your infinite wisdom.

        Btw, baby coming soon ??

        I rarely venture forth topside.

        The kid is due to be shipped at the end of next month.
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        If you want me to go on arguing, you'll have to pay for another five minutes.

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  • Profile picture of the author markbowden1
    I don't wish to hijack this thread but any thoughts on the UK also?

    (OP, I'll add a new thread and delete this message if I'm encroaching)

    Lots of virtual products now being sold on my website and VAT plus other tax is kind of ridiculous..

    I'm not looking for "you need to do a, b and c" (although that would be great!) but if you could point me in the kind of area or consultants that might be able to assist or offer advice. I get the feeling that the digital world is different to what my accountancy firm is used to on a daily basis.
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    • Profile picture of the author agmccall
      Originally Posted by markbowden1 View Post


      I'm not looking for "you need to do a, b and c" (although that would be great!) but if you could point me in the kind of area or consultants that might be able to assist or offer advice. I get the feeling that the digital world is different to what my accountancy firm is used to on a daily basis.
      Just look for an accountant that is local to you and go get the advice you need. The "Digital World" as you put it, is no different from an accounting standpoint than any other business. There are still only 2 columns, Income and expense.

      al
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      The Flu? Not worthy of a mention here???
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  • Profile picture of the author markbowden1
    I think the 'digital world' is quite a bit different.

    I've heard that the tax is payable in the country that you make the sale in not just where you operate from. I could be wrong with this but I'm sure there are technicalities like this.

    Also, as I am not selling a service or physical product that needs to be shipped from a certain destination I could feasibly operate from anywhere in the world so maybe there are advantages to being based elsewhere.

    A 'local' accountant isn't likely to have this kind of knowledge as it isn't something that they are likely to deal with on a day to day basis.
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    • Profile picture of the author Dan Riffle
      Originally Posted by markbowden1 View Post

      A 'local' accountant isn't likely to have this kind of knowledge as it isn't something that they are likely to deal with on a day to day basis.
      If your accountant can't answer this question, you're going to the wrong accountant.
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      If you want me to go on arguing, you'll have to pay for another five minutes.

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  • Profile picture of the author DIABL0
    Outside of specific deductions, strategies, etc... which you need to talk to someone qualified to answer.

    1) Move to a state that has no state income tax

    2) Make as much as you can over $118,500. Which is the limit for social security tax. So anything above that, your not paying 12.4% self employment rate.

    3) Keep good records to make sure that you take every expense deduction you can.

    Probably not what you where looking for though.
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    • Profile picture of the author JohnMcCabe
      Since you are asking about taxes in income to a partnership, I'm assuming you mean income taxes.

      Which makes the tip about locating in a state with no income tax a viable one.

      I'm in Florida, and there are two reasons professional sports teams have so much luck recruiting free agents, even to teams that haven't won anything worthwhile in years.

      1) The weather, obviously.
      2) No state income tax. Since most franchises play half of their games at home, half of the athlete's pay is worth ~7% more than it would be in a taxed state. (7% is a very rough eyeball average of state income tax rates.)

      Beyond that, you may want to put together a team of a good CPA and a tax lawyer. I'm neither, but I'm guessing that a change in business entity is in your future...
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      • Profile picture of the author YourBizAid
        Banned
        Originally Posted by DIABL0 View Post

        Outside of specific deductions, strategies, etc... which you need to talk to someone qualified to answer.

        1) Move to a state that has no state income tax

        2) Make as much as you can over $118,500. Which is the limit for social security tax. So anything above that, your not paying 12.4% self employment rate.

        3) Keep good records to make sure that you take every expense deduction you can.

        Probably not what you where looking for though.
        Originally Posted by JohnMcCabe View Post

        Since you are asking about taxes in income to a partnership, I'm assuming you mean income taxes.

        Which makes the tip about locating in a state with no income tax a viable one.

        I'm in Florida, and there are two reasons professional sports teams have so much luck recruiting free agents, even to teams that haven't won anything worthwhile in years.

        1) The weather, obviously.
        2) No state income tax. Since most franchises play half of their games at home, half of the athlete's pay is worth ~7% more than it would be in a taxed state. (7% is a very rough eyeball average of state income tax rates.)

        Beyond that, you may want to put together a team of a good CPA and a tax lawyer. I'm neither, but I'm guessing that a change in business entity is in your future...
        These two replies are very much appreciated guys. Thanks a lot!
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  • Profile picture of the author ChrisBa
    Originally Posted by YourBizAid View Post

    Hey Guys and Gals,

    We need your input/advice. Last year we grossed over $289,000 in one of our businesses. And we hope to double or triple that number this year. The problem is we are doing business as a partnership and we paid a lot on tax.

    So my question is for folks doing over 6-figures who live in America. How do you reduce your tax in your online business and what measures do you take to reduce this?

    What states offer the best tax rates for online businesses and how to go about implementing this in our business.

    Thanks in advance!
    Your best bet is to visit an accountant, a good accountant is worth their weight in gold.
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  • Profile picture of the author Curtis2011
    You need to talk to a CPA for tax advice. A few hundred dollars for a consultation could save you tens of thousands of dollars a year in taxes. Asking random people on the Warrior Forum is not good enough when this much money is on the line.
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  • I heard some american's leave the country for one with a low tax but I'm no attorney so I'm not sure if that is true check with one I don't want FTC to be mad at me.
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    soon people... Relax...
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