Business Is Now Making 7 Figures - Taxes are killing me - Advice?

[limitup]

Of course it does. He pays his annual salary from Subsidiary Y and Company X to pay whatever he needs for US consumption. The remainder can be reinvested tax free/deferred offshore.

I wrote a recent article about the impact of taxation on compounding wealth. You may like to read it:

http://www.globalwealthprotection.com/know-double-penny-day-analogy/

Even if Ralph is the CEO of his Internet business, his company still can't pay for all of his personal living expenses like his house purchase or mortgage, car purchase or payments, gas, groceries, or anything else. Try it and see what happens when they catch you.

 

[limitup]

Show me again where I said this was possible? You seem to want to make an argument for amusement.

The original poster, and the majority of this thread, is questioning if it's possible for a US citizen to significantly reduce his tax burden while still retaining control and access to spend the money here in the US. That is also the "challenge" I originally made to you. Nothing you've posted has shown that this is possible, and now you're agreeing that it's not. Thanks.

As stated previously, CEO Ralph can pay the salary he chooses for his personal needs while living in the US and move a significant portion of his company income into a no-tax jurisdiction offshore where it can compound tax free/deferred.

I know a lot of millionaires and most of them don't choose to live on 100k a year. Sure if you want to live like a "normal" person and keep all your money offshore that's a different story, but I don't believe that is what the original poster was asking about.

You make silly assumptions that if CEO Ralph earns $1m he somehow needs to spend $1m.

Sorry but I'd say you're the one who's not even reading what you're replying to, and you make the silly assumption that CEO Ralph wants to live on 100k a year and hide the rest of his money offshore.

 

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[GlobalWealth]

My Business is now profiting 7 figures, but I'm getting raped on the taxes. My business is an S-Corp and all the income flows down to my personal which puts me in the highest bracket. I don't mind paying some taxes, I just don't like paying 40% of my income (15% would be much more reasonable).

Any advice or what I can do to alleviate some of my tax burden?

What is the best entity for high profit businesses?
What do other 7 figure+ business do to offset some of their taxes?
Should I have the business purchase investments and things of value to lower the income (replacing the cash with investments)?

P.S. Before you tell me that I should be asking a professional (not a forum), I have spent a lot of money on "professional" accountants, attorneys, and even a tax strategist. I have yet to find one that really knows how to effectively reduce taxes at this level...so here I am...and hopefully someone here can help...

Here is the original post for your reference.

No where in here did he ask how he can earn all of his profits offshore but spend them in the US.

He only asked how he can alleviate his high tax burden.

 

[limitup]

As stated above, the 100k was a numerical assumption. Feel free to add zeros at your leisure.

OK how about I add 1 little zero. I make 1 mil in net profits and I need 1 mil to live the lifestyle I want, not 100k. How are you going to significantly reduce my tax burden?

 

[limitup]

You make 1 mil in net profits and then need a mil to live a year? Well, Im thinking you wouldn't have to worry about a tax burden in that case because you would be broke before long.

Or maybe I have 8 figures in assets/investments and the 1 mil in net profits a year is made for the sole purpose of spending and having a great f'ing time.

Me thinks you make too many assumptions ...

 

[Kak]

Here is the original post for your reference.

No where in here did he ask how he can earn all of his profits offshore but spend them in the US.

He only asked how he can alleviate his high tax burden.

Lol he's probably never coming back nor will he take any of this advice. This was probably just an epic argument for no reason.

 

[biophase]

Or maybe I have 8 figures in assets/investments and the 1 mil in net profits a year is made for the sole purpose of spending and having a great f'ing time.

Me thinks you make too many assumptions ...

How much is spent on housing?

 

[Tiago]

Have you considered relocating your business to the state of New York? If you're eligible, you could pay 0 taxes for 10 years! NEW YORK
IS TAKING CARE OF BUSINESS

There’s a new advantage to doing business in New York. A big one. START-UP NY, Governor Cuomo’s groundbreaking initiative, is transforming communities across the state into tax-free sites for new and expanding businesses. Now, businesses can operate 100% tax-free for 10 years. No income tax, business, corporate, state or local taxes, sales and property taxes, or franchise fees.
Eligibility

Many different types of businesses are eligible to apply to START-UP NY. In order to participate, your company must:

• Be a new company in New York State
• Be a foreign or domestic company that is relocating to New York State
• Be an existing New York State company that’s expanding — for example, a company creating a new line of business or opening a new advanced manufacturing facility — and not simply moving existing jobs from one location to another location
• Be aligned with the academic mission of the college or university with which you hope to work
• Be able to create new jobs in the first year
• Be able to bring positive and economic benefits

In New York City, Long Island and Westchester County, businesses must be start-ups or high-tech companies.


Non-Eligible Businesses
Certain types of businesses are excluded from the program. These include:

• Retail and wholesale businesses
• Restaurants
• Real estate brokers
• Law firms
• Medical or dental practices
• Real estate management companies
• Hospitality (lodging for travelers or vacationers)
• Finance and financial services
• Businesses providing personal services (including personal care, death care, pet care, or laundry and cleaning services)
• Businesses providing business administrative or support services (unless the business is creating at least 100 new jobs and has received permission to participate)
• Accounting firms
• Businesses providing utilities, or energy production and distribution companies

This is a great opportunity! Not paying taxes for 10 years that's just amazing. I just wanted to share this with you guys, see more at http://startup.ny.gov

 

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[brandonrush]

Non-Eligible Businesses
Certain types of businesses are excluded from the program. These include:

• Retail and wholesale businesses
• Restaurants
• Real estate brokers
• Law firms
• Medical or dental practices
• Real estate management companies
• Hospitality (lodging for travelers or vacationers)
• Finance and financial services
• Businesses providing personal services (including personal care, death care, pet care, or laundry and cleaning services)
• Businesses providing business administrative or support services (unless the business is creating at least 100 new jobs and has received permission to participate)
• Accounting firms
• Businesses providing utilities, or energy production and distribution companies

That is interesting, but it sounds like only manufacturing businesses will be able to benefit off of this. With that list of excluded businesses, I can't think of anything else that would benefit.

 

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[mememan]

Make less taxable as ordinary income. Hire a manager and become a limited partner. Don't work in the business.

Didn't you know the whole goal of the tax code is to make high earners want to quit their job and invest in passive income to prop up the stock market

 

[GlobalWealth]

What a great thread. I've been doing a lot of research into this topic as it's something I've been dealing with the past couple of years.

I've considered renouncing my citizenship and finding a new home. My businesses are completely online and there's no reason to be based out of the US.

I plan on visiting islands in the Indian Ocean later this year to learn more about permanent residence programs and the idea of living permanently outside of the US.

GlobalWealth, do you have any articles/information you would recommend for someone in my position regarding renunciation? What does the average US citizen renouncing his citizenship look like? Mega-millionaires/billionaires?

hurrMahGurt,

You can click the links in my signature below for info. We have a free newsletter you can subscribe to. We also offer various education and consulting for people who need to make the move. You can also send me a pm.

 

[Leonard Dollars]

What a great thread. I've been doing a lot of research into this topic as it's something I've been dealing with the past couple of years.

I've considered renouncing my citizenship and finding a new home. My businesses are completely online and there's no reason to be based out of the US.

I plan on visiting islands in the Indian Ocean later this year to learn more about permanent residence programs and the idea of living permanently outside of the US.

GlobalWealth, do you have any articles/information you would recommend for someone in my position regarding renunciation? What does the average US citizen renouncing his citizenship look like? Mega-millionaires/billionaires?

Great blog I've personally learned a ton from
http://premieroffshore.com/category/articles/

 

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[InLikeFlint]

Haven't read all the posts in the thread so it's possible someone has already mentioned this...but if the money/goods/services are only passed internationally (UK to Canada for example) then it could potentially be taxed only as a foreign investment, which would be around 20%, I believe. However, this is assuming you have the ability to establish the international --> international trade of services, which could prove difficult depending on the business.

 

[HenkHolland]

I would be happy to pay 40% income tax.
The majority of my income is in the 52% tax bracket.
We used to have a tax bracket of 72% here in the past (in the seventies and eighties. So, your 40% sounds like a steal to me.