Move As Much Of Your Business Offshore As Possible To Slash Taxes and Increase P

It seems unfair that U.S. residents have to pay high income taxes on cyberspace profits, even if it is an ebook sitting on a server in Panama and sold to a buyer in the U.K. Counting Federal and state taxes, you can about double your bottom line just by moving your business offshore.

There is nothing illegal about booking your sales and profits in an offshore entity, and only paying taxes on the money you remit to your home country, such as the U.S. Also, if you arrange your affairs correctly you do not have to have signature authority on a bank account – a red-light question on the U.S. 1040 tax form.

The best structure is to have an offshore corporation that owns the intellectual property you create. The corporation sells ebooks and physical products to customers all over the world. You set the corporation up in a jurisdiction where there are no taxes on its income. Then the corporation pays out a small percentage of its profits to you as a royalty, and you declare that on your income tax form. While it is true you have a choice about how much of your income to report to the tax authorities, it is safest to report all the income you actually receive. Otherwise, they could do a lifestyle audit and ask some embarrassing questions about how you are living so well on such a small reported income.

Also, there used to be a loophole to get an offshore Visa or MasterCard, and charge domestic expenses to it, with the bill paid by your offshore corporation. Most taxing authorities now have the right to examine your charge card records if the card is in your name, no matter where the card is issued. That loophole is closed.

So the first real advantage of an offshore corporation is not total tax avoidance, but significant tax reduction by keeping profits not needed for your living expenses out of taxable income, corporate or personal.

The second real advantage of establishing an offshore presence is asset protection. There are too many professional plaintiffs and greedy lawyers these days to believe you will get through life without a lawsuit, perhaps a devastating one. Some risks can be insured against and others cant, but one of the quickest ways to stop a lawsuit is to be judgment proof. That simply means most of your assets are offshore in untouchable corporations and accounts protected by bank secrecy, and the ones that have to be in the U.S., like your car and house, are held by trusts or other entities rather than being in your name. No lawyer will take a contingency case against someone without assets to pay a judgment.

The third real advantage of going offshore is passing significant wealth to your heirs without going through probate or paying huge estate taxes. Shares of an offshore corporation and even bank accounts can be structured to pass from generation to generation outside estate tax regulations.
The biggest problem with going offshore is not language, expense, time or the learning curve. It is simply not knowing the right people. There are too many “offshore opportunities” where they put your money in their pocket and leave. They know you won’t sue – it’s too expensive, and in many jurisdictions the bad guys have the judges in their collective pockets.

Also, since the Patriot Act, many formerly safe jurisdictions have signed tax treaties or information exchange agreements with the U.S. There is only one country that still has total bank secrecy, does not exchange information with any countrys Internal Revenue Service, and has high-speed Internet connections – Panama. A group of international business people, experienced professionals from all over the world, recently set up the required structures in Panama to simplify the offshoring process and provide connections to honest lawyers, banks, Internet Service Providers and so on. Panama is a major node on the Global Crossing optical fiber backbone, so web pages load remarkably fast for Internet surfers around the world.

There are some MLM characteristics of this new business plan, but the main reasons to review it are to protect your business from predatory lawsuits, slash your taxes, and move your estate out of range of estate taxes. There is a very modest $20 a month or so charge to have access to all the resources – the right people, lots of educational material, introductions to right institutions, and so on.