Tax Shelter Incorporating
Tax Shelters are a good thing.
The financially illiterate will refer to tax shelters as "loopholes" or "schemes", but the reality is that our legislative authorities have allowed tax shelters for a very specific reason - to reward those whose hard-earned money makes the economic wheel turn. Investors and investor capital is the fuel that stokes the fire of an economy. Without those funds, economies freeze, unemployment skyrockets, and all the government subsidies in the world can't help it move again.
Enter, the tax shelter.
Consider a tax shelter as the governments way of saying "thank you" for being one of the people that contribute to the economy. It's a benefit of being one of the people that support the economy.
How Tax Shelters Work
The tax shelter is a legal, legitimate, and ethical way for you to reduce income tax liability. If there is any doubt about this, consider the words of former IRS Commissioner Don Alexander:
"As a citizen, you have an obligation to the country's tax system, but you also have an obligation to yourself to know your rights under the law and possible tax deductions - and to claim every one of them."
Tax Shelter Incorporating - Is Forming A Corporation A Good Tax Shelter?
There are several benefits of setting up and operating as a corporation. When we say "corporation" what we are referring to is a separate legal entity created by following the correct protocol for entity creation.
When a corporation is created, it is assigned an Employer Identification Number (EIN), which is also known as a Federal Tax Identification. This is considered the identifying number of the entity. Typically, all corporations will have an EIN.
There are several benefits to incorporating, including:
- Tax Shelter: You could save money on taxes, as many corporations are taxed at lower rates than personal taxes. If you do business at all, you save by incorporating. You will also be eligible for deductions, which are typically not taxed at all. This does not always apply, so you need to speak with an advisor to find out about your specific situation.
- Asset Protection: Having a corporation makes it much more difficult for someone to sue you personally. A corporation is a separate legal entity from you, meaning you can mitigate personal liability by conducting affairs from behind a corporation that you control. It's fast and perfectly legitimate to begin a "home based business" and incorporate it so that it is a separate legal entity from yourself.
- Professional Image: Having an "Inc" or "LLC" behind your name demands respect. The corporate form is recognized by banks and financial institutions, customers, vendors, as well as branding in the eyes of the general public. When you incorporate you may find that your corporation creates greater ease in doing business and getting deals done. Most other businesses like doing business with other corporations, versus "regular people".
- Longevity: Even if you die, your corporation lives on. A corporation has to be legally dissolved by the shareholders before it "dies", making it a great way to pass on a family legacy.
- Faster Funding: If you have any desire to raise money or capital for your business, you will most likely want to incorporate. Venture capitalists typically don't give out "personal loans" - they invest in real businesses with real legal structures.
- Write Offs: Another advantage is the ability to legitimately write off corporation expenses which could include health insurance premiums, life insurance, business travel, and depreciation on specific types of assets.
For more information on incorporating, contact us today for a 100% free consultation. We promise to give you the best possible recommendation for your unique situation.
The financially illiterate will refer to tax shelters as "loopholes" or "schemes", but the reality is that our legislative authorities have allowed tax shelters for a very specific reason - to reward those whose hard-earned money makes the economic wheel turn. Investors and investor capital is the fuel that stokes the fire of an economy. Without those funds, economies freeze, unemployment skyrockets, and all the government subsidies in the world can't help it move again.
Enter, the tax shelter.
Consider a tax shelter as the governments way of saying "thank you" for being one of the people that contribute to the economy. It's a benefit of being one of the people that support the economy.
How Tax Shelters Work
The tax shelter is a legal, legitimate, and ethical way for you to reduce income tax liability. If there is any doubt about this, consider the words of former IRS Commissioner Don Alexander:
"As a citizen, you have an obligation to the country's tax system, but you also have an obligation to yourself to know your rights under the law and possible tax deductions - and to claim every one of them."
Tax Shelter Incorporating - Is Forming A Corporation A Good Tax Shelter?
There are several benefits of setting up and operating as a corporation. When we say "corporation" what we are referring to is a separate legal entity created by following the correct protocol for entity creation.
When a corporation is created, it is assigned an Employer Identification Number (EIN), which is also known as a Federal Tax Identification. This is considered the identifying number of the entity. Typically, all corporations will have an EIN.
There are several benefits to incorporating, including:
- Tax Shelter: You could save money on taxes, as many corporations are taxed at lower rates than personal taxes. If you do business at all, you save by incorporating. You will also be eligible for deductions, which are typically not taxed at all. This does not always apply, so you need to speak with an advisor to find out about your specific situation.
- Asset Protection: Having a corporation makes it much more difficult for someone to sue you personally. A corporation is a separate legal entity from you, meaning you can mitigate personal liability by conducting affairs from behind a corporation that you control. It's fast and perfectly legitimate to begin a "home based business" and incorporate it so that it is a separate legal entity from yourself.
- Professional Image: Having an "Inc" or "LLC" behind your name demands respect. The corporate form is recognized by banks and financial institutions, customers, vendors, as well as branding in the eyes of the general public. When you incorporate you may find that your corporation creates greater ease in doing business and getting deals done. Most other businesses like doing business with other corporations, versus "regular people".
- Longevity: Even if you die, your corporation lives on. A corporation has to be legally dissolved by the shareholders before it "dies", making it a great way to pass on a family legacy.
- Faster Funding: If you have any desire to raise money or capital for your business, you will most likely want to incorporate. Venture capitalists typically don't give out "personal loans" - they invest in real businesses with real legal structures.
- Write Offs: Another advantage is the ability to legitimately write off corporation expenses which could include health insurance premiums, life insurance, business travel, and depreciation on specific types of assets.
For more information on incorporating, contact us today for a 100% free consultation. We promise to give you the best possible recommendation for your unique situation.
