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Author Topic: Incorporation to save on Taxes  (Read 16903 times)

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donding

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« Reply #50 on: May 18, 2009, 16:47 »
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And there is no personal state income tax in Florida.

Wow, maybe I should move to Florida?  ;D

Heh Madelaide...there isn't any in the state of Texas either...of course we no longer live there...we are now in Alabama..which does have state income tax.. :-\


lisafx

« Reply #51 on: May 18, 2009, 18:01 »
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Well we were in the car business for 17 years but incorporated for the last 15 years. We never retailed we only wholesaled...meaning we were the middle man between the new car dealerships and the used car dealers. We bought the new car trade in's and then sold them to other dealers at auction. At one point we were the biggest independent wholesaler in the state of Texas....which was why we incorporated. We never had to pay sales tax because we wholesaled.
As for unemployment tax in Texas you couldn't draw it, if you were shareholder but had to pay it in which really never made sense to me and really gotta p***ed me off, but that was what I was told that by someone in the unemployment office.
And of course with the ecomony the way it was and the new car dealers doing no business it trickled down to us. If we were still trying to do it we'd be starving right now because of the situation the new car dealerships are in right now.  We were in debt up to our ears and drowning fast before we got out of it thinking it would turn around. And of course with the debt of the business going up that also put our pursonal debt way up there...we were robbing Peter to pay Paul. Needless to say we were able to dissolve the corporation but the debt was our burden...and the only answer for us was bankruptcy which really tugs at our pride especially since I was always one to pay the bills 7 days before they were ever due, never missing one. Our house was even forclosed on.

So sorry to hear this Donding.  I know the car business is one of the hardest hit by the economy.  Really terrible to hear how it is affecting real, hard-working people.  It would be a terrible blow to build a business and watch it go down hill due to things totally beyond your control.

Hoping that your future endeavors are successful and you land on your feet. 


« Reply #52 on: May 18, 2009, 18:29 »
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And there is no personal state income tax in Florida.

Wow, maybe I should move to Florida?  ;D

Heh Madelaide...there isn't any in the state of Texas either...of course we no longer live there...we are now in Alabama..which does have state income tax.. :-\
I knew this about Texas, not about Florida. I wonder if any other state has higher state income tax than CA. And on top of that our sales tax just went up by 1% ....

« Reply #53 on: May 18, 2009, 18:35 »
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I knew this about Texas, not about Florida. I wonder if any other state has higher state income tax than CA. And on top of that our sales tax just went up by 1% ....


According to Wikipedia (http://en.wikipedia.org/wiki/State_income_tax), there are seven (7) U.S. states with no income tax:

Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming

Although they don't have income tax, they have a higher sales tax rate (and probably many other taxes that are higher).

California does have the highest rate for a state, but there are some cities that have a tax rate which (when combined with the state income tax) makes them higher than California.  For example, NYC has a state income tax rate of up to 8.14% and a city tax rate of 4%.



donding

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« Reply #54 on: May 18, 2009, 18:43 »
0


So sorry to hear this Donding.  I know the car business is one of the hardest hit by the economy.  Really terrible to hear how it is affecting real, hard-working people.  It would be a terrible blow to build a business and watch it go down hill due to things totally beyond your control.

Hoping that your future endeavors are successful and you land on your feet. 



Thanks lisafx.... :)

donding

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« Reply #55 on: May 18, 2009, 18:46 »
0
I knew this about Texas, not about Florida. I wonder if any other state has higher state income tax than CA. And on top of that our sales tax just went up by 1% ....


According to Wikipedia (http://en.wikipedia.org/wiki/State_income_tax), there are seven (7) U.S. states with no income tax:

Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming

Although they don't have income tax, they have a higher sales tax rate (and probably many other taxes that are higher).

California does have the highest rate for a state, but there are some cities that have a tax rate which (when combined with the state income tax) makes them higher than California.  For example, NYC has a state income tax rate of up to 8.14% and a city tax rate of 4%.





I always thought that too, but we were paying 8.25% sales tax in the Dallas Texas area, but here in Alabama...it's 8.50% where we live and the next town over is 9.00%!!! Wow was I ever surprised to see that. I really figured since they had state income tax the sales tax would be less, but it isn't..it more.

« Reply #56 on: May 18, 2009, 18:47 »
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Thanks GeoPappas!

Corporation can be done in any state. From what I know, Delaware is one of the most popular states to get a corporation. This is from Wikipedia:

"New Jersey was the first state to adopt an "enabling" corporate law, with the goal of attracting more business to the state. Delaware followed, and soon became known as the most corporation-friendly state in the country after New Jersey raised taxes on the corporations, driving them out. New Jersey reduced these taxes after this mistake was realized, but by then it was too late; even today, most major public corporations are set up under Delaware law."

I don't know of the details, but maybe that is something to look into when creating a corporation.


« Reply #57 on: May 18, 2009, 19:35 »
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Here in Brazil only monthly earnings below roughly US$600 do not pay taxes; from US$600 to 1100, we pay 15%; above US$1100, 27.5%.  But that goes in ranges, for instance: US$2000 (=600+500+900) pays (0*600+0.15*500+0.275*900)=322.5 (or 16%).  As I already earn above US$1100 in my job, everything I earn in photography is taxed at 27.5%.  :(

The above is about salaries or any work profit.  Investment funds and other applications have a different rule.

donding

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« Reply #58 on: May 18, 2009, 22:04 »
0
Here in Brazil only monthly earnings below roughly US$600 do not pay taxes; from US$600 to 1100, we pay 15%; above US$1100, 27.5%.  But that goes in ranges, for instance: US$2000 (=600+500+900) pays (0*600+0.15*500+0.275*900)=322.5 (or 16%).  As I already earn above US$1100 in my job, everything I earn in photography is taxed at 27.5%.  :(

The above is about salaries or any work profit.  Investment funds and other applications have a different rule.



OUCH...that's gotta hurt. Why are taxes so high there?? ???

« Reply #59 on: May 18, 2009, 23:22 »
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OUCH...that's gotta hurt. Why are taxes so high there?? ???
It's not much higher than in the US, probably less in some instances. Everything above $33,950 per year is taxed at 25%, above $82,250 at 28%, and that's not including state income taxes (8% for California above $37,234 per year).

« Reply #60 on: May 19, 2009, 06:47 »
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...and that's not including state income taxes...

Or the myriad other hidden taxes and fees that we are charged on a daily basis (such as sales taxes, property taxes, gasoline taxes, phone taxes, cable taxes, toll roads, ad infinitum).

Like they say, there are only two things guaranteed in life: death and taxes.  The irony is that there is actually a death tax as well  :o

« Reply #61 on: May 19, 2009, 08:10 »
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If you wish to reject other opinions why put your questions on a public forum?

The Government, CPA, and Attorney  love INC, more control and paperwork for them. Of your CPA want you to INC because he will make a ton of money from you.  Good luck at your first INC directive meeting. Be sure to follow the letter of the law because your are now a corporation.

Been there and done that! Do as you wish baby! Good Luck!

lisafx

« Reply #62 on: May 19, 2009, 10:08 »
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The Government, CPA, and Attorney  love INC, more control and paperwork for them. Of your CPA want you to INC because he will make a ton of money from you.  Good luck at your first INC directive meeting. Be sure to follow the letter of the law because your are now a corporation.


This shouldn't be a problem, considering in my twenties I was a parallegal.  I handled hundreds of incorporations for the law firm I worked for, and maintained minutes and bylaws, issued stock, and filed annual reports for most of them. 

I went through an online service to do this one because I didn't know if anything had changed over the past 15 years, and they were only around $100 more than doing it myself from home.  It was worth that to save the hassle of trying to do it myself without the benefit of a law firm to keep me up on the latest requirements. 

Turns out not much has changed.  Only that you can do most of it online now, vs. snail mail.  The annual meetings are no big deal - just a formality.  If you are your own registered agent you can file the annual reports yourself.  Costs only $150/year.

Shutterdrop, I don't see why you are trying to make this all sound so complicated.  It's really no big deal even if you don't have legal experience. 

I never cease to be amused by how many so-called "experts" there are who are willing to sound off on how other people should live their lives,  but offer no concrete facts to back them up. 

If you wish to reject other opinions why put your questions on a public forum?

FWIW, I was not posting questions in a public forum.  I was sharing information that was helpful to me and might help someone else in the same boat. 

But you will notice I am not rejecting everyone's opinion.  Only your ill-informed one.   

Thanks, Shutterdrop,  for providing the entertainment factor in what would have otherwise been a very dry tax discussion thread  ::)

« Last Edit: May 19, 2009, 10:32 by lisafx »

« Reply #63 on: May 19, 2009, 16:15 »
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Or the myriad other hidden taxes and fees that we are charged on a daily basis (such as sales taxes, property taxes, gasoline taxes, phone taxes, cable taxes, toll roads, ad infinitum).

We have those too.  Our sales taxes are "hidden" inside the price we pay.  Although we are self-sufficient in oil, gasoline here costs the same as in Europe because of taxes.

donding

  • Think before you speak
« Reply #64 on: May 19, 2009, 21:20 »
0
Or the myriad other hidden taxes and fees that we are charged on a daily basis (such as sales taxes, property taxes, gasoline taxes, phone taxes, cable taxes, toll roads, ad infinitum).

We have those too.  Our sales taxes are "hidden" inside the price we pay.  Although we are self-sufficient in oil, gasoline here costs the same as in Europe because of taxes.


just courious madelaide...how much is a gallon of gas there? In american dollars of course..Right now it runs between 2.19 to 2.36 a gallon here and still rising.

« Reply #65 on: May 19, 2009, 21:41 »
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Roughly US$1.23 per liter or 4.66 per gallon.  If I am correct, in Europe prices are around EUR1-1.2 per liter, or US$1.35-1.63.


 

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