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  1. #1
    AdCaliber Magic2K2's Avatar
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    Best way to minimize U.S. Taxes?

    Obviously there are a multitude of personal situations and anyone should consult a tax accountant before making such a decision, but I am starting to bring in enough web revenue that I need to start brainstorming some options. What is the best way to minimize U.S. Taxes? A corporation of some form is probably a good way to go, but I am not sure. I want the lowest possible U.S. taxes. I'll meet with a tax accountant before I make any decision.

  2. #2
    SitePoint Wizard Lil_Red's Avatar
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    The best thing is to discuss your tax situation with a tax accountant.

    No one here is qualified to give you "tax tips" to avoid paying taxes. After all, people can say whatever you want to hear since they won't be paying the fines and penalties for cheating.

  3. #3
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    Some people buy domains to show them as business expenses.

  4. #4
    SitePoint Guru Marubozo's Avatar
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    One thing you can definately do to help reduce tax liability, is to create a "company" and keep all of your internet sales revenue seperate from personal income. It will depend greatly on your exact situation, an LLC might work best for you, or maybe an S-Corp, or even a C-Corp. Each has their advantages and disadvantages in particular situations.

    I currently own both an S-Corp and a C-Corp and I'm a member/manager of an LLC, so I've seen how each one can benefit an individual

    But that being said, talk to a tax advisor, or even just a good accountant. Depending on how much money you make from these web revenues, how much liability you take on, and what your tax goals are, they can help you determine what is best for you.

  5. #5
    SitePoint Enthusiast BeauCreative's Avatar
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    I learned that hard way that the best way to minimize your taxes is to keep good records. I made a decent amount of money in 2004 and didnt even have enough deductions to get over the standard deduction.

    For 2005 I am keeping records of everthing, even if it might not qualify... ill ask my accountant later.

    Keep track of all expenses, and all mileage on your car. Try to think of ways you can fit it into a business expense and then ask your accountant if it qualifies.

    No matter what you do, if you are making good money, taxes will hit you hard... but if you keep records you can at least get a small break.

    Im keeping my fingers crossed that bush's upcoming "major" tax reforms help out my tax situation... if i had it my way, Id opt for the national sales tax
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  6. #6
    SitePoint Guru Marubozo's Avatar
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    BeauCreative is spot on, and that is why I suggest creating a formal company to handle all of your "business" expenses. This way, you have a business bank account, and a business credit card. Then all of your business expenses and income are individually tracked and you can easily get the maximium amount of deductions. When I first started one of my ventures, I was just a sole proprieter, where basically any money I made went right into my pocket, and any expenses came right out of my pocket. This made recordkeeping a complete nightmare, and finding all of the right deductions was extremely difficult.

    And as an aside, I'm with Beau, I want to see a national sales tax! But that is another thread for another day

  7. #7
    AdCaliber Magic2K2's Avatar
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    Quote Originally Posted by Lil_Red
    The best thing is to discuss your tax situation with a tax accountant.

    No one here is qualified to give you "tax tips" to avoid paying taxes. After all, people can say whatever you want to hear since they won't be paying the fines and penalties for cheating.

    Did you even bother to read my post? I already acknowledged everything you just said, and did it for the purpose that you wouldn't even bother to reply to my thread, but I guess I couldn't keep you away.

    Thanks to everyone else who has been helpful.

  8. #8
    Not now, I'm kinda busy. pdxi's Avatar
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    This isn't recommended, but it's a funny story:

    A friend of mine applied to become an ordained minister for the Universal Life Church (www.ulc.org) and incorporated his business as part of his "Church". He paid zero taxes...

    I smiled, laughed, and nodded, but I thought that it was one of the dumbest things that I'd ever heard.
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