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Hire a good accountant and remember that personal and corporate taxes are very different. General broad concept for the US, personal taxes are taxed on your gr
by davismwfl 6y ago
Hire a good accountant and remember that personal and corporate taxes are very different. General broad concept for the US, personal taxes are taxed on your gross income before expenses, corporate taxes are based on income after expenses (there are lots of details involved this is just a broad point). If you ever wonder why high net worth people hold assets etc in companies, or hold both a major winner and major loser under the same holding company? There are liability reasons of course, but it also lets them manage taxes in an effective way.
There are many ways to reduce tax liability legally but it does take a little effort, time and guidance to do it properly. A good account will help you, but to be fair it isn't worth it until your income and/or net worth cross specific thresholds. Just like using family limited partnerships doesn't really benefit you until you have enough assets to justify doing it etc, otherwise the cost to manage it is just not worth the tradeoff.
One last point, entrepreneurs who build businesses outside of VC world (most) figure out how to manage taxes and debt really well if they become successful. Even more so if they deal in hard assets like real-estate, equipment, manufacturing etc. Most tech companies do not have the type of hard assets which give so many of the tax incentives/benefits, Amazon would be an example of an exception there. Amazon pays so little in taxes because of their hard asset investments, much like any large real-estate developer given that real-estate has some of the greatest benefits, and if that real-estate creates jobs even more benefits.