Posts Tagged business
Important Factors of a Good Federal Tax ID Database Provider
Posted on October 12, 2011 | Tax Studies.
The federal government of the United States uses a unique number in order to identify various businesses. This number is called Federal Tax ID also known as Employer ID Number (EIN). People who tend to start a business apply for this unique tax ID. There are searchers who are always in need of looking up various entities’ EIN. Such purposes are best served with the online database providers, but there are so many that it is difficult to pick one out of the pool. Following are the characteristics of good Tax ID record providers.
Must have a Vast Database
Because the only function of such sites is providing their users with EINs it is necessary for them to maintain an enormous directory to search from. This characteristic counts the most and is one of the prime factors to look for. When choosing such service provider, it should be confirmed that a website with the hugest database should be chosen so that there is no chance of frustration. These services are not free thus choosing the right one is very important.
SSN Verified
SSNVS is an institute of government that deals with all the social security numbers, an individual should make sure the services he is going to work with is verified by this foundation as it defines the website’s reliability. There are many sites out there who have this verification; however, the competition is immense thus this is not the only factor that should satisfy you. Other aspects should also be as impressive as this one.
Fair Pricing Plans
It is fair for these sites to charge for their hard work, but overcharging should not be compromised. Just because a popular site charges heavy prices does not mean there aren’t such other sites offering cheaper quotes. Choose the database portal that charges minimal monthly or annual fees depending on your needs.
Go with the Elites
Such services are also used by the elite firms like DHL, SONY, and National Banks etc. for different official or private tasks. It is a good move to go with them as they are way more experienced than the others and know about positive aspects of such gateways. This kind of a research may demand a little of your time but it is worth sparing it to find the website you have to work with in the long run.
Suitable Deals
The site with more than just one plan is what you should aim for. Find the one that offers a package that suits all the needs. This aspect is one of the most important, as it can save money, as well. There are annual subscriptions with some of these sites that can save a lot of bucks while offering the same as others.
If all of these factors are considered when choosing an EIN database provider, there is no doubt one will find regression. There are a few sites with all of them; one good example is FEINsearch which has the widest database, SSN verification, untouchable pricing plans, elite clients and various packages as well.
Strategies for Extracting Profits From Owner-Managed Companies
Posted on July 29, 2011 | Tax Studies.
One of the benefits of running your own business is that you have the freedom to decide how much of the profits should remain in the company and how much should be returned to you as an owner (shareholder). However, with that also comes one of the most classical tax-planning questions we are often asked: how do I get money out of my company in the most tax-efficient way?
The modes of profit extraction are handful – each with its own merits and tax implications – unfortunately, many entrepreneurs are insufficiently advised or do not thoroughly grasp the principles of how to effectively apply them. In these series of articles we shall explore the following strategies for drawing funds from your business, analyse the likely financial implications to you, and your company and evaluate their tax effectiveness:
- Salaries and bonuses
- Benefits in kind
- Director’s remuneration
- Pension contributions
- Dividends
- Selling assets to the company
- Charging rent on personally owned property used by the business
- Charging interest on loans to the company
- Loans or advances from the company
- Liquidation of the company
But, first: should surplus profits be retained or extracted and how much should be drawn out?
Aside from legal and tax considerations, which we shall mention later, your personal financial needs and those of your business will be the primary factors in determining how much to extract and how much to reinvest in the business. Needless to say, in order to grow your business you need to invest in it and not less important than that, you as individual need money to maintain your lifestyle. Finding the balance is an art rather than a strict formula and requires careful assessment of your current circumstances and future plans, business and personal.
On the legal side, declaration and payment of dividends is regulated by the Articles of your company, which in turn is subject to the Cyprus Companies Law Cap.113 statutory provisions and rules on capital maintenance related to payment of dividends. One of those fundamental rules is that dividends can be distributed only out of profits. Therefore, even if your business is cash positive you will not be able to pay yourself dividends if there no profits; however, you may employ other methods such as paying yourself salary or receiving a repayment of a loan previously given to the company.
Although there is no statutory requirement forcing companies to distribute dividends, the Cyprus tax legislation imposes “deemed dividend distribution”, whereby, companies are considered to have distributed to their Cyprus-tax-resident shareholders, 70% of their after-tax accounting profits, as at the end of the second year from the year in which the profit was made. This “notional dividend”, outlined in Art.3(3) of the Special Defence Contribution Law 117(I)/2002, is then taxed 15% in the hands of the Cyprus-tax-resident shareholder. To illustrate that, let’s say your business made an after-tax accounting profit in 2009 and paid only 50% of it in dividends. The 20% undistributed profits of 2009 will be deemed to have been distributed at the end of 2011 (if not fully paid by then) and you, as shareholder will be levied with 15% special defence contribution.
The deemed dividend distribution serves dual purpose to the Cyprus state; first, it ensures that there is a steady inflow from taxing individuals receiving dividend income, and second, circumvents the excessive accumulation of profits and thereby the capital appreciation of the shares, which if sold will not give rise to any tax.
In summary, business and personal factors will determine how much to pay yourself for doing a good job at your company; however, it will be the legal and tax aspects that will define the possible and tax-efficient ways of doing that. It is also important to recognise that lack of financial and tax planning may force you to unknowingly or unwillingly take a mode of profit extraction that has an overall high tax cost or prevent you company from taking a good business opportunity.