Hey all
I run a family owned consulting biz (3 consultants and we are all family members) and we make a decent income. I have been looking at ways to rearrange the companys finances a little to meet two goals I have in the next few years
1.Reduce tax we pay each year
2.Retire in a caribbean island at some point.. Cayman would be good but open to other options as long as its hot in the winter LOL
So here is what I am planning to do. First of all YES I do realize this is frowned upon, I'm not doing my duty as a Canadian by paying my taxes, etcetera, etc
I obviously cant ask my accountant for help on this as I dont want a record of this conversation in case we ever get audited and he gets called up on the stand to testify against me. I do all my own accounting anyway and he just does year end taxes
First some stats:
company has been around for 3 yrs
we are a bunch of indep. consultants who banded together to go out and work on our own
we bring in about 400-500k a year between the 3 of us
we pay taxes on almost all of that amount... its reduced a bit because of entertainment expenses/phone/etcetera but obviously we barely make a dent in the 400-500k with those expenses
all billings need to be invoiced by our canadian company as it would be a bit frowned upon if our clients had to make cheques payable to "420 fund Cayman Islands Inc".
none of us take a salary from the company so we're not employees. We get a small dividend each year and save/invest the rest of the cash.
What I want to do:
Open up a corporation in a caribbean island. Alot of these islands don't make companies pay any tax as long as they are foriegn companies that do business outside the island -- which we do
Open a bank acct in the same island
Every month, receive an "invoice" from the caribbean company for consulting services. This would be explained that we outsource some of our consulting to a company in the caribbean. For example we maybe pay some guy in the caribbean to help us with our proposals or other work.
We would pay maybe $5k or $10k a month to this company.
Cheque gets mailed off to pay the invoice, gets deposited in caribbean bank, and becomes tax free. And all the while is a deductible expense for our Cdn corporation.
This money would never come back to canada or leave the island in anyway. We would save up so each of us could buy a condo there or something.
So here's my questions:
I think I have covered all of the angles and possible areas that could trip me up. I would use another address (not our company office address) to set up the caribbean corp and to have the bank acct statements sent to. We would not keep any of the caribbean corp papers onsite at our business or any of our homes. They would probably go in a safe deposit box in a bank. What *ELSE* have I overlooked?????!??
Will this work??? We will be explaining to our accountant that we need to pay some guy overseas some $$$ to help us out with our business. We make more money each year than we did before (by a bit.. not huge increases) so we could attribute that to the fact that we have outside help. We are also taking on more responsibility and clients each year so maybe we could say that we had our hands full and its cheaper to outsource.
if anyone has experience, forum links that would be useful, books to read, etc. it would be VERY VERY VERY helpful. As you can imagein there is not much info out there other than companies that want to charge you $5k to help you incorporate... and I'm sure its quite easy to do and I can do it on my own.
I run a family owned consulting biz (3 consultants and we are all family members) and we make a decent income. I have been looking at ways to rearrange the companys finances a little to meet two goals I have in the next few years
1.Reduce tax we pay each year
2.Retire in a caribbean island at some point.. Cayman would be good but open to other options as long as its hot in the winter LOL
So here is what I am planning to do. First of all YES I do realize this is frowned upon, I'm not doing my duty as a Canadian by paying my taxes, etcetera, etc
I obviously cant ask my accountant for help on this as I dont want a record of this conversation in case we ever get audited and he gets called up on the stand to testify against me. I do all my own accounting anyway and he just does year end taxes
First some stats:
company has been around for 3 yrs
we are a bunch of indep. consultants who banded together to go out and work on our own
we bring in about 400-500k a year between the 3 of us
we pay taxes on almost all of that amount... its reduced a bit because of entertainment expenses/phone/etcetera but obviously we barely make a dent in the 400-500k with those expenses
all billings need to be invoiced by our canadian company as it would be a bit frowned upon if our clients had to make cheques payable to "420 fund Cayman Islands Inc".
none of us take a salary from the company so we're not employees. We get a small dividend each year and save/invest the rest of the cash.
What I want to do:
Open up a corporation in a caribbean island. Alot of these islands don't make companies pay any tax as long as they are foriegn companies that do business outside the island -- which we do
Open a bank acct in the same island
Every month, receive an "invoice" from the caribbean company for consulting services. This would be explained that we outsource some of our consulting to a company in the caribbean. For example we maybe pay some guy in the caribbean to help us with our proposals or other work.
We would pay maybe $5k or $10k a month to this company.
Cheque gets mailed off to pay the invoice, gets deposited in caribbean bank, and becomes tax free. And all the while is a deductible expense for our Cdn corporation.
This money would never come back to canada or leave the island in anyway. We would save up so each of us could buy a condo there or something.
So here's my questions:
I think I have covered all of the angles and possible areas that could trip me up. I would use another address (not our company office address) to set up the caribbean corp and to have the bank acct statements sent to. We would not keep any of the caribbean corp papers onsite at our business or any of our homes. They would probably go in a safe deposit box in a bank. What *ELSE* have I overlooked?????!??
Will this work??? We will be explaining to our accountant that we need to pay some guy overseas some $$$ to help us out with our business. We make more money each year than we did before (by a bit.. not huge increases) so we could attribute that to the fact that we have outside help. We are also taking on more responsibility and clients each year so maybe we could say that we had our hands full and its cheaper to outsource.
if anyone has experience, forum links that would be useful, books to read, etc. it would be VERY VERY VERY helpful. As you can imagein there is not much info out there other than companies that want to charge you $5k to help you incorporate... and I'm sure its quite easy to do and I can do it on my own.