The Sarbanes-Oxley Act, also called the Public Company Accounting Reform and Investor Protection Act of 2002 was signed into law on July 30, 2002 by President Bush. In the aftermath of Enron, Arthur Andersen, Global Crossing, and WorldCom, SOX promises greater corporate accountability and transparency. Named after Senator Paul Sarbanes and Representative Michael G. Oxley, SOX focuses on the importance of ethical behavior in corporate governance-across the United States and now?overseas.

All countries have government-required laws like Sarbanes Oxley. In the UK, it's the "Combined Code on Corporate Governance," in The Netherlands it's the "Code Tabaksblatt," Germany has a "Bilanz Reform" and a "Bilanz Kontroll Gesetz." But then, why do we need SOX overseas since we already have the required laws? It's because companies with U.S. headquarters must ensure that all foreign outposts meet federal standards. This is the major cause of concern in the management and accounting circles. According to some experts, the Sarbanes Oxley Act might have dictated convoluted rules and regulations on the U.S. businesses. While the rules are concrete ideologies that prevent accounting scandals, the constant flux in the policies confuses businesses around the globe.

SOX compliance by vendors and business partners outside the U.S. is a frightening task. The risks and complications involved in enforcing the regulations for multiple firms around the world are enormous. The U.S. firms should keep themselves abreast of the data operations and data management followed by overseas vendors. This complicates the case further as the data should be integrated in financials or entered in balance sheets. Cumbersome processing of data would step up IT-related expenses.

The global impact of SOX is tremendous. At the moment, the UK Big Four firms are feeling SOX repercussions in their consulting sectors. Big4.com -a website for global Big4 alumni- receives periodic updates on the latest news and trends at the Big Four firms. The Big Four in UK reportedly lost GBP250 million in consulting fees since 2002-a direct outcome of Sarbanes-Oxley Act. Among the Big Four firms, PricewaterhouseCoopers faced a huge decline in their consulting fees. Causes for this decline can be attributed to:

· The increased cost of compliance that usurped consulting budgets.

· Independence restrictions in Sarbanes-Oxley have restrained companies from utilizing their auditors for many consulting services.

There is an apparent role reversal in consulting fees and audit services. If consulting fees have declined, audit fees have considerably increased. A whopping 30% increase in Big Four audit fees has been observed over a period of two years. This spike does not compensate for the revenues lost for consulting. Consulting was the major strength of the Big Four in the UK. But, in the present conditions, the significant decline in consulting fees clearly demarcates the performance of the Big Four in the UK.

According to a survey by an European firm, many overseas firms with their shares listed in the U.S. were not ready to meet the deadlines of Sarbanes-Oxley. Since European firms already have specific regulations, SOX compliance is extremely difficult. Some overseas firms have been attempting to get delisted from the U.S. stock markets since SOX's inception. Foreign firms about to get listed on overseas exchanges are also resisting to get listed in the U.S. These problems would take toll on the U.S. market performance and economy. But, the exit of foreign firms from the U.S. exchanges is not that easy. As per SEC guidelines, foreign firms holding 300 or more shareholders in the U.S. cannot delist from the U.S. exchange where they trade.

In the light of these problems, the Securities and Exchange Commission-in its bid to offer sustained flexibility-started modifying rules for overseas firms listed in the U.S. The SEC would facilitate foreign firms to delist their securities that are traded on the U.S. exchanges. Modifying SEC rules to accommodate European firms would create a state of unrest among the American managements.

The SOX compliance should be an "all-encompassing" formula-that which enables governments and managements worldwide to function efficiently and in rhythm. A level headed approach to weed out this disconcert would improve the situation.

Whether helping the kids with a down payment on their first home, paying the premiums on a life insurance policy in an irrevocable trust, or moving appreciated assets to a younger generation, annual gifting will touch the lives of millions of Americans. But before the transfer is made, an investor should spend some time looking at the investment and the tax ramifications of the property to be passed.

Much of the gifting itself will be done under the Annual Gift Tax Exclusion, a method that alleviates both a gift tax and the need to report the transfer. This exclusion applies to gifts only between individuals. Gifts made to charities and other organizations fall under a completely different set of rules.

The transfer is not deductible by the donor nor is it taxable to the recipient. Currently (in calendar year 2005), the annual exclusion is set at $11,000. In the future, this can be adjusted for inflation, but only in $1,000 increments. Spouses can increase their gifts to others to a maximum of $22,000 and, finally, gifts between spouses, like love, knows no limits.

Most transfers are done for one of two reasons. In the past, passing along property to diminish the value of an estate and, therefore, estate taxes was a major consideration in estate planning. This is still used extensively for larger estates but, under current law, fewer estates are subject to the tax. If the estate has no tax exposure (and if nursing care is taken care of), many advisors recommend not to gift at all but, instead, toallow the assets to receive a "stepped up" tax basis upon death.

Gifting to allow for current use of assets has been and continues to be popular. Often a parent wants to see a child use the gift immediately in order to enjoy an extended vacation or to make a major purchase. Here, it is expected that any gift of securities will be converted into cash with the appropriate tax paid.

Both donors and recipients should be aware that various gifts for educational or medical purposes may not reduce the annual exclusion. You should check with your tax advisor to determine whether this applies to a your specific situation.

Certain kinds of property (real estate, art, collectibles, closely held business interests, etc) should be appraised before a transfer is made. Consulting an expert in the particular field is usually a good idea to calculate the fair market value of the property.

Another circumstance requiring professional help is when "spending down" an estate for Medicaid purposes. An elder law attorney should be consulted for help in this area.

The actual gift of marketable securities or cash is fairly straightforward. Giving a check to someone or journaling over securities is enough to complete the gift. However, before making the gift, you should understand some of the potential tax considerations.

Let's first look at stock that has appreciated in value. Remember, whatever tax basis the donor in the gifted property will become the recipient's tax basis. If the donor is in a higher tax bracket than the recipient, it is often wise to gift the stock to the recipient and let the recipient sell the stock at his or her lower tax bracket.

If the fair market value of the stock is below the donor's original cost, then the donee must use the fair market value of the property as of the date of the gift in determining his or her tax basis. If you find yourself in this situation, the donor should consider selling the asset and then gifting the cash proceeds to the recipient.

Obviously, there will be times when a gift needs to be made regardless of the consequences; but, when time allows, you should do your homework to see what works to your best advantage.

Glenn ("Chip") Dahlke, a senior contributor to the Living Trust Network, has 28 years in the investment business. He is a Registered Representative of Linsco/Private Ledger and a principal with Dahlke Financial Group. He is licensed to transact securities with persons who are residents of the following states: CA. CT, FL, GA, IL. MA, MD. ME, MI. NC, NH, NJ, NY.OR, PA, RI, VA, VT, WY.

With gas prices at an all time high before Hurricane Katrina left her mark on our nation, most Americans were hoping that gas prices would settle down once summer passed. But gas prices have jumped as much as 80 cents a gallon across the country once Hurricane Katrina destroyed the Gulf Coast and impacted all of our lives.

While Hurricane Katrina is a horrible tragedy, it's not just affecting the Big Easy. Hurricane Katrina will impact every single American that commutes to work, takes a vacation, or shops online.

Company Car vs. Mileage Allowance

Companies and individuals alike are now concerned that the federal mileage deduction or their company's gas mileage reimbursement will no longer cover the costs of operating a vehicle for business purposes.

At the beginning of 2005, the IRS standard federal mileage reimbursement rate for business use of a personal vehicle (including vans, pickups or panel trucks) was 40.5 cents a mile for all business miles driven, up 3 cents from 37.5 cents a mile in 2004; The primary reason for the increase was higher prices of vehicles and fuel in 2004.

Christopher Tanis, District Manager of a restaurant chain in New York State travels for business to 5 different stores per week. For him, the 2005 federal reimbursement rate worked out quite well, and he opted for using his personal vehicle instead of using a company car. Now that fuel costs are so high, he's decided to re-examine the financial feasibility of mileage reimbursement.

Poor Gas Mileage Cars are Losing Value

Chris Brown; owner of Auddie Brown Superstore, an automobile dealership located in Florence, South Carolina, commented "I think [the jump in gas prices resulting from Hurricane Katrina] is ridiculous because they act like we're running out of fuel and we've got plenty."

Selling cars, the standard expense for selling each vehicle used to include a full tank of fuel when they bought a car, once the price hit $2.50 a gallon, Chris starting limiting his fuel allowance to $10. Chris explains, "Some cars take $80 worth of fuel to fill up and on a new car we're lucky if we make $80 in profit on them -- especially the new cars. Our new car profit margin is at its lowest ever. At this point we're just glad to sell the car and bring in some inventory."

Now that gas prices have gone through the roof, small business owners are working furiously to dump those 6,000 pound gross vehicle weight fuel guzzlers they bought only a year or two previously under a tax loophole which allowed small businesses to write-off most of vehicle cost in one year.

Mr. Brown has experienced this situation on a larger scale than most of us, adding "People come in to trade their larger trucks and SUV's with poor gas mileage for smaller, better gas mileage vehicles. Most consumers are not only so upside-down (owing more on the car than its fair market value) but are finding it hard to trade-in these larger vehicles. Not only they are valued less because of gas prices but people just cannot afford the fuel that would be needed to maintain these lower gas mileage vehicles."

Weighing your Options

You, too, may have to analyze your business vehicle deduction options, now that high fuel prices seem like they're here to stay. You may find that while maintaining a mileage log and claiming a car deduction or mileage allowance isn't right for your situation, the IRS will allow you to deduct actual vehicle expenses based on the percentage of business vs. personal miles. For those who use their vehicle mostly for business, minimal personal usage combined with the burden of record-keeping may justify a company car. There's no right answer for everyone. Literally, your mileage may vary. Consider your options and you'll find the way to steer yourself to the best tax advantages in these new circumstances.

Ann-Marie Patero is a freelance writer for Envision Software, publisher of Consulting Mentor, a website providing Consultant Resources and Consulting Articles to Consultants world wide. If you're a consultant, freelancer, or considering starting your own small business, the resources at Consulting Mentor will help you improve your effectiveness, profitability, and overall success.

In the largest criminal tax case ever filed, KMPG has copped a plea to using fraudulent tax shelters to bilk the government out of 2.5 billion dollars. KMPG has agreed to pay a fine of $456 million dollars, but nine of its executives still are under indictment.

Son of Boss Tax Shelters

From 1996 to 2003, KMPG promoted a tax strategy known as the Son of Boss. This shelter was used to create phony tax losses that could be claimed by wealth individuals looking to write off tens of millions of dollars. KMPG promoted the structure despite the fact it's own internal tax attorneys warned the structure was fraudulent and could result in criminal charges. So far, wealthy individuals participating in the scheme have paid over $3.7 billion dollars to the IRS.

There should be no mistaking the impact of the plea agreement in this case. KMPG may have enjoyed the huge fees earned from the scam, but it is paying an incredible price for pursuing this practice. The price paid includes:

1. 456 Million Dollar Fine,

2. Permanently barred from providing tax services to wealthy individuals,

3. Permanently barred from involvement in any pre-packaged tax strategies,

4. Permanently barred from charging a contingency fee for work,

5. All actions monitored by government appointee for three years,

6. Full cooperation with government in indictments of individual KMPG employees.

Remaining Indictments

While KMPG pled guilty, it left its employees out to dry. An interesting maneuver since one can assume KMPG enjoyed the millions of dollars produced from the fraudulent tax shelters. Those under indictment, who are all now former employees, are:

1. Jeffrey Stein, former Deputy Chairman of KPMG, former Vice Chairman of KPMG in charge of Tax and former KPMG tax partner;

2. John Lanning, former Vice Chairman of KPMG in charge of Tax and former KPMG tax partner;

3. Richard Smith, former Vice Chairman of KPMG in charge of Tax, a former leader of KPMG's Washington National Tax and former KPMG tax partner;

4. Jeffrey Eischeid, former head of KPMG's Innovative Strategies group and its Personal Financial Planning Group and former KPMG tax partner;

5. Philip Wiesner, former Partner-In-Charge of KPMG's Washington National Tax office and former KPMG tax partner;

6. John Larson, a former KPMG senior tax manager;

7. Robert Pfaff, a former KPMG tax partner;

8. Mark Watson, a former KPMG tax partner in its Washington National Tax office.

With the massive losses caused by Katrina, the economy of the Gulf Coast region is in extremely bad shape. Fortunately, there is a quirk in the tax code that can help you generate a large refund from your 2004 taxes.

Apply Losses to 2004 Taxes

When a large geographic area suffers a disaster, the President can declare it a federal disaster area. President Bush has made such a declaration for the Gulf Coast area.

While you've probably heard such declarations occur over the years, I doubt it means much to you. The declaration, however, has major implications for recovery efforts. Initially, the declaration of a federal disaster area means the federal government is going to provide disaster relief loans, special grants that don't have to be repaid, unemployment benefits and a variety of other assistance. It also signifies a major tax break for impacted businesses.

When a business suffers a loss, the deduction must typically be made in the year the loss occurred. With Hurricane Katrina, the deduction would typically occur when you file taxes in 2006. The problem, of course, is 2006 is a very long time from now if your business is destroyed. You will find this hard to believe, but the IRS is here to help.

The IRS is going to give you cash. Under current tax law, you may make a special election to deduct your business losses caused by Katrina on your 2004 taxes. By doing this, you do not have to wait till 2006 to get a tax refund. You don't have to do this, but it may be the key to getting necessary cash.

Just image, you are a small manufacturing company, business has been good, but yesterday you received a call from a customer who wants 50,000 widgets in 45 days. The customer is a large account and if you turn the business down, he may never call you again.

Problem: You need to hire more staff to meet the manufacturing needs of this customer. AND the customer said nothing about an advance payment. In fact he mentioned that he would be paying net 30 once shipment was received.

You need working capital and you needed it yesterday

You sit down and you start to think. Well let's see, it will take much needed time to apply to the bank for a loan, your wife threatens to leave with the kids if you refinanced the house one more time for business reasons and your credit cards are maxed out.

As you look around your messy yet effective office you wonder where you can get the working capital you need?

Sitting in front of you is your secretary mailing out invoices. You slowly walk over to her desk and you ask "What's the total amount of invoices that we have outstanding at this very moment?

Your secretary looks on her computer, moves the rat around a few times, clicks a couple of times, and then hits something that makes the printer start singing. She looks up at you with those "I want a raise" eyes" and says, "it's coming out on the printer"

You walk slowly over to the printer and pick up the sheet of paper. Just when you think you are ready to read and understand the page another page prints. She says very softly, "the second page will give you the total" You pick up the second page and allow your eyes to scroll down to the bottom of the page and much to your surprise the total amount is well over $300,000.

You don't want to call a Factoring company because, they will discount your Invoices and you won't get all your monies OR do you?

Your secretary reminds you that all the fees for Factoring the Invoices is tax deductible and in the end the Factoring will cost you nothing. (Your secretary is taking tax classes at night, something about becoming more valuable to the company and earning more money) She also reminds you that you can Factor the Invoices and be paid up to 92% of the total invoice amount within 48 hours. Plus, the Broker does not charge you.

It is at this point that you try to remember why you married your wife instead of your secretary?

You quickly change from that thought back to who should I call? There are so many Sharks in the water and about $200,000 of the invoices are Government Contracts.

You know you need a Factoring company whose rates are fair and who can deal with the endless paperwork that the Federal Government requires to Factor one of their Contracts.

Needless to say, he called me; the names have been changed to protect the guilty.

Most people trying to make a crust online (or offline for that matter) are so focused on doing just that, they ignore taking simple steps to ensure that they hang on to just as much of it as they can. Instead, they hand over large lumps of their hard-earned money in tax, usually in one of two mistaken beliefs. Either:
It's a good thing, a sure sign of a civilised society. Or,
If they don't, the Feds will "get them", fining them, expropriating their assets, maybe even jailing them.
I'd respectfully suggest that those two "reasons" are mutually exclusive. Visiting penal sanctions on citizens because they decline to hand over their money to you could hardly be regarded as the mark of a civilised society. In fact it might more properly be regarded as the mark of a criminal one!
So how does this situation arise, and how can the thinking man or woman avoid it?
Most e-mails I receive regarding business opportunities trumpet the benefits of being an entrepreneur. Now the Shorter Oxford English Dictionary defines "entrepreneur" as follows:
"A person who undertakes or controls a business and bears the risk of profit or loss".
Yes, that's "risk", "profit" and "loss". All things that people with their own businesses regard as being as inevitable as night following day.
Interestingly, the SOED contains no definition of "rentseeker". Still, key the term in to Google and you'll discover that it refers to people who want to be paid to take your money for a "service" that you would not yourself choose to pay for.
Now let's just talk this one through:
They want to be paid. In practice, they don't just wish to be paid, but to enjoy substantial pension rights. All of this is funded by the taxpayer.
In return for these payments, they undertake to extract further sums of taxpayers' money to provide what they describe as "services".
Critically, taxpayers would not, either as individuals or collectively, freely choose to pay for these services. If they did, they would do so, in the marketplace.
The money is therefore taken by coercion.
They lack any concept whatever of risk (at least to themselves) or of profit (to taxpayers). Loss, on the other hand, is guaranteed to each and every taxpayer.
Now, in any other context, this process is known as "robbery", or, more subtly, "fraud".
After all, it IS your money, right? Well not according to Uncle Sam, or, depending where you're based, your nearest friendly local equivalent.
Governments seem to think that they've generally got a whole lot better set of ideas about what to do with your money than you might have yourself (despite all the evidence to the contrary in front of everyone's eyes). What they've particularly got, however, is a set of excellent ideas for using your income to pay their own salaries and pensions (final salary, index-linked, performance-irrelevant). And these people are known as rentseekers.
The legendary investor, Jim Rogers, writing in the Foreword to "Financial Reckoning Day", by Bill Bonner and Addison Wiggin, had this to say:
"In America, if you have a job, you pay taxes. If you save some money, you pay taxes on the interest. If you buy a stock and get paid a dividend, you pay taxes. If you have a capital gain, you pay taxes again. And when you die, your estate pays taxes. If you live long enough to get social security, they tax your social security income. Remember: you paid taxes on all this money when you earned it originally and yet they tax it again and again".
Now wouldn't it just be nice to avoid all of that?
Because it's the simplest thing on earth, particularly if your earnings are being generated in that weird nether land called cyberspace, to use a set of perfectly legal arrangements to process your money FREE OF TAX.
In other words, you set yourself up a company, a bank account, and a business address somewhere no predatory taxman stalks! That is, OFFSHORE. There are quite a large number of these jurisdictions, and there is not a single Fortune 500 company that doesn't use them. I kinda think that tells you a lot.
Once it's all in place it works just like any other company arrangement - you just don't pay any tax!
Now no-one's suggesting that it costs nothing to set up these arrangements, and it's true it's not going to figure high in your priorities if you've got a marketing budget of $10 and are wondering how to pay the rent. But, assuming that you're already generating even reasonable income, it just has to make sense to look into this.
After all, even if you're not interested in saving yourself a whole lot of money, there's another reason you might wish to avoid all of this. I'll leave you with another quote, this time from Charles Adams, in "For Good And Evil: The Impact Of Taxes On Modern Civilisation":
"Tax haven 'refugees' report that they are tired of fighting the taxman. They have had enough of audits, year in and year out, of having their banking and accounting records picked over and questioned. They are tired of having their privacy totally destroyed by inquisitional tax agents. They are tired of appeals, big fees for tax professionals, and endless tax litigation. Many complain that the soak-the-rich philosophy of their homelands was not as intolerable as the harassment and scorn they receive from revenue bureaucrats".
Personally, I can relate to that...

As a sole proprietor, it's wise to familiarize yourself with the some key deductions that may reduce your tax bill for 2004.
Small-business consultants generally recommend that you hire an accountant to prepare your tax returns, payroll and financial statements. But you should also meet with your accountant well before the year-end rush to discuss such matters as tax planning, and record keeping for tax deductions.
Seven common small business tax deductions:
1. Employee Benefit Plans - You may deduct contributions to employee benefit plans (such as health insurance plans and retirement plans). Depending on your circumstances the maximum contribution that you may deduct per employee in a qualified retirement plan can go up to:
$100,000 or more For a Defined Benefit Plan$44,000 For a 401(k) plan$41,000 For a SEP-IRA or Keogh
2. Automobile Expenses- You can elect to deduct the actual expenses incurred (including gas, oil, tires, repairs, insurance, depreciation, and rent or lease payments) for the business-related portion of your car or truck expenses, or simply take the 2004 standard mileage rate of 37.5 cents per business mile.
3. Taxes - You may deduct Social Security and Medicaid taxes paid to match required withholdings on employee wages, federal unemployment taxes, sales taxes and real estate or personal property taxes paid on business assets.
4. Home Office - Depending on whether you use your home or other real estate for business purposes, you may deduct some or all of any mortgage interest paid, as well as some or all of the maintenance and repair expenses associated with the property. The cost of utilities and business supplies associated with business use are also deductible.
5. Depreciation - Depreciation may be taken on passenger cars, equipment used for entertainment or recreational purposes (i.e., photographic equipment, cell phones and computers), as long as these items are used solely for the business.
6. Professional Fees - You may deduct professional fees, such as those paid to a lawyer or accountant.
7. Meals and Entertainment - You may deduct 50 percent of meal and entertainment expenses directly associated with the conduct of your business Remember to keep on file the records and documentation necessary to substantiate all of your deductions.

Does this scene sound familiar? It's April 7. You haven't seen the top of your dining room table in two weeks because of the piles of paid bills, receipts, canceled checks, and unidentified cash register receipts covering it. Your head pounds and your stomach churns as the countdown to April 15 begins.
You might hate to pay taxes, think the system is unfair, dislike the forms, and even stage a mini-tax rebellion, but in the end the tax man cometh - with penalty if you're not careful! The key to your survival is taking an organized approach to this unavoidable task.
There are really two issues here. Number one, of course, is getting the information together for this year's tax return. Number two is developing a strategy, which will eliminate the panic you're feeling now next year - and now is the easiest time to do that too. Consider these tips:
? If you use a tax advisor, make an appointment to get together well before April 15. For the future, do it before the end of the tax year, and you may be able to save on your tax bill.
? Designate a specific, easily accessible place to keep all the information relevant to your tax return.
? Pay tax-deductible items by check or credit card whenever possible. If you have many tax-deductible items, get a separate credit card for those expenses.
Now, for this year:
Step 1: Collect all the records you can find: canceled checks, credit card receipts and statements, canceled checks, cash register receipts, calendars, and any articles or other information you may have collected with information about what you can deduct. (Use Post-it? Flags to highlight important information.) If you're not sure, discuss with your accounting the critical information to include with your tax return, including documents to support any wages or other income received as well as mortgage interest paid.
Step 2: Separate all the papers into appropriate categories. Put each one into a separate container - large envelope, plastic basket or shoebox. Labeling each category with a Post-it? Note will make it easier to adjust your category names if you change your mind as you proceed. Since you will probably need more than one sitting to complete your taxes, these labeled containers make it easier to clear your work area, if necessary, and to find your place when you are ready to continue.
Step 3: Take one category at a time and eliminate (or staple together) any duplicate receipts. If you need to correlate your expenses with your calendar in order to prove tax-deductible expenses, such as in the case of entertainment, put all receipts in chronological order to speed up the process. (Use a different color Post-it? Flag for each deductible category.)
Step 4: Now you are ready to begin entering the information on the tax forms, into your computer program, or to take the information to your accountant. (Many accountants will provide a worksheet of compiling information.)
Once you've finished filing your return, the next consideration is how long to keep the material you've collected. The simple answer is to keep whatever you need to persuade the IRS that everything on your return is accurate, and hang on to the evidence for as long as the IRS has the right to question your return. But I'm sure you wanted a more practical answer!
Ordinarily that's three years from the due date for the return, including extensions, to assess any additional tax. But a return can be audited for six years if the IRS suspects the taxpayer has neglected to report substantial income. If fraud is suspected, there is no time limit.
Your record keeping system doesn't have to be elaborate or sophisticated. What is more important is to have a system - and the discipline to keep it up to date.
Make sure to keep tax information separated by year. If you have a minimum amount of back-up material, one file folder may be sufficient. Staple together all information for each itemized deduction. Label it clearly with a Post-it? Note. Otherwise, use separate file folders or envelopes for each category. If you run a business and have a very large amount of material, use one storage box for each year. Make sure to label the outside of the box! Put all boxes together. As you put in this year's box, you can remove the box with information you no longer need to keep. Sorting your back-up materials will be easy to do right after you filed this year's return when the categories are fresh in your mind. If you are audited, it will be easy to provide documents to support your tax return.
In addition, consider these tax tips:
? If you write off the cost of a business car, keep the logbook in which you recorded your trips as well as evidence of the costs you incur.
? If you claim as a dependent someone who is not your child, keep a separate file for the evidence that shows you provide more than half of that person's support.
? Keep information that relates to the purchase of all homes at least six years after the sale of the last house. This includes your title, deed of purchase, and information about your home's purchase price, sales price, capital improvements and repairs

One way to maximize your business profits is by reducing your taxes. Frequently, income and other taxes could be lowered significantly if only the taxpayer were willing to plan ahead. By taking some simple steps to rearrange your affairs, you could save a fortune!
1. Are You Splitting Your Business Income?
You may pay reasonable salaries to spouse or children through your incorporated or unincorporated business. If you are not doing so, you may be missing out on some real tax savings.
In the Canadian Federal Budget of February 16, 1999, measures were introduced to discourage income splitting with minor children through family trusts. However, these measures do not apply to paying reasonable wages to family members. Thus, this may be one of the last ways of legally splitting income left for the small business person with minor children.
Obviously, the amounts paid must bear some relationship to the work performed. Of course, all required payroll taxes should be remitted and proper records need to be maintained.
Why not rearrange your affairs so that family members with little or no income can perform duties for and be paid by your business? Then, they can contribute out of their own income towards the operation of the household. In this way, little or no tax will be paid by your dependants and you will have successfully shifted taxable income out of your hands.
2. Should You Register For The Goods And Services Tax?
Even if your business grosses less than $30,000.00 per year in taxable sales, you may still benefit by registering your business to collect the Goods and Services Tax (G.S.T.). If you are not doing so, you may be missing out on some real tax savings.
For example, you will be paying G.S.T. on many of your business expenses. If not registered for G.S.T., you must absorb this cost. If registered, you may deduct the G.S.T. paid on such business expenses (input tax credits) from the tax collected. Many business persons expect to pay G.S.T. and it doesn`t really cost them anything since they deduct such amounts as input tax credits from the G.S.T. they collect from their customers.
In some cases, the quick method of calculating G.S.T. may actually allow you to retain more of the G.S.T. collected than you would have just claiming the G.S.T. actually paid by you.
A factor to consider also: If you are not registered for G.S.T. in Canada, you are telling your clients that you do under $30,000.00 per year in taxable sales or that you cheat. Is this the image you want your clients to have?
3. Could You Benefit From Incorporating Your Business?
Although incorporating your business may result in increased accounting and legal fees (for setup, extra tax returns, and annual minutes), the advantages of incorporation may justify this added expense. Not only will you enjoy limited liability by incorporating, but you may reap significant tax savings as well.
Corporations are often subject to lower tax rates on small business income. In Canada, sales of shares of qualifying small business corporations can obtain a lifetime $500,000.00 capital gains exemption. Certain tax incentives and government programs are only available to incorporated entities. Additionally, corporations can be used for income-splitting and estate, retirement, and succession planning objectives.
4. Do You Engage in Tax Planning Year-Round?
Some people only worry about their taxes during tax season. However, you will save a fortune in taxes, legally, if you make tax planning your year-round concern.
Can you make some changes to turn your hobby into a moneymaking business? Can you use that extra room in your house as a home office for your business? Can you arrange to use your car more for business purposes and have you documented your business use mileage? Can you arrange for more of your entertainment expenses to be business related and have you listed the business purpose on the back of each receipt?
Do you make business and personal purchases, investments, and other expenditures with tax savings in mind. Do you document your expenses well so that you they would survive a tax audit? Whenever you are faced with a business or personal financial decision, do you consider the tax consequences?
Make year-round tax planning part of your business management mindset and, thus, enjoy maximum tax savings. Yes, by rearranging your affairs to account for tax implications, you will save a fortune in taxes.

In trying to comply with tax laws for your e-business, you may find yourself falling down the rabbit-hole, going through the looking glass, and attending a Mad Tea-Party.
Common sense, logic, and fairness never did apply fully to the field of taxation but this is especially true of e-commerce transactions.
1. Canada Customs Welcomes You to Canada!
Since I`m located in Canada, let`s start here.
Canada has what you might call a national sales tax or a value added tax (VAT). This Goods and Services Tax (G.S.T.) of seven percent is applicable to many Canadian transactions.
Not only is it critical to determine whether a taxable sale was made in Canada or not, but also where in Canada. If it was made (or deemed to be made) in any of the Harmonized Sales Tax (H.S.T.) provinces (Nova Scotia, New Brunswick, and Newfoundland and Labrador), a higher, fifteen percent H.S.T. rate applies. This is because those provinces have allowed Canada to collect their provincial sales taxes for them.
As well, each province and territory has its own rules. Ontario charges eight percent retail sales tax on many typical Internet transactions whereas Alberta has no provincial sales tax.
Of course, this is only scatching the surface. This entire article is an over-simplification of a very complex subject. You will definitely need professional advice to help you through E-Commerce Taxland.
2. When Exports Aren`t Exports
In Canada, exports are "zero-rated" sales for G.S.T. purposes. This means that when you ship a product to someone outside Canada, you don`t charge G.S.T. Yet, you get to claim (or deduct from the G.S.T. collected by you) all the "input tax credits" (G.S.T. that you paid for business purposes) to make that export. The idea, I suppose, is to encourage exporting.
However, if you export products other than tangible, physical goods, beware! There are many pitfalls to watch out for.
As one example, consider digitized products that you might sell from your Canadian website, such as e-books, downloadable software, or subscriptions to content. You would be considered to be selling "intangible personal property". Unless your product is also considered "intellectual property" (such as software or e-books that you produced or have obtained the rights for), you will have to charge G.S.T. The reason why, according to the Canada Customs and Revenue Agency, is that it COULD be used inside Canada, even if it isn`t.
Say you sold a membership for accessing digitized content (from various sources) on your Canadian website to a customer in the United States. Since there are no restrictions as to where the intangible personal property may be used, and the property is not considered intellectual property (nor the provision of a service), the American customer is subject to G.S.T., even if he never comes to Canada.
Strangely, the same logic doesn`t apply when an American buys a regular book (or a car) which he COULD bring into Canada with him and use here. It is true that it is easier for Canada to assess such items at the border than in cyberspace, but I know of no cases of Americans being taxed on the books or cars they bring with them when they come to live in Canada for about half the year.
As a Canadian registrant, one way you might legally avoid this silly March Hare is to explicitly state on your website and invoice that use of such intangible personal property in Canada is prohibited (or requires an additional fee and the payment of G.S.T.).
3. When Imports Aren`t Imports
Goods shipped to Canada are subject to G.S.T. on importation. Such tax is often assessed at the border. But what if you are a Canadian registered for G.S.T., selling to a Canadian customer but your supplier is in a foreign country?
Pretend that your Canadian customer has bought a book from you from your Canadian website. Your drop ship supplier is located in the United States and is registered for G.S.T. You fax your order to the American company, and they, in turn, ship the book for you (complete with Customs Declaration and their G.S.T. Business Number).
Since they paid the G.S.T., you wouldn`t think you would have to charge it again, would you? "Wrong!", smiles the Cheshire cat. Since you are a registrant located in Canada, you are required to charge and remit the G.S.T.
But you are entitled to input tax credits, aren`t you? In many cases, the answer is "No".
It may be very difficult for you to satisfy the documentary and other technical requirements. As an example, it is not uncommon for American suppliers to absolutely refuse to give an invoice breaking down the G.S.T. or to allow you to be the Importer of Record. This complicates their life unnecessarily and they just don`t need the aggravation.
There are relieving tax provisions covering drop shipping, sales agencies, and other situations. In many cases, unfortunately, the most practical solution is to allow the tax to be paid twice.
4. When You`re Subject to Tax Where You`re Not Subject to Tax
It makes sense that countries impose a tax on sales and income made in their own jurisdiction. But does it make sense for Germany to tax sales made in the United States?
In effect, starting July 1, 2003, the European Union has done just that by imposing an online sales tax.
This means that if someone from England buys an e-book from someone in the United States, the American should submit this tax. Of course, If the sale was to someone in Germany, the tax rate would be different.
The rationale behind this follows: Since countries can`t collect sales tax on Internet transactions at their borders, the only way they can collect it (other than a self-assessment system) is with an online sales tax. Further, it is claimed that businesses in the European Union suffer a major competitive disadvantage because they have to collect Value Added Tax (VAT) but others don`t.

How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share
By Darren Oliver
With the rush to file your taxes by April 15th, you probably did not consider the possibility that you overpaid. According to the General Accounting Office, in 1998 alone, there was $311 million paid unnecessarily to the IRS. Do not count on the IRS to tell you if you have overpaid because they are not required to but you can file an amended return for up to three years.
Chances are, you either prepare your business taxes yourself or have your tax preparer or CPA does them. There a number of issues surrounding either tax preparation method, which can result in your tax liability being calculated as higher than it actually is including missed deductions, numerous changes in tax laws or being given incorrect advice.
As a home-based business professional, there are a number of deductions you are entitled to which many tax preparers often miss. For example, if you run a home office you are entitled to deduct expenses for the percentage of square footage the home office is occupying. Expenses include the combined total of mortgage interest, property taxes, utilities, repairs, etc. For example, if 250 square feet of a 1,000 square foot house is being used for a home office, you are entitled to deduct a quarter of your total expenses.
Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars that you are unnecessarily paying the IRS. That is money that you could be using to grow your business.
Karen McClafflin, owner of home-based Secret Canyon Realty in Colorado Springs, CO, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns.
Another area, which causes many business owners to overpay, is being given incorrect advice by their CPA, tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer, prepares an average of 480 returns between February 1st and April 15th, that is a lot of returns in a relatively short amount of time which makes it difficult for your return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due. Moreover, in a poll of 50 professional tax preparers, consisting of 10 basic tax questions, none answered all 10 questions correctly and only 34 got at least half correct.
This problem does not extend to just tax preparers or CPA's. In the IRS's 2001 assessment of their own 544 call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether you do your taxes yourself and had to call the IRS for clarification on an issue or your CPA did, odds are the answer was not accurate.
The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can easily make a mistake or, forget to use an exemption which could reduce your tax liability.
If you have not yet filed your taxes, it is a good idea to get a second opinion from an independent source. The extra money and time spent in doing this could save you thousands. Look for someone or a company who:
· Has sufficient years preparing home-based business tax returns
· Prepares less than the average number of returns between January and April so that your return gets sufficient time and attention.
· Have had clients get a second opinion. In addition, talk to those clients to get there first hand insight.
· Is willing to pay for a second review of your tax returns to ensure accuracy.
· Is willing to take MSN's online Tax IQ Test at http://moneycentral.msn.com/investor/calcs/n_taxq/main.asp. Although designed for consumers, this test contains basic tax information that even junior level tax preparers should know.
Just as you trust a surgeon with your life, you trust this individual or company with your money and confidential information. Be highly selective and do not be afraid to put them through a rigorous qualification. If they are not willing to participate in your qualification then either they do not know their stuff or, your business is not that important to them.
If you already filed your taxes or think you might have missed out on deductions, have been given bad advice or failed to take advantage of a tax law change which could reduce your liability for previous tax years, what can you do? The good news is that by law, the IRS is required, for up to three years, to review your returns and records as many times as needed to find errors. You have the same three years to get a second opinion and file an amended return. In fact, in 2002, 3.3 million taxpayers filed an amended return.
Samuel Rowley, owner of Muffler Masters in Colorado Springs, was able to recover $14,500 through the filing of an amended return when it was found that he overpaid FICA and payroll taxes.
You may worry that an amended return will trigger an audit however; the IRS itself admits this is not the case. In 2002 alone, 3.3 million taxpayers filed an amended return. The IRS is not the big, bad agency we used to know. In fact, statistics show that audits are down and continue to decline.
Businesses throughout the U.S. overpay their taxes to the tune of billions each year and your money could be part of the billions that is overpaid. When it comes to your taxes, always get a second opinion to ensure you are not paying more than you should and, you can even hit pay dirt by looking back.

Small Businesses Filing Amended Federal Tax Returns to Recover Money
By Darren Oliver
April 15th may be gone but, but certainly not forgotten - especially if you, like millions of small businesses, unknowingly overpaid your federal taxes and can recover money by filing an amended return.
According to the IRS tax code, you have three years from the filing date for the tax year in question to file an amended return. For example, if returns for the 2003 tax year were filed on March 1, 2004, the taxpayer has until March 1, 2007 to file an amended return. This same rule also applies if the taxpayer feels they have made errors resulting in a balance.
Most business owners either prepare their business taxes themselves or have a tax preparer or accountant do them. With either method, the tax liability can be calculated as higher than it actually is because of missed deductions, unrecognized changes in tax laws or just plain being given bad advice.
There are a number of applicable deductions which many tax preparers often miss from home office deductions to self-employed health insurance to personal assets converted to business use. Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars.
Another area, which causes many businesses to overpay, is being given incorrect advice by their tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer produces an average of 480 returns between February 1 and April 15, making it difficult for each return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due.
Furthermore, in the IRS's 2001 assessment of their own call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether a business owner does their taxes themselves and had to call the IRS for clarification on an issue or a CPA did, odds are the answer was not correct.
The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can, like all humans do, easily make a mistake.
In 2002 alone, 3.3 million taxpayers filed an amended return. Samuel Rowley, owner of Muffler Masters in Colorado, was able to recover $14,500 through the filing of an amended return when it was found that he overpaid FICA and payroll taxes. Another small business owner, Karen McClafflin, owner of home-based Secret Canyon Realty, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns.
Why is it that when faced with a life-threatening surgery a second opinion is immediately sought after but, when trusting thousands or millions of dollars to an individual or entity, it's done without question? Businesses must get a second opinion, whether it is done before or after the return is filed, to ensure they are not overpaying or simply to ensure their returns are accurate in all aspects. If not, they could be leaving thousands of dollars on the table.

The 100 year old investment-banking firm of Warburg, Dillon Read (on Park Ave. N.Y.) (now UBS Warburg) has offices in 39 foreign countries - including the Bahamas, the tiny Cayman Islands, Hong Kong and the Channel Islands. Makes you wonder why, doesn't it?
Non-resident foreign companies, trusts, banks and individuals can trade stocks, bonds, commodity contracts and options 100% free from U.S. capital gains taxes.
Under the U.S. Tax Code, only when a foreign company, foreign trust or nonresident alien individual takes up permanent residence within the United States will he be subject to U.S. capital gains taxes in the same way as domestic taxpayers. For a corporation permanent residence would be a U.S. office or warehouse. Capital gains realized by foreign corporations and other nonresidents "not engaged in a trade or business within the United States" are exempted from tax under IRC Section 871 and IRC Section 881 & IRC Section 897(c)(3). Moreover, U.S. Treasury Regulations Section 864-2(C)(1) & (2) provides an exception for what embodies being "engaged in a trade or business within the United States". Under U.S. regulations, a nonresident's Stock Market transactions carried-out through a U.S. stock broker, independent agent, or an employee are not considered to cause the nonresident to be "engaging in a trade or business within the United States".
Publicly traded stock market gains (from NYSE, NASDAQ or AMEX listed stocks and bonds) accruing to an offshore company are free of US capital gains taxes by the Internal Revenue Tax Code's statutes, but "US Shareholders" can have a tax liability (indirectly) if the offshore company is a "Controlled Foreign Corporation (CFC) (i.e., "more than 50% of voting and non-voting stock is owned by US SHAREHOLDERS). See sections 951 thru 958 of the IRC. See especially Code-Section 951(b) for the definition of US SHAREHOLDERS.
American taxpayers that use tax havens are taking more risks (generally) than a foreign non-resident alien (not a US citizen). Whether an American citizen taxpayer will have a tax liability on the offshore company profits depends on a lot of things - including what kind of income is produced by the company (i.e., Subpart F or non-Subpart F) and how many shares in the company you own, and whether the offshore company is a CFC - as defined in the Internal Revenue Code in Sections 957 and section 958.