Tax Umbrella Companies – Advice From An Expert
May 16, 2010 by Taxcut Editor
Filed under Personal and Business Taxes
If you are thinking of casting off from the shores of being permanently employed and heading into the potentially stormy, but nonetheless lucrative, waters of contracting or freelancing, then you need to consider how you will set up your new business so as to minimize your long term tax liabilities, while maximizing your income and making it simple for your clients to deal with you. Your choices are to set-up a limited company or to operate under what is called an tax umbrella company. Setting up a limited company, in which you are the director and only shareholder, is the most tax efficient way of working, and means that you can claim back a wider range of expenses, such as equipment and software costs. As you would expect though, there are lots of legalities and paperwork involved with setting up a limited company. There is the cost to factor in too; it is not a cheap thing to do. As well as paying to register the company, you will also have to pay for a solicitor and an accountant. If you would prefer to avoid the hassles involved, and to focus on simply making money, then a tax umbrella company is what you need. What a tax umbrella company does is take care of your invoicing, payments and tax contributions. They do this in the same way as your previous employers did. They literally follow exactly the same processes. Technically, you are employed by them, but that is only for tax purposes, and not in a practical sense. Obviously, they have no control over you, and cannot tell you what to do or how many hours to work. The tax umbrella company system is fairly simple to use, and you can have everything set-up within a few days. Once you are in their system, you will get paid from them every couple of weeks or every month, with the amount being whatever your clients have paid for your services, minus your taxes and the fee that you have to pay the umbrella company. You should only have to pay the umbrella company a set monthly fee, and not a percentage of your earnings.
Now Try : ir35 Umbrella
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A Brief Timeline of Tax Law of the United States, Part 3
December 28, 2009 by Taxcut Editor
Filed under Personal and Business Taxes
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
So the question remains, what happened with the tax system in the United States?
US tax makers have been reaping what they have sown for a long time. The honor system has been replaced by a system in which every tax payer is under surveillance due to the strong inclination of evading their taxes. Basically, consent has been replaced with compulsion. Honor has been replaced with espionage. If you’re feeling the pressure with today’s taxes, call a Cary NC CPA for all your tax-related needs!
In the mid-20th century, there wasn’t a bank in the US that informed the IRS about the affairs of citizens who went to that bank, interest was not reported, withdrawals of cash weren’t reported, and not a thing that went through accounts were photographed. In addition to this, real estate transactions weren’t reported, stock transactions were not reported, dividends were not reported, income from other sources (Form 1099) was not reported, and US Customs didn’t require a declaration of cash carried. Go here if you want help from a modern-day Tax Preparation in Cary, NC.
It was an honor system, and it functioned quite well. The erosion that occurred over the last 50 years to now is that anything of any fiscal significance is now reported.
Adam Smith stated that people will evade taxes and tax laws shown no respect when there is a general suspicion of much unnecessary expense and great misspending of tax revenue. In other words, $500 toliet seats, huge grants to study the sex lives of ants, etc.
Because the government wanted to catch a handful of tax resisters and evaders in the 1950s Congress made a tax monster of the US tax system that more and more taxpayers try to evade. As a general rule, mass tax evasion is a clear sign that a government’s tax system isn’t working. People will pay taxes, even income taxes, if the rates are reasonable.
Thanks for reading! Stay tuned for more updates!
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A Short Timeline of Taxation of the US, Section 2
December 28, 2009 by Taxcut Editor
Filed under Personal and Business Taxes
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
1861 – After Lincoln’s election, southerners walk out on Congress and form the Confederacy with a new constitution to curtail the power of their newly formed country to tax.
1862 – The beginning of US income tax is levied to help finance the rising massive debts of the Civil War. If you are feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
1872 – The income tax is abolished.
1894 – Congress creates an income tax as a result of southerners complaining that excessive reliance on tariffs skyrockets the costs of imported goods for farmers and consumers. Go here if you want help from a modern-day CPA firm in Raleigh, NC.
1895 – The US Supreme Court holds that the 1894 income tax law conflicts with the US Constitution’s bars on insituting direct tax.
1913 – The 16th Amendment is passed and removes that bar and Congress creates an income tax system.
1917 – World War I revenue requirements push up tax rates, with the biggest rate reaching 77% in 1918.
1924 – Publication of the names of taxpayers and how much they owe fails to complete the goal of enforcing paying the taxes and the practice ends.
1942 – Prior to World War II, the lowest income level for paying income tax excluded most wage earners. However, the cost of the war bumped the threshold down the income ladder and sent the top rate to ninety-four percent before the war was over.
1943 – To enforce compliance from the sharply increased number of taxpayers, Congress institutes tax withholding from wages, effectively turning employers into tax collectors.
In the 1940s Justice Jackson of the Supreme Court, former chief counsel of IRS, boasted about how law-abiding Americans were in reporting their income taxes. The system was based on the user’s honesty – there were only a few informational returns. Open resistors to the taxes were few and the underground economy was relatively small.
1962 – IRS Commissioner Caplin said “no other nation in the world has ever equaled this record of voluntary compliance. It is a tribute to our people, their tradition of honesty, and their high sense of responsibility in supporting our government.”
1982 – Chief Justice Neely said – “cheating on federal and state income tax is all pervasive in all classes of society; except among the compulsively honest, cheating usually occurs in direct proportion to opportunity.”
Stay tuned for Part 3 of the Timeline of US Tax Policy!
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A Short Timeline of Taxation of the USA, Part One
December 25, 2009 by Taxcut Editor
Filed under Personal and Business Taxes
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Between 1868 to 1913, almost 90% of the federal government’s revenue was gotten from tax on alcohol and tobacco. While the Civil War was occurring there was a brief income tax, but it wasn’t until 1913 that the 16th Amendment permitted Congress to tax incomes “from whatever sources attained.” The initial 1040’s were due on March 1, 1914. There was not any money taken from paychecks and no money was sent in with the return. Every taxpayer’s taxes were calculated by IRS field agents and a bill mailed to the taxpayer on the first of June.
1766 – Colony leaders met to extinguish British taxes in place by the Stamp Act. The Stamp Act Congress, as it was called, was the start of the American independence movement and the beginning of the modern U.S.
1782 – The first Congress under the Articles of Confederation formed. This Congress had no taxing powers.
1789 – America granted a newly formed Congress the ability to tax. Without taxing powers, the first Congress of the United States barely survived 7 years prior to being dubbed a failed attempt; the second Congress, with taxing powers, is currently going strong after almost 300 years. If you are feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
1792 – Alexander Hamilton coerces Congress to pass an excise tax on whiskey to increase earned income for the government and steady the increase in alcohol consumption. In the western frontier alcohol was the basic medium of exchange, and the 25% tax was harsh. By 1794 the area was in open rebellion. The father of the IRS was created to give the tax enforcement. Go here if you want help from a modern-day CPA firm in Raleigh, NC.
1832 – The national debt that remained after the Revolutionary War and the War of 1812 is paid off. The South doesn’t see any reason for continued high import taxes that raise prices for Southern consumers and promote industrial monopolies in the North.
1850 – John C. Calhoun of South Carolina tells Congress that the South could leave the Union due to the fact that the overly oppressive taxation in the South increased funds that ended up in the North, creating a great shift in wealth from the South to the North.
Stay tuned for Parts 2 and 3 of the Timeline of US Tax Policy!
http://www.marccpa.com/
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The History of Taxation, Part Nine: Tax Law, the Slaves, and the American Civil War
December 25, 2009 by Taxcut Editor
Filed under Personal and Business Taxes
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
“Slavery – the one cause of the Civil War.” – John Stuart Mill, 1862
Can there be any doubtful thoughts about this topic? Certainly the American Civil War was about the slavery issue… was it not? Well actually, one of the greatest hoaxes in our history is that the Civil War began because of the slavery issue and that Lincoln, the Great Emancipator, fueled a terrible war to break the chains of bondage that enslaved over 3 million black Americans. Right before the war, the South had everything its way.
In 1860, the South controlled the Supreme Court and Lincoln and Congress were approving a constitutional amendment to protect slavery forever! What happened?
We should rewind the time back to the year 1832. By 1832 the national debt from the War of 1812 had been paid and the South saw no need to keep up the exorbitant import taxes that seemed to only jack up prices for the South’s consumers. Either the South paid high import taxes on imported goods or it bought Northern manufactured goods at excessive prices. Either way, the South’s money transferred to the North. To say the least, the South was not happy with this arrangement. If you are feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
So, in 1832 a convention was hosted in South Carolina to nullify these federal import taxes. The South declared the tax was unconstitutional and authorized the governor to resist the enforcing of the import taxes instituted by the national government. It seemed like a civil war was in the making. Mild tempers won over, however, and the Great Compromise of 1833 reduced import taxes over the subsequent few years to an area the South could tolerate. Go here if you want help with a modern-day Tax Return in Raleigh, NC.
Over the ensuing years, however, Northern corporate and manufacturer interests bullied into Congress more taxes that again stressed Southern planters and allowed Northern Manufacturers to become rich once again. In 1850, John C. Calhoun, the South’s most outstanding spokesperson, delivered a speech to Congress. His speech listed 3 grievances of the South that may cause secession from the Union and war. The first two involved fears about the gradual decline of power of the South in general and the states in particular.
The third, and only solid grievance, was about taxation. In Calhoun’s view, national import taxes was a targeted legislation against the South. Huge amounts of taxes on the South raised money that was used in the North. The focus of economic life in the country was steadily changing strongly to the North. Calhoun spoke of secession if the taxes weren’t reduced. But what of the slaves? Well, in his campaign for the presidency in 1860, Lincoln repeatedly said he would not do anything about slavery in the South. Actually, most Northerners did not care much about black men in bondage, just as little as how much they worried about the Native-American in the West or impoverished uneducated workers in factories. By and large many black slaves got substantially better quality treatment and more compassion than their counterparts in the North. Lincoln, in fact, promised Southern plantation-owners that fugitive slaves would be caught. The Congress and then the Supreme Court (Dred Scott decision) continually affirmed that slavery wasn’t going anywhere.
However, just as Lincoln was elected and Congress assembled in 1861, they enacted more high import tariffs. Slavery wasn’t an problem – higher import taxes were. In his inaugural address Lincoln stated he would collect the customs in the South even if there happened to be a secession!
Fort Sumter, near the entrance of the Charleston Harbor, started to fill with federal troops to support the collection of the new taxes. The Civil War began in 1861 when South Carolinians fired on the federal garrison at Fort Sumter. The inevitable had been brewing for years – but it wasn’t about the slaves. It was about tax policy.
Two years later, Lincoln issued the Emancipation Proclamation, and then only following repeated military battles, as the last resort to rally the North behind a noble cause. With respect to the slave issue – most Northerners didn’t care much concerning black people in bondage, no more than they cared about Native-Americans in the west and the poor illiterate peasants in the factories. Ironically, most black slaves got better treatment and greater compassion than their impoverished counterparts in the North.
That’s it for the History of Taxes Series!
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