Setting up companies for tax benefits
 

Hi all,
Looking for a little information about setting up Corporations in order to take advantage of tax breaks and decrease personal liability and risk involving a higher risk investment.
I was recently approached by a family friend regarding an investment oppurtunity. The deal is that I would be investing a lump sum of money with a group who will be selling a product using the little kiosks you see in the middle of the mall. My initial investment would cover much of the start-up costs involved. I would be making money based on the profit of the business, with the group I am investing in taking care of all marketing, sales and management of the kiosk.
Assuming I have done all my due diligence regarding the group I am investing in and the product they are selling, what other steps do I need to take so that I don't get screwed by taxes and limit some personal liability. I am wondering what type of entity I need to start, and what the nature of this entity would be.
Any help would be greatly appreciated.

-Echo

Re: Setting up companies for tax benefits
 

Ask a lawyer, not a poker forum.

Re: Setting up companies for tax benefits
 

Thanks for the advice. I plan on talking to a lawyer and an accountant.
But before I do, I thought that I may be able to get a little info from people who may have some experience with such an investment by asking in the "Business, Finance, and Investing" forum.

Re: Setting up companies for tax benefits
 

[ QUOTE ]
Ask a lawyer, not a poker forum.

[/ QUOTE ]

I agree. IMO, this question is too complex to answer in the context of this forum. IMO, it'd be best to find a lawyer that is also a CPA to ask about this. A competent non-CPA tax lawyer would probably be qualified to answer this question too. Do yourself a favor and hire a CPA tax lawyer rather than some random lawyer from the yellow pages - he'll save you lots of cash in the long run.

Re: Setting up companies for tax benefits
 

Didn't mean to come off as blunt, but your question is so open-ended as to be unanswerable. Questions of liability, tax benefits, etc. are always so personalized based on the specifics of the partnership and the operation of the business that you won't find any useful advice no matter how much detail you give.

There's no set "playbook" for limiting your liability and getting tax benefits; it's all situation-dependent.

Re: Setting up companies for tax benefits
 

I understand. Maybe I can put it in a way that would make it more clear.
Basically I am making an investment in a company. The return on my investment will depend on the profit of the company. The return on my investment will be paid every two weeks.
If it was allowed, I would make this investment using money from something like my Roth IRA, that way, I would not have to pay very high taxes on my return.
I am pretty sure I can't use my Roth IRA to make this investment. I am wondering what other types of investment accounts or business entities I could/should use to help with taxes.

Re: Setting up companies for tax benefits
 

[ QUOTE ]
I understand. Maybe I can put it in a way that would make it more clear.
Basically I am making an investment in a company. The return on my investment will depend on the profit of the company. The return on my investment will be paid every two weeks.
If it was allowed, I would make this investment using money from something like my Roth IRA, that way, I would not have to pay very high taxes on my return.
I am pretty sure I can't use my Roth IRA to make this investment. I am wondering what other types of investment accounts or business entities I could/should use to help with taxes.

[/ QUOTE ]

Oh, ok, totally different question. What you need is called a 'self-directed IRA'. There are a lot of rules for SDIRAs, but the gains are taxed-deferred. YOu can learn more about SDIRAs here:

http://www.penscotrust.com/education/IRAs.asp

Re: Setting up companies for tax benefits
 

If you are just an investor, you should have no liability problems.

A CPA/attorney will know better, but I don't think you will be able to save any money owning this with a corporation. It may actually be worse as your capital gains are taxed as ordinary income.

-Tom

Re: Setting up companies for tax benefits
 

[ QUOTE ]
[ QUOTE ]
I understand. Maybe I can put it in a way that would make it more clear.
Basically I am making an investment in a company. The return on my investment will depend on the profit of the company. The return on my investment will be paid every two weeks.
If it was allowed, I would make this investment using money from something like my Roth IRA, that way, I would not have to pay very high taxes on my return.
I am pretty sure I can't use my Roth IRA to make this investment. I am wondering what other types of investment accounts or business entities I could/should use to help with taxes.

[/ QUOTE ]

Oh, ok, totally different question. What you need is called a 'self-directed IRA'. There are a lot of rules for SDIRAs, but the gains are taxed-deferred. YOu can learn more about SDIRAs here:

http://www.penscotrust.com/education/IRAs.asp

[/ QUOTE ]

Thanks for the link. I have looked into Self-directed IRA's before and I really like the idea. But I don't think I am going to be able to take advantage of that with this oppurtunity at this time, unfortunately.

Re: Setting up companies for tax benefits
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I understand. Maybe I can put it in a way that would make it more clear.
Basically I am making an investment in a company. The return on my investment will depend on the profit of the company. The return on my investment will be paid every two weeks.
If it was allowed, I would make this investment using money from something like my Roth IRA, that way, I would not have to pay very high taxes on my return.
I am pretty sure I can't use my Roth IRA to make this investment. I am wondering what other types of investment accounts or business entities I could/should use to help with taxes.

[/ QUOTE ]

Oh, ok, totally different question. What you need is called a 'self-directed IRA'. There are a lot of rules for SDIRAs, but the gains are taxed-deferred. YOu can learn more about SDIRAs here:

http://www.penscotrust.com/education/IRAs.asp

[/ QUOTE ]

Thanks for the link. I have looked into Self-directed IRA's before and I really like the idea. But I don't think I am going to be able to take advantage of that with this oppurtunity at this time, unfortunately.

[/ QUOTE ]

Personally I'm not aware of any other way to selter earnings from a small biz investment other than a self-directed IRA. If you do find something let me know - I'll add it to my investor pitch.