How do I process SaaS payments with the help of a US LLC/corporation? 

Answer by Wray Rives: SaaS or subscription services are generally consider digital goods for tax purposes and are subject to US income tax and depending on the state you register in state level income and sales tax also. First forming a US corporation will require filing a US corporate tax return and paying US federal […]

Should I join a start up as a 1099 employee or W2 employee? 

Answer by Wray Rives: First off it is not really a choice you make of being an independent contractor or employee.  If you receive a 1099, you are not an employee and just referring to yourself as a 1099 employee, probably means you don't qualify and you really are an employee who should be receiving […]

What steps are needed for the IRS to begin taxing intraday trade profits at 50%? 

Answer by Wray Rives: The US House has to propose an amendment to the Federal Revenue Code, that says intra day trading profits are taxable at 50%. This generally comes from the House Ways and Means Committee. The US House has to vote on and pass the bill The US Senate has to either vote […]

What are legal ways a U.S. company can avoid paying income taxes? 

Answer by Wray Rives: You are buying a company that generates $3M in EBITDA but you are seeking free tax advice on Quora.  If you are legitimate, do yourself a huge favor and hire some competent CPA's and attorney's to help you structure the deal.  I consult on M&A deals all the time and there […]

How much do you pay in taxes if your company is registered in Nevada but live in New York City? 

Answer by Wray Rives: Mark Rigotti is correct.  Just because you register you LLC in one state does not mean that the LLC is not subject to taxes in other states as well.  It is a commonly held misconception that you can register an LLC in a relatively low tax state and avoid taxes in […]

Why do accruals increase expenses and prepayments reduce expences when referring to change in profits in Accounting? 

Answer by Wray Rives: Because when you accrue an expense you are recording an expense that you have not yet paid for, but know that you have a liability to pay in the future, so you are increasing the current period expenses for money that will be paid out in the future. Recording a pre-paid […]

I sent a 1099-MISC of $13,000 to my business partner, does the IRS deduct this from my taxes? 

Answer by Wray Rives: Your first problem is as others have noted the IRS is not going to automatically adjust the tax return you filed for yourself, just because you sent them a 1099.  You will have to file an amended return. Your possible second issue may be more important, because you refer to this […]

What are the benefits of becoming an S Corp instead of being a sole owner in a freelancing situation? 

Answer by Wray Rives: Mark Rigotti is correct that the primary benefit to S Corp vs sole proprietor is that given the right set of facts you may be able to save significant self-employment taxes.  Sole proprietors pay 15.3% SE tax in addition to income tax on the net profit from their business.  S Corps […]

Am I obligated to file an amended return if a contractor delivered a 1099-MISC to me well past the deadline and I have already filed my r… 

Answer by Wray Rives: Yes you absolutely are required to amend your tax return and report the additional income.  What is reported on a 1099 does not determine what you are obligated to report on your tax return.  You should have reported all of your income, even if you received no 1099 forms. If you […]

Are computers, computer networks and their programming that much less complicated than US tax code? 

Answer by Wray Rives: Mike Emeigh and Richard Fritzler make some very good points in their answers.  I would just add one more perspective.  In college I was required to take classes in Fortran and Basic, so I have a very rudimentary skill at computer programming and can even write a really simple program and […]