C6 Your Money The Epoch Times April 14, 2010 How to Save Two-Thirds of Your Tax Liability Your Personal Finance Advisor Finding a Fit for Commodities in Your Portfolio By CHRISTIAN GENITRINI CPA, MS, MBA, JD, LLM If you are a business owner or a self-employed individual, there is a good chance you are paying too much in taxes. In my tax and ﬁnancial planning practice, I see hardworking individuals who literally waste money by using the wrong ownership structure or by not doing any tax planning. For example, if you do business as a sole proprietor, not only do you expose yourself to unlimited liability, but you also pay self-employment taxes on the full amount of your net earnings and you may not maximize your deductions for retirement purposes. Therefore, just by using a corporate structure, you would save thousands of dollars each year (at least $6,000 in my experience). Although many business owners have been advised to do business using a LLC, there are many instances in which a corporation is a better vehicle to maximize deductions, oﬀer better beneﬁts to the owners, and minimize overall taxes. Before you choose the best legal entity for your business, some of the proper questions to ask are: Ɓ In what industry do you operate? Ɓ How much in net income or losses are you generating today? What about in the next few years? Ɓ In what states are you selling or will you be selling your products? Ɓ Are you planning to raise outside capital in the near future? These questions are extremely important because based on your answers, you should set up a different legal entity. It is therefore imperative not to think that a certain legal entity is best for all types of businesses—this can be a mistake that will cost you money each year. For businesses with assets such as real estate, plants, machinery, By ELAINE RACHLIN, CFP TAX TIME: Consulting with professional tax and accounting advisers can take some of the headache out of tax season. photos.com vehicles, and intangibles, there are many ways to minimize taxes and liabilities by segregating the ownership of some or all of these assets into diﬀerent entities. Such separation can also be utilized when your business has distinct products or service lines, as well as when you serve diﬀerent geographical markets. For businesses with signiﬁcant net income, more sophisticated techniques may involve oﬀshore entities or multilayered corporate structures. Proper tax planning will also allow you to create very ﬂexible retirement plans that will allow both signiﬁcant tax savings (up to $30,000 per year) and the ability to create your own “bank.” In fact, the money accumu- lated in such plans could then be accessed during years in which your business is not doing well or like in the past year, the credit markets are shut, and it becomes almost impossible for business owners to obtain bank ﬁnancing. These retirement plans can cover both business owners and their families and allow for complete control of the funds by the owner. There are also ways for an astute business owner to leverage the money put into the retirement plan to obtain additional income. What is important to understand is that you do not have to change your business or your operations to take advantage of tax planning options. All the solutions are im- plemented via the creation of the proper documentation without interfering with your day-to-day activities. Furthermore, tax planning can also help you increase your top line revenue by allowing you to lower your pricing and still retain the same proﬁt per unit or hour of service. Now that you know that you have options, doesn’t it make sense for you to take a few basic steps to retain your hard-earned money and accumulate wealth for you and your family? If you want to receive FREE tax and ﬁnancial planning advice, contact Mr. Christian Genitrini, CPA, MS, MBA, JD, LLM, at 646-2594620 or [email protected]. Recovering From Identity Theft By LYLE EVANS Identity theft is on the rise in America because con artists want something for nothing. Unfortunately, many innocent people get hurt because of the fraudulent activities of others. Restoring your good name and credit can take much longer to repair than it took to destroy. The worst part about the whole thing is that you are the one responsible for restoring your identity even though you are not the one who used your name fraudulently. We will discuss some of the simple things you can do to get your identity on the road to recovery and simple things you can do to keep it there. There are varying degrees of identity theft. For example, if someone uses your credit card once or twice fraudulently and you ﬁnd out and put a stop to it, you may not have such a hard time repairing the damage. On the other hand, if someone gets all your information, your Social Security number, your birthday, and other pertinent information, he can set up false credit card accounts and run up large bills in a hurry. Con artists can use your information over the phone and Internet to get phone cards and such and to purchase just about anything as long as they have a credit card in your name. If this goes on for an extended period of time, it can be very serious to your credit and large fraudulent expenses may be incurred. The size of the fraudulent charges and the length of time the theft has gone unnoticed can make it very diﬃcult to clean up your credit and identity. Many lending companies will take responsibility if fraudulent activities are reported quickly. If the fraudulent activity goes on for a long period of time with large expenses incurred, lending companies make it much more diﬃcult to clear your record and name. There are many questions and hoops these institutions will require you to go through. If you ﬁnd yourself a victim of fraudulent activity, there are some things you should do immediately. Call the lending company and put a stop to the fraudulent activity as soon as you ﬁnd out. Depending on the severity of the fraud, you may need to have your credit company cancel your current cards and reissue new ones to you. If your name and identity have been used fraudulently on a wide scale, you will need to contact every company that you have done business with. This can be large task in itself, but you need to make them aware of what is going on. If something looks suspicious to them, have them contact you. In cases where your Social Security number has been used fraudulently, contact the government Social Security oﬃce. (The government Web site consumer.gov/idtheft also provides a wealth of information on this topic.) They can help you get things straightened out. They deal with this often and know what to do in order to help you clean up your credit and Social Security number. You may also want to contact state government Web sites where you will ﬁnd additional agencies and information to help you. It is also a good idea to keep good documentation when you ﬁrst ﬁnd out about the fraudulent activity. Begin by recording the names of the people you talk to at the diﬀerent institutions you communicate with. By keeping a good log and documentation, you protect yourself and can back up what has happened if needed. Law enforcement may also ﬁnd your documented information useful in prosecuting the individual or individuals responsible. There are a number of things you can do to protect your identity once you have everything cleared up (or to prevent it in the ﬁrst place): Ɓ Mail payments directly at the post oﬃce; never leave them in the mailbox. Ɓ Refuse to give personal information to people who ask for it in surveys. Ɓ Be very careful about giving your information over the Internet. Be sure you know the IDENTITY THEFT: Simply refraining from sharing your personal information over the Internet is one way of limiting your risk of identity theft. photos.com site is secure and reputable. Ɓ If you normally carry your Social Security card in your wallet, take it out and put it in a safe place. If your wallet were to be lost with that card in it, it would be an open door for thieves. Ɓ Dispose of personal information by shredding or burning. Ɓ Be careful when using credit or debit cards so that people are not close enough to get your personal information (such as at an ATM, a terminal at a checkout stand, and so on). Ɓ If you can aﬀord it, hire a reputable credit watch company to watch your credit and notify you of any suspicious activity. Ɓ Finally, do your best to protect information and be cautious. Remember it can take a long time to get your credit and identity cleaned up. Be patient in your rebuilding eﬀorts. If your situation is dire, you may need to seek professional help. Do your homework before choosing an identity restoration consulting ﬁrm. Good luck. © Simple Joe, Inc. Lyle Evans is a quality control specialist for Simple Joe, Inc. These days, advertisements for investing in commodities are nearly everywhere. On TV, radio, and billboards, famous and not-so-famous people champion products like gold, silver, and oil as reliably good investments. The appeal is easy to understand. At a time when many investors are still licking their wounds from losses suﬀered during the Great Recession, can’t we all sympathize with the urge to invest in something that retained its value during the crisis? But is there really room in your portfolio to invest in commodities? What are the drawbacks? Are there risks involved? You should understand the characteristics of commodity investments and determine an appropriate level to include in your overall asset mix before making any investment decisions. Generally speaking, commodities should not be considered a substitute for your core investments in stocks, bonds, and cash-equivalent instruments. the complexities of commodities Gold and oil are the two most visible commodities considered for investment purposes. But a wide range of commodities fall into this category, ranging from natural gas to copper to pork bellies. Finding investment success in any single type of commodity can be challenging, particularly for those with little experience in this market. Commodity prices have a history of signiﬁcant volatility. Prices can change dramatically and with little notice. That is a recipe for potential investment disaster if you are not careful about choosing the right investment. Consider the volatile nature of prices on oil futures contracts on the New York Mercantile Exchange in recent years. Based on data published by The Wall Street Journal, in July 2007, oil was up to $78/barrel. About one year later, oil futures topped the $145/barrel mark. By December of 2008, ﬁve months later, the price of an oil futures contract fell to just $35/barrel. This type of price movement is an indication of the risks associated with investing in a single type of commodity. Yet if structured correctly within a diversiﬁed portfolio, commodities can help reduce volatility in your overall investment mix. Often, commodity prices tend to move in a diﬀerent direction from the stock and bond markets. In the period from October 2007 to March 2009, the stock market, as measured by the Standard & Poor’s 500 stock index (an unmanaged index of stocks), lost 57 percent of its value. During that same period of time, gold prices (based on the spot price of gold on Elaine Rachlin, CFP Financial Advisor Ameriprise Financial Services, Inc. 530 Fifth Avenue, 16th Floor, New York, NY 10036 Direct: 917.472.2697 ameriprise.com We shape ﬁnancial solutions for a lifetime® the Commodity Exchange or COMEX) rose 25 percent, helping to smooth the performance of a portfolio that included gold in the mix. using a cautious approach While investing in any single type of commodity may carry undesirable risk for most investors, a good case can be made for other approaches that are readily accessible. Commodity-focused mutual funds or exchange-traded funds (ETFs) are two alternatives to consider. Funds like these oﬀer diversiﬁcation within the marketplace to provide a degree of protection from the volatile nature of individual commodities markets. Some funds invest speciﬁcally in commodity-related indexes. Others may invest in companies that participate in selected commodity businesses, such as oil exploration ﬁrms or gold mining companies. It makes sense to talk to your investment advisor and try to determine the most appropriate way to diversify into commodities within your overall portfolio. This column is for informational purposes only. The information may not be suitable for every situation and should not be relied on without the advice of your tax, legal, and/or ﬁnancial advisors. Neither Ameriprise Financial nor its ﬁnancial advisors provide tax or legal advice. Consult with qualiﬁed tax and legal advisors about your tax and legal situation. This column was prepared by Ameriprise Financial. Financial planning services and investments oﬀered through Ameriprise Financial Services, Inc., Member FINRA & SIPC. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any ﬁnancial institution, and involve investment risks including possible loss of principal and ﬂuctuation in value. © 2009 Ameriprise Financial, Inc. All rights reserved. THEEPOCHTIMES.COM 6-- :WLJPHSPaLK PUPUKP]PK\HS PUJVTL[H_ 7LYZVUHSPaLK :LY]PJL :HMLHUK +LWLUKHISL -YLLLÄSL ^P[O[OPZHK ;LS! 6WLU!4VU|:H[ HT[VWT 3P]PUNZ[VU:[UK-S )YVVRS`U5@ :[LWZH^H`MYVT[OL Z[VWH[5L]PUZ:[ (*.H[/V`[:JOLYTLYOVYU HUK)489H[+L2HSI(]L