I am officially living in Puerto Rico full time now, and since I don’t have any property or assets on the mainland, I decided to take advantage of the very generous tax breaks both the federal U.S. government and Puerto Rico give to businesses that move their mainland companies to Puerto Rico. I am currently in the research stage and will be hiring a firm out of San Juan that has both Certified Public Accountants and Lawyers that will graciously help me through the entire process of setting up a Puerto Rico Corporation, filing for tax exemption, showing my business history and appearing with me in front of a committee that will question my business and its move to Puerto Rico (for a fee). I don’t think it is as easy as setting up an S-Corp back on the mainland.
It is my understanding, that because I am in the service industry (Marketing) and that 90% of my clients are not in Puerto Rico, if I employee 5 residents of Puerto Rico (can be gringo or Puerto Rican as long as they live here) I can qualify for a Tax Exemption. This tax exemption will completely relieve me from having to pay Federal Taxes and will reduce my state taxes to 7% after all of my deductions. I also we will not be double taxed. I only pay taxes on my business once, then all the profits are mine at the end of the year. If I pay myself a salary, I will have to pay taxes on that (but I can write that off as a PO) Now, 5 employees is about all I would like to have (I used to have almost 40), but it would be worth bringing them on just for the tax break!
The problem with having employees is that you have to work harder. You need to have a plan for them everyday and most of all, you need to make sure they don’t all asleep on your desk. Cheech’s first and last day on the job:
Cheech, you’re fired!
Popularity: 65% [?]
That’s pretty sweet that you get some sweet tax exemptions! My boyfriend is going through hell with the stupid IRS right now over back taxes he wasn’t aware he had to pay, bc he was paid under the table forever & was claimed by the company he worked for as a “contract worker.” Bulllshit! Stupid government anyway.
Cheech is apparently not excited by desk work. How cute though!
Stefan,
let me know how this turns out. Since I’m a freelancer, I’m my own business, so I would like to know how things work, in case I decide to formally become a PR resident.
Jashana:
I can’t even say the word, so I’ll just say, Cheech got his job back, but now he is in charge of pest control instead of dictation.
Robert:
Will do….keep an eye on this thing too. I’ll update the trials and tribulations and let you know who I used, how they ended up working out.
Oh Cheech…When will he ever learn. Although he isn’t a very good speller, he does love to type (and by “type” I mean he runs across the keyboard until you pay attention to him…). Perhaps he has narcolepsy, in which case you would be an equal opportunity employer.
Jashana - Ahhhh, the ol’ sneaky 1099. That sucks, BIG time.
question - what program do you use for your website?
Can you send me the company you are using in San Juan? I am relocating to PR to buy a small business there and would like to have the same tax benefits
Michael:
We use WordPress to power this blog. It has a very simple user interface and minimal code.
I’ll let you know once I hire these guys to handle my business stuff…I am going to try to work out a referral deal with them…
Hmmm…This makes the prospect of doing business in Rincon a lot more interesting. We were there earlier this month for a couple of days - being a contractor of course I had to look at some property while there. I’d love to know of any resources you find that might help me understand the construction industry in Rincon. BTW - love the project!
It would be great if you could add me to the list about what you find out about the tax exemptions. I am also a freelancer. I don’t think I would be hiring people anytime soon though …
My quickie update.
I found an accountant in Guaynabo that was able to help me out, and per his advice, I have filed federal and California state returns for 2007. I will start the 2008 tax year as a PR resident. Since I was only in PR for 4 1/2 months of 2007, I have no liabilities to PR.
I wrote back and forth with Summer a few times several months ago. I’m still trying to figure out how to live part time in Pennsylvania and part time in Puerto Rico and be able to also work remotely from both locations. I run a non profit here in Pennsylvania, but I’m trying to find a niche to do some consulting or freelance work. I am not able to live in both locations with my current job. What are you looking for?
What are you looking for? I’m a freelancer as well. I live in San Juan now. Used to live in NYC, moved to DC, moved back to PR…and have the fondest memories of Rincon (I spent my college years between Mayawest and Rincon).