Hello all -

My names Rafe Kibrit and I too suffer from Black Friday PTSD. After deciding against relocating out of the country, I've stumbled into the world of finance and accounting. As I begin my own business after working in public accounting, my main goal is to educate my clients about not only their business, but their personal finance. I believe the lack of curriculum dedicated to gaining financial literacy through formal education is one of the main reasons many educated individuals struggle when dealing with how to invest, understanding basic taxes, time value of money, etc.

As I begin my journey in spreading financial knowledge, I'd love to give back to the poker community. While not active on the forum - I definitely can credit a lot of the (previous) poker skills to twoplustwo hand breakdowns.

With that said - ask anything poker regarding either your 2021 taxes (due May 17!) or poker related taxes in general.

And if you'd like to discuss your personal situation further - feel free to PM me!

Given this has been moved to the Finance, Business & Investing thread - feel free to ask any non-poker related questions. I've only received PM's thus far so if you prefer that way - shoot me a message!

So if I Have a small business where my wife and I are a partnership and each make about 100k, we save about Half of our incomes and invest some. I don't really need to expand the business very fast so I am not buying new vehicles or machinery every year or anything.

I got my taxes back from my accountant this year but didn't opt to do a meeting because of the covid stuff but I had wanted to ask him on what he thinks about when to consider incorporating the business. We are in Canada but I assume it is similar tax laws, or maybe its not something you can shed insight on. A problem I may have is I own 3 trucks and an excavator (4 years and $30,000 left) in my personal name, 1 is paid off, 1 bought new has $6000 payments left and another new one has 5 years or $45,000 of payments left.

We are a service based business with 2-3 full time employees and probably 750k gross this year, 400k gross profit.

Hey - thanks for reaching out!

Let me preface this by saying I'm not familiar with the Canadian tax laws.

How long have you been in business? Generally, its more advantageous to generate a separate, distinct entity rather than file as a sole proprietor. After doing a quick google search, it does not seem as though an LLC is available in Canada, which is a cost-effective way to limit your liability in the US. Your accountant should be able to better inform you of your options in Canada.

The key point to note here is that you don't want possible creditors or others attempting to access your personal funds if your company doesn't meet its obligations. As mentioned above, not only should you create a separate entity for your business, you should also not co-mingle funds between personal and business accounts. Not only will this make bookkeeping easier, it should also help your tax-bill at the end of the year. The last thing you want is to send messy books to your accountant who most likely charges you by the hour. I've worked with clients at a previous CPA firm who ended up paying probably 50% of their fees for the accountant to reconcile your bank accounts & 50% of less on value added service. (Also, based on prior US tax law, separate & distinct entities that have co-mingled funds with personal funds have been deemed personally liable and is known as "piercing the corporate veil".

Without even knowing much about your company, I would recommend discussing with your accountant soon regarding incorporating given your revenue is approaching $1M. Are all the vehicles mentioned used for business purposes? If so - when you create your entity, discuss with your accountant about transferring the property/assets, in addition to cash, as capital contributed upon formation. When discussing options with your accountant, ask about forming a tax-efficient retirement plan that fits you (and possibly, employees) and your wife's goals. In addition, ask questions regarding other proactive strategies to save money on taxes.

Assuming the US and Canada are mostly similar - I hope this provides a bit of help. Also - kudos on your profit margin!

Best way to transfer ownership of a private company to (some of the) employees?

Biz in NC. I own 100% stock. Sub S.... after many years as a C corp. Valuation probably under one mill. No real estate, only a million in mill machinery that at a minimum is 20 years old.... so, not worth a mill. Still operating with a 100K profit per year -ish.

Want to give two employees the business (hehehehe, sounds bad). One is a relative, one has been long time shop foreman. (I will continue owning the property that is held in a different LLC). Biz may not survive after both retire in 10 years.

Best way to xfer with the least amount of tax for giftees? Timeframe is.... done within next 7-10 years

Hi King -

How long have you been an S Corp for? Are the only assets the machinery (no cash)? Also - have you taken depreciation on machinery?

In your S Corp operating agreement, is there any information regarding a buyout agreement or buy-sell agreement?

One final question - when was the last time the business was valued?

Feel free to PM if personal info.

.

Thanks for the info.

Have you kept track of your basis in the S Corp since changing from a C?

Thanks for the reply. We are 5 years in business. I know corporations are similar in that even with dividends we will end up paying similar taxes as sole prop, so its not a huge deal, I think my accountant would have said something. I will have to eventually sort out the mess of all the equipment in my personal name, for now it is working and money is flowing in so I am happy.

No. Didn't know to find out.

If you have your basis of the C Corp prior to switching to S Corp - you can determine your basis by reviewing your 1120S returns and adjusting for the few years you've been an S Corp. The basis will determine the amount of possible capital gain on any sale. If you look at your K-1's, some accountants keep track of basis in Part II - Information about the partner.

Once you have that information (and any corresponding debt basis) - then it will be easier to determine the most efficient (or advantageous) way to transfer your shares.

Not an accountant, nor a lawyer, but I'd strongly suggest you incorporate right away Snowie. Doing so protects your personal assets from any actions that may happen while working: from your posts, it sounds like you're in construction/contracting - even with insurance you're open to WSIB suing. There's further steps you need to take to properly distance yourself, but that's a lawyer's meeting or a few hours of Googling to find out.

Look into an ESOP.

please answer any pms in the thread, the questioner keeps their anonymity but others could have same issue

Will do moving forward.

Is it even worth playing poker (money wise) online if one lives in the USA? Also, lets assume that someone wants to start playing poker on the side outside there normal 9-5 W-2 generating job.

Is there some formula one could use to find out what would be the minimum they would need to make in a year playing poker on the side to at least break even (after costs in taxes owed + probably needing to hire a CPA due to probably how complex this would make paying taxes)?

Also, what records would one need to make sure to keep in case one was audited by IRS, assuming they report these gains?

Last, what are the implications of playing online poker with offshore companies, such as Bovada or others online? Does one need to also report other things with that?

Appreciate the advice, yes we are landscape/sprinkler contractors. There are definitely some risks and scenarios where we could be sued where our insurance doesn't cover something. We had a pipe break 3 years after we installed a system on an apartment building, 1 acre filling up 6" deep from 4-8am before anyone noticed and it was running into the main foyer. That is about 60 gallons a minute coming out. Luckily the owners of the building did not say a word after we fixed the break for free, only 1 year warranty. There was a car accident about 15 feet from where the break was a few weeks earlier. But that's just one example of something that could bite us if our insurance decided to abandon us. Also had a guys crawl space flood after we replaced 2 valves out of 4 and he opted not to replace the other 2, which failed soon after.

You touch someones sprinkler system one time and you are getting the blame on anything water related for years to come.

I am slowly looking into it.

Hey Blue -

I'm probably not the best to comment on current online games in the US (but I think you're on the right site for someone to chime in!).

Regarding playing poker outside 9-5 W-2 job, tax courts usually aren't friendly to poker players also looking to report on Schedule C as a professional. Here's an article for reference, but if you were to look into the benefits of 'professional' rather than as a hobby (no deductions for expenses), my advice would be to treat it as a 2nd business (separate account, track everything, etc.).

https://www.accountingweb.com/tax/in...d-in-tax-court

I think that article answers the majority of your post.

And yes, unfortunately the IRS doesn't care how made $, all income is technically taxable (including drug dealers $). If you decide to take it up and pursue it as a profession with a W-2 9-5, document everything and I'd even create a Single Member LLC to "show" the courts that you are treating it as a 2nd job.

Best of luck.