Does it make sense to set up a corporation to buy stocks & protect your wealth?

Sweg · 27-02-2020 04:23PM #1

To start off, I'm not sure if this under the correct topic, so feel free to move if that's the case.

Anyway, I am 25 years old and have started investing in the stock market.

I hold a mix of growth stocks and dividend stocks in a private brokerage account, and have started reading Rich Dad Poor Dad.

One of the main pieces of advice given in this book is that you should set up a corporation to protect your wealth.

The main idea behind this is that you should pay your expenses with pre-tax money.

In other words, you pay your expenses (company car, gym memberships, etc.) first, and then you pay tax on whatever is left over.

With the current capital gains and corporation taxes in Ireland, I'm wondering is it a better idea / more tax-efficient to set up a corporation in Ireland, and buy my stocks through that rather than a personal brokerage account?

I understand the tax systems are different in both countries, but I'm just wondering if this makes sense.

VonBeanie · 27-02-2020 04:41PM

For specific advice, contact a tax advisor.

Its quite common to see assets held in corporations in the USA. Its not at all common on this side of the pond. Tax issues drive the agenda. Corporation Tax on profits irrespective of distributions, close company surcharges, income tax and USC on dividends and other issues means you don't come across it here very often.

You can allow related expenses against your profits as an individual as well as a corporation. I think the rule is the same for both ("Wholly and Exclusively for the purpose of the trade"). I cant see gym membership meeting that criteria for either an individual or a corporation.

Some things just don't translate from USA to Ireland

Nermal · 27-02-2020 04:44PM

Forget everything you read in that book, now. It's tripe.

https://johntreed.com/blogs/john-t-reed-s-real-estate-investment-blog/61651011-john-t-reeds-analysis-of-robert-t-kiyosakis-book-rich-dad-poor-dad-part-1

Jim2007 · 28-02-2020 03:36AM

Sweg wrote: »

I hold a mix of growth stocks and dividend stocks in a private brokerage account, and have started reading Rich Dad Poor Dad.

The bin is the best place for that book! It was one of the typical American self help books of the 90s - sounded great to the averages who bought into the you to can be a millionaire... except the advice was bad or just plain dumb... still it did well for the author.

Oh and the corporations... well many ended up being investigated for fraud by the IRS. You can not pay private expenses out of business profits and evade taxes... it’s illegal as most of the poor sods discovered.

Ush1 · 28-02-2020 10:18AM

Brendan Burgess spoke about this on askaboutmoney.com.

It's basically pretty much never advisable to purchase shares through a company like you're describing.

Does it make sense to set up a corporation to buy stocks & protect your wealth?

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