Unheard Incentive Could Boost International Profits

The domestic US market may be grinding to a halt but small business owners could still make it big at the remaining hot markets overseas specifically Brazil, China, and India.

IC-DISC: Not Just an Accounting Jargon, It is the Only Incentive Today

Weak dollar prices can make the prices of US products competitive in the developing markets.  On top of that, a previously unheard and under utilized tax break incentive could help drive the international profits of US business interests.  The tax break incentive is officially called as IC - DISC or Interest Charge – Domestic International Sales Corporation.  It can also offer lots of savings for US businesses.

Jim Jacobsen of Centerprice Group said that the IC - DISC is the only remaining incentive for US exports companies.  

How the IC-DISC Works for the Small Business

The IC-DISC works by allowing businesses to set up a shell account which will be utilized to funnel the earnings from international market. The money earned will be distributed to the company shareholders and will only have a 15% tax rate, just like dividend stocks.

Small businesses and companies cannot get any better deals than the IC - DISC.  InDrill International, a Houston export company set up their IC - DISC.  They were able to generate $6 million to $8 million profit take from their international sales.  

The IC - DISC facility will require companies to pay commission to it from its earning abroad.  This commission can be withdrawn in the form of dividends.  However, the best thing about IC - DISC is that the commission paid can be deducted from the company’s profit.  So companies are essentially saving through the commissions paid and the tax incentive offered by IC - DISC.  At the end of calendar year, the IC - DISC will not pay taxes.

Benefiting Exports Sales and Other Market Players

The IC - DISC includes in its books all transactions earnings from international sales.  Also included are sales from manufacturing, architectural services, entertainment products, and software.  Consulting services is not included in the IC - DISC item

The IRS will only challenge the IC - DISC only if the business did not follow the rules provided by it.  Companies therefore need to be careful on the rules to avoid issues with the IRS.  Improper contributions or commissions paid to the IC - DISC could render the entire tax break package void.  The company then will be banned by the IRS to get future incentives.

IC - DISC can be set up at a cost of 30 percent for the first year of savings.  The tax break offered by IC - DISC is advantageous to small companies even if they earn only $1 million.