Approved for Puerto Rico Act 22 Application!

UPDATE: SIGNED ACT 22 DECREE RECEIVED

I just got an email this morning stating my Act 22 Application has been approved and now awaiting my $5,000 payment! My Act 20 Application is now “Eligible Case” which was defined in a previous email I received at the beginning of the process:

o   Act 20: it means that the draft of the decree has been sent out to the agencies for their determination or recommendation. It has a time frame of 20 working days, however the public policy of this administration is that no case will be approved without the recommendation of the Department of Treasury.  Once we receive the recommendations of the agencies, we send a final draft of the decree, where a team of the DDEC will evaluate your petition, this will not change the status but we call it the Final Stage. Once they understand that the case is ready for approval they send it to the Secretary of DDEC.  Once we receive it the status will change to Approved and we will contact you so that you can pick your decree or we can send it by mail.

More info on the history of my process can be found at this link.

Puerto Rico Act 20 / 22 Tax Incentives – How to Apply Yourself for $450.00 | Self-Help Resources

Puerto Rico Act 20 / 22 Tax Incentives – How to Apply Yourself for $450.00 | Self-Help Resources

I started a Facebook Group of Act 20 / 22 members and those interested here: https://www.facebook.com/groups/1193474797381907/

UPDATES

ACT 22 SUCCESS

January 11: Submitted application online

January 19: Sent email on pre-evaluation status for application completion. Talked with staff indicating one person is in charge of prequalifying all apps.

January 21: Talked with prequalifier over phone and discovered application website was down.

January 26: Requested a manual review if the application website was still down. It was down 9:00 PM PST, January 25, but it seems to be back up now.

February 2: Called in on status update, and discovered pre-evaluation was complete. I should had received an email indicating a notarized affidavit and $750 application fees were required, but I didn’t receive that email for some reason. Mailed out via 3-Day Priority mail my notarized applications and Cashier’s checks for application fees.

February 11: Check was received by their offices and I received a detailed email describing the next steps on how my application status will proceed according to certain milestones as described below.

  • FILED: Payment has been received and my application will be forwarded to the appropriate agencies.
  • IN EVALUATION PROCESS: Background checks are conducted and evaluations are conducted on the provided documents. No specific time frame.
  • ELIGIBLE CASE: This is the final “stamp of approval” required stage passed onto the highest departments such as the Department of Treasury and The Department of Economic Development. Time frame is listed at 20 working days. This is where I’ll need to pay the one-time fee for $5,000 for Act 22.
  • APPROVED: THE DAY I’M LOOKING FORWARD TO!

February 16: Act 22 Application is now “In Evaluation Process.” Act 20 is still in “Pending Filing”

February 18: Act 20 Application is now “Filed.”

February 23: Act 20 & 22 now “In Evaluation Process.”

March 1: Act 20 & 22 “In Evaluation Process.”

March 2: I just heard through various people experienced with the process that Act 20 has been taking upwards of 6 months to complete. Since I officially “filed” February 12, that’s looking to be completed sometime in middle August which means not enough time for me to move AFTER approval, and still qualify as a bon-a-fide resident. It turns out that upon approval, the Decree is backdated to your approval date, so assuming the decree gets approved the same year, you could move in expectation of approval.

March 7: This group has been helpful. Just be wary of the people trying to “sell” you stuff. There seems to be a higher concentration here than I’m used to, but that may be because there are a lot of “Internet Marketers”: https://www.facebook.com/groups/1570113163276010/

March 9: Realizing I could’ve moved to Puerto Rico upon my file date (dumb mistake!), I’ve sought professional representation to help increase my odds of gaining approval. At least with enough certainty that I make the move earlier than I had anticipated.

Based on the Facebook group I listed, I discovered that there are three main organizations that got in from the start: BDO, PMA, & AMG. BDO is the only group that has CPAs licensed. The other groups are attorneys, so they have the advantage of having 100% attorney-client confidentiality, if that’s your thing. BDO can’t necessarily promise that, but they offer a blended rate which puts them at being cheaper overall than the attorney firms, while still offering Attorneys within BDO mixed in with CPAs.

I’m checking with my contact at BDO if he wants me to post his contact info so you can give him mad referrals! I wish I found that Facebook group at the beginning. I have no idea why I didn’t do a quick search in Facebook at the beginning. Stupid me! Oh well, you can learn from my mistake now.’

March 10: Upon some soul searching, I’m ready to make the plunge. My contact at BDO is below. The basic rationale is that there have been essentially zero cases where someone from Act 20 has been flat out denied. Even if the application doesn’t get approved until after the 2016 tax return deadline, I can still submit it as though I was approved.

Unfortunately, the Internet has not been doing Act 20 / 22 any favors with all the people trying to monetize information (only reinforcing the “scammy” feeling), and it’s taken some time for me to shake off the “feeling” of this being a scam. Seriously, a 4% tax rate seems “too good to be true!” The Facebook group helped bring an authentic and more trustworthy assurance that this is, in fact, THE REAL DEAL! Time to GET SOME!

GIOVANNI MENDEZ, ESQ.
Senior Associate
Tax Advisory Services
Tel: 787-754-3999 Ext. 2154
gmendez@bdo.com.pr

Also, since I’m going to be a Puerto Rican resident, I didn’t need to also apply for Act 22 since Act 20 allows the dividends from my company to be tax free for Puerto Rican residents. Oh well. Even if I knew that before, I’m glad I did it anyway since I’ll probably be glad I did so within the next 20 years.

March 23: Confirmed that even if my application isn’t approved this year, I can still file as though it is approved. So I ended up flying in Sunday, March 13. Moved into my house in Monte Claro, Bayamon, March 21. I’ve learned a lot, and perhaps I’ll do an updated podcast soon.

April 28: APPROVED FOR ACT 22!!! I just received the letter via email this morning. Act 20 is now listed as “Eligible Case” which is defined from one of my earlier emails as:

o   Act 20: it means that the draft of the decree has been sent out to the agencies for their determination or recommendation. It has a time frame of 20 working days, however the public policy of this administration is that no case will be approved without the recommendation of the Department of Treasury.  Once we receive the recommendations of the agencies, we send a final draft of the decree, where a team of the DDEC will evaluate your petition, this will not change the status but we call it the Final Stage. Once they understand that the case is ready for approval they send it to the Secretary of DDEC.  Once we receive it the status will change to Approved and we will contact you so that you can pick your decree or we can send it by mail.


DISCLAIMER: I AM NOT AN ATTORNEY OR CPA. I HAVE NOT CONSULTED ANY PROFESSIONALS, AND THIS IS BASED OFF RESEARCH ONLINE. NO ACTUAL EXPERIENCE. FOLLOW MY ADVICE AT YOUR OWN RISK!!!

 

SUMMARY
♦ 4% Corporate Tax Rate (ACT 20)

 

♦ 0% Tax on Dividends (ACT 22)

 

♦ “Source of Income” not from the US are exempt from US Federal Income Tax (https://www.irs.gov/taxtopics/tc901.html).

 

“Source of Income” defined: http://www.nd.gov/spo/connectnd/1099-information/irs-def.pdf

 

Pay yourself market salary for Arm’s Length Transactions

 

STEP 1 – CREATE CORPORATION

https://prcorpfiling.f1hst.com/CreationFilings/NameAvailability.aspx

Registered Agent

United Corporate, $250.00

info@unitedcorporate.com

$150 for Minimum Registration Fee

Bylaws & Minutes

 

STEP 2 – APPLY FOR EIN

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online

 

STEP 3 – APPLY FOR ACT 20 & 22

https://applications.pridco.com/

– Request Access for Company & Individual

– Go through process, hit “Save Application”

– Go Back to Main Screen

– See all documents needed to Upload

 

DOCUMENTS NEEDED
Criminal Background Check (https://oag.ca.gov/fingerprints/security) ~$50
Two Commercial Bank References
Resume
Corporate Structure
Passport
Social Security Card

Find the official list here: http://www.oeci.pr.gov/SiteCollectionDocuments/Instructions%20-%20DDEC%20Online%20Applications%20Platform.pdf
TIMEFRAMES?
ACT 20: 6 months?
ACT 22: 2 – 3 Months?
=====

GOVERNMENT LINKS
http://www.oeci.pr.gov/SiteCollectionDocuments/Instructions%20-%20DDEC%20Online%20Applications%20Platform.pdf
http://www.oeci.pr.gov/Pages/Communications.aspx
http://www.oeci.pr.gov/sworn-statement-notifications

http://estado.pr.gov/en/
http://estado.pr.gov/en/formularios-para-corporaciones/
http://estado.pr.gov/en/category/entrepeneurs/

 

TIME TO ACT NOW

http://taxfoundation.org/sites/default/files/docs/fed_individual_rate_history_nominal.pdf

http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=464%2C851.00&year1=2015&year2=1950

 

MAP OF LOCATIONS

https://www.google.com/maps/d/u/0/edit?hl=en_US&app=mp&mid=zcrmk64ro1OE.k-Uy3CYn9FiM

 

Dorado & Palmas Del Mar

 

FOR RENT

http://www.point2homes.com/US/Rental-Properties-Maps/PR/Dorado-Municipality/Dorado.html?location=Dorado%2C+PR&geopicker_type=viewport&search_mode=location&PriceMax=3%2C000&PropertyType=Homes&Bedrooms=4plus&Bathrooms=2-3&page=1&selected_view=map_view&LocationGeoId=352258&viewport=-66.30441089476972%2C18.454808840353525%2C-66.28044267501264%2C18.46640015557495&zoom=17&location_changed=&ajax=1

 

YOUTUBE LINKS

https://www.youtube.com/watch?v=AT8r0EqwYHA

 

https://www.youtube.com/watch?v=SZlTaixK-W4

 

RESTAURANTS

http://www.yelp.com/search?find_loc=san+juan,+puerto+rico&start=0&sortby=review_count&cflt=restaurants&l=g:-65.86990356445312,18.62248950625186,-66.28189086914062,18.231627019246293

 

ACT 20

http://www.portocapital.com/puerto-rico-act-20-tax-incentives-export-services-act-tax-incentives-legislations/

 

http://www.prinvestmentsummit.com/featured-speakers-pris.php

 

http://puertoricotaxincentives.com/act-20-export-services-act/

 

ACT 22

http://taxlawsolutions.net/articles/2014/PRIDCO%20Presentation%20-%20Tax%20incentives%20for%20export%20sercies%20and%20resident%20investors%20in%20Puerto%20Rico.pdf

 

http://www.portocapital.com/puerto-rico-act-22-tax-incentives-legislations-individual-investors-act/

 

OTHER LINKS

http://www.nestmann.com/articles/prtaxes.htm#.Vor_5RUrIuU

 

http://edition.cnn.com/2014/03/22/us/puerto-rico-migration-economy/

 

http://premieroffshore.com/blood-in-the-streets-offshore-tax-planning/

 

https://www.quora.com/Would-you-recommend-Act-20-22-Puerto-Rico-which-offers-100-tax-exemption-on-capital-gains-and-4-corporate-tax-to-an-individual-entrepreneur-with-an-online-business-generating-500k-1m-per-year-in-taxable-income

 

http://www.internationalman.com/articles/why-i-really-moved-to-puerto-rico-and-you-should-too

 

PALMAS DEL MAR

 

Dorado Beach, a Ritz-Carlton Reserve

Peter Schiff moved there

http://schiffgold.com/key-gold-news/cnn-money-talks-to-peter-schiff-puerto-rico-the-next-singapore/

 

http://money.cnn.com/2015/08/05/investing/puerto-rico-tax-exemptions-billionaire/

 

http://www.ritzcarlton.com/en/Properties/DoradoBeach/Information/Directions/Default.htm

 

ACT 74

http://businessinpuertorico.com/documents/ACT-74-PG.pdf

 

QuickBooks Pro 2013 OLSU-1022 Error Message Solution

PROBLEM DESCRIPTION

I did a fresh install of QuickBooks Pro 2013 on a new machine and noticed I was getting an error message when I was trying to “Set Up Online Services”.

An Error occurred while updating the branding files!

Please restart the Online Banking Setup Wizard to initiate the update process again.

Then I’ll hit the “OK” button only to proceed to this error message:

An unexpected error occured. A critical file that contains the financial institution data is not in the correct format or missing.

Error message number: [OLSU-1022]

Press OK to have QuickBooks download this file for you. After the download, restart the Online Banking Setup Wizard.

SOLUTION

The QuickBooks given solution didn’t work for me. Then I remembered I had perfectly working files on other computers, so I just copied the files from the working computers to mine.

STEP 1
Download the four files I’ve shared here:

  • FIBlueprint.xml
  • PopularFIs.ini
  • index.ini
  • fidir.txt

STEP 2
Go to the following folder on your computer and move your downloaded files to that directory:

C:\ProgramData\Intuit\QuickBooks 2013\Components\OLB\branding\filist

STEP 3
Right click the four selected files in the designated folder in STEP 2 and select “Properties”. Then make sure the “Read-Only” option is checked, and you should be good to go!

Many of my banking institutions don’t have QuickBooks files (.QBO) to use Quick Connect with and only offer the Quicken files (.QFX). I’ll cover how to convert QFX files to QBO files in a different post.

Accounting, Human Resources, Payroll Overview for Start Up Businesses in California

This guide assumes you know 0% about all the numerous laws, best practices, etc., about running a business.  I obviously can’t cover everything, but I can at least bring to your attention some of the most important aspects to minimize your liability (AKA the risk of you getting sued).

 

Accounting

Payroll

Human Resources

– Break Even Analysis

    — Fixed Expenses

    — Variable Expenses

    — Income Sources (variable vs. fixed)

    — Break Even Point

FIRST OFF

Do you have:

    – Need an Federal EIN http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online

 

    – Need a State Employer ID

https://www.ftb.ca.gov/businesses/faq/701.shtml

ACCOUNTING

I’ll actually break accounting up into multiple parts:

 

– Accounts Payable

    – Credit Cards

    – Checks

 

– Accounts Receivable

    – Timeframe

    – Keep Track of Accounts and Review

 

– Bookkeeping

    – Quickbooks

    – Download Transactions Online

    – CATEGORIZE!!!

    – Look at Reports to adjust your “break even” analysis to be more accurate

PAYROLL

– In house, or Outsource (http://www.amesoft.com/)

    – Payroll Taxes

– Hourly / Salary

 

– Overtime:

    http://www.dir.ca.gov/dlse/faq_overtime.htm

 

    – Meal periods:

        http://www.dir.ca.gov/dlse/faq_mealperiods.htm

 

    – Paid Break

 

    – Rest Periods:

        http://www.dir.ca.gov/dlse/faq_restperiods.htm

 

– Time management software for clock in and clock out times

    – May come with payroll company

    – TimeTrex (open source)

    – Numerous other options

 

– WHY do this?

 

– Unemployment:

http://jeffersonkim.com/2012/09/20/unemployment-from-a-business-owners-perspective-in-california/

 

http://www.edd.ca.gov/UIBDG/default.htm

 

http://www.edd.ca.gov/pdf_pub_ctr/de2088c.pdf

 

Write Ups and notifications.

 

DOCUMENT EVERYTHING!!!

HUMAN RESOURCES

 

– Protected Classes

http://www.nolo.com/legal-encyclopedia/california-employment-discrimination-31690.html

– Applicable to Hiring, Firing, EVERYTHING

 

– At Will Employment

    http://en.wikipedia.org/wiki/At-will_employment

 

– Employee Handbook not 100% necessary at this stage

 

– New Hire Packet

    W-4

    I-9

    Lunch & Break Notice

    MPN Notifications

    Healthcare Notifications (http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf)

“Evergreen” Contracts and Contract Negotiation with Tellecommunications

I prefer month-to-month contracts as much as possible, especially in areas of technology.  This is to give me the freedom to cancel with the vendor in case they aren’t working out financially.  It’ll allow you to cancel after the month without any repercussions.  Perhaps you find someone cheaper or you may discover their services aren’t really needed.

Make sure you’re reviewing ALL contracts in the fine print and renegotiate the fine print.  If you don’t like it, walk away and check with a new company if many companies offer similar services.

Often contracts will have provisions that automatically renew the original term of the contract unless you cancel at least 90 days prior to the end of the term.  These are “evergreen” clauses and I HATE them.  Some contracts will even state you can’t cancel earlier than 180 days before the end of the term.  That means you only have a 90 day window to cancel a contract that may automatically renew another 5 years!!!

I will often try to do a standard term on the contract, and then once the term ends, have the contract month-to-month.  Or if it’s an evergreen contract, I will send them a cancellation letter the first month or as early as possible so that it’ll force them to come back to the table to renegotiate the terms at the end of the term, rather than automatically renewing.  You still need to be on the ball upon renewal time.

The most notorious companies are the ones that deal with technology.  Month-to-month is the way to go or at most an annual contract because technology and pricing is constantly shifting downward.  You have to be on the ball and paying attention to these because often times you have a small window to cancel.

Companies to consider: telephone, Internet, and television.  Or basically any company that you started services with more than 3 years ago.

I’ve saved hundreds of dollars per month by trimming bloated telecommunications contracts from 2004.

How I Got Over $600,000 for Selling my Cell Tower Leases

Some hotels have cell phone towers on their hotels. Consider yourself lucky because YOU JUST HIT THE JACKPOT!

AT&T, Sprint, T-Mobile, Verizon, Metro PCS, and whatever other cell phone provider basically pays out thousands of dollars per month to property owners for the permission to put cell phone towers on their roofs. Most of the time, the property owner doesn’t need to pay for electricity.

That’s a pretty sweet deal. You get thousands per month for doing pretty much nothing.

There are some companies that will offer you a lump sum of cash in exchange for the monthly payment from these cell towers (40-year term). So for example, for a $2,000 / month cell tower lease, you can get a lump sum of about $192,000 (more or less)!

The break even for this is about 8 years, but seriously, how many hotel owners actually keep their hotels for 8 years? And when a hotel brings in millions per year in revenue, a couple thousand is a drop in the bucket during selling time. A person who buys a hotel buys a hotel for its ROOM revenue and is not so concerned about a cell phone tower lease.

I got competitive bids from multiple companies, and we ended up going with UnisonSite.com We got the highest bid from them and they processed the cash relatively quick. Their lawyers also helped us get rid of an erroneous Mechanic’s Lien on our Title. Definite bonus points for that added perk!

Have you had experiences (good or bad) with different lease buyout firms? Have a better idea to best utilize your cell towers? Let me know below.

 

How I Became a Paperless Office Using a Document Scanner

I currently use the Fujitsu ScanSnap S1500 as a document management tool. I basically scan any document into this machine, and then it turns it into a searchable PDF document. This means that I can later do a word search and the results will bring up any document with the words I look for.

The time saved on not having to file and pull up documents is well worth the $400 investment. Just make sure you auto back up the folder housing all your saved documents! I’ve been using a document scanner since I first started in 2007.

Imagine: NO MORE FILE CABINETS!!!

Support Software

1) Adobe Acrobat – It comes with the scanner so you can create your own PDFs and separate the PDFs you scan in into individual pages for emailing purposes.

2) SyncBack – This is a freeware program that you can use to schedule automatic backups of your scanned documents. (Advanced Tip: I bought the pro version and setup a freeware FTP server off-site using FileZilla.)


How I Saved $83,112.09 on Property Taxes and You Can Too (Orange County, CA)

If you look at your annual property tax from Orange County (go http://tax.ocgov.com/tcweb/search_page.asp if you don’t have it on you), you’ll see a line item for “OCSD SEWER USER FEE” This fee is to maintain the sewer system in Orange County. One of the things with this fee is that it only an ESTIMATE based off of some formula I don’t understand. I think it may have to do something with the square footage.

This means, that if you send the OCSD (Orange County Sanitation District) the actual amount of water you use, they can calculate what the ACTUAL fee is and can adjust your bill. If it’s lower, they’ll give you a refund for the past 3 years of taxes, and if the actual bill is higher, they WILL NOT charge you more :]

Win-Win I say. And all it takes is for one simple form to be filled out here:

http://www.ocsd.com/civica/filebank/blobdload.asp?BlobID=8346

Now there are some “agents” out there who will do the paperwork for you and take 40% of the savings from you. Or you can just do it yourself and keep all the savings for yourself.

Or, if you really want, you can contact me and I can do it for you and I’ll only charge 25% of the savings I get you. :]

 

CASE STUDIES:

Howard Johnson Hotel – Saved $83,112.09

Red Roof Inn, Buena Park – We were undercharged, but we didn’t have to pay extra