“Reduce your tax rate into the single digits!”

It’s not how much money you make, but how much money you keep. In addition, it is also about what you do with the money you do keep. This thought mentality is at the heart of building lasting wealth.

Tip: Have the mindset that the more money you make the more money you can save in taxes.

You can reduce your taxes down to single digits. You can keep your taxes in the single digits even as your money grows. You can put these tax savings into vehicles that will build you even more wealth.

Two tax savings distinctions: Incorporated and unincorporated.
Incorporated businesses are the way to go. However, you can experience tax savings for both incorporated and unincorporated businesses.

The purpose of your business is to generate a profit. Sometimes it takes a long time for your business to see a profit. For example, Amazon.com didn’t earn a profit for the first 15 years. Many accountants will say that if you don’t earn a profit in the first 3-4 years then it is considered a hobby. This is completely false! Amazon.com took 15 years to realize a profit and they are most certainly not a hobby!

You can take a loss from your business and subtract if off your other income. For example, let’s say that you lost $20,000 on your business. However, you also have a corporate job. You can subtract this $20,000 from your W-2 income (from your corporate job). This means that your taxable income has decreased. This is a great tax savings in itself.

The uneducated system of taxes includes earning money, paying taxes on it (state, federal, and FICA taxes), and then spending the difference. This type of tax format doesn’t allow you to build wealth. It makes it extremely difficult to get ahead.

The “educated” system of taxes includes making money, spending it, and then paying taxes on the difference. “Spending it” in this case refers to business deductions. Deductions include health care, business supplies, business trips, etc. There are very few things that you can’t deduct if the circumstances are correct.

You need to learn enough about the tax codes so that your records are kept properly. You need to be aware of what information and documentation is required for deductions. This way you can slash your taxes legally.

Tip: Bill Gates said “A working knowledge of the tax code” was the most important factor of his success.

Tip: S-Corporations have typically 75 deductions they can take. If you are a W-2 employee then you have at most 10 deductions you can take. That’s why it is hard to get ahead financially when you work for somebody else or work at a corporation.

Tip: C-Corporations allow you to choose your fiscal year end. It doesn’t have to be December 31st. A C-Corporation can take several deductions as well.
C-Corporations pay only 15% tax on the first $50,000 word of net income.

Do you have a working knowledge of the tax code? If not, learn it today to save you thousands of dollars.

Warmest regards,

Matt Bacak

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“Don’t Let this Happen to your Business!”

What are the effects of not having a properly structured business? Your assets are at significant risk! Lawsuits can go after your property, your bank accounts, your business, etc. You and your business are extremely vulnerable. Your business could be foreclosed and your bank account drained dry.

Never hold real estate or businesses in your name. It doesn’t matter what type of business you have. You could have a software company or a deli, it doesn’t matter. Let me repeat – never have a business in your own name.

What do you have to do to start your “own” business? All you have to have is a profit motive. You have to have the intent to make a profit. The tax codes and laws favor people that run their own business. If you have your own business then you can slash your taxes.

The minute you make money your asset columns grow. If you are in business then your next move is to make money again. If you want to build lasting wealth then you can’t have a one shot deal. You have to have the desire to continually make money.

People won’t sue you if you don’t have money. People will wait until you make money. Once they see that you have enough money then they will sue you. So it’s great to make more money, but with more money comes a higher potential to be sued. However, you can thwart these lawsuits if you have the right corporate structuring knowledge.

Think about what you want to do with the money you earn. Do you want to travel? Do you want to buy a boat? Does the way you run your business favor these activities? Don’t forget about taxes. Every week taxes chip away at the money you could use for these activities. If you are employed by a corporation or other business then taxes are automatically taken out of your paycheck. These continual taxes make it more difficult to build lasting wealth.

Also don’t forget about lawsuits. Lawsuits can hit you without notice and grab huge chunks of your money. Your dream vacation can be down the tubes in the blink of an eye. Basically, taxes and lawsuits can make it hard to get ahead financially.

The bottom line is to not have businesses in your own name. Learn the business structure of successful entrepreneurs. They have learned how to protect their assets and run a thriving business.

Warmest regards,

Matt Bacak

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“Lawsuits – Does your business structure make you vulnerable?"

Slashing your taxes is one major obstacle your business will face. The other major obstacle is defending your business against lawsuits. Don’t think you will face a lawsuit? Think again. Lawsuits happen all the time.

Obstacle #2: Lawsuits.
The average person is slapped with 5-7 lawsuits in their life. In other words, 1 in 4 people will be sued in the next 12 months. Every year universities pump out new lawyers. These lawyers are hungry to make money. Therefore, they are on the hunt to create lawsuits.

If you are sued is your business structured in such a way that you will not only survive from the lawsuit, but actually thrive? You can thrive if you are knowledgeable about entity structure. Your entity structure can be a powerful force against lawsuits. In other words, the person suing you will be worse off when they win then if they had never bothered you in the first place. Even if your opponent wins, they will spend more money on actually suing you.

You need to know how to deter lawsuits so you can spend your time building lasting wealth. If your business structure is set up correctly then people who try to sue you will find it better to just come to an agreement before a lawsuit begins.

You can use the Internet to your advantage. You can find information on anybody you want in seconds. However, this technology can also make it easy for people to find out information about you that they can then use against you. For example, if you have businesses in your own name then people can view you as having deep pockets. They are more likely to sue you if they see that you have money.

DBA and sole proprietorships give you no protection. These types of businesses are in your own name. These types of businesses are risky because if you make a mistake then your name and personal assets are vulnerable.

General partnerships are the riskiest forms of business you can have. You need to shift the way in which you approach and run your business. If your partner makes a mistake, both of you are sued. This can be devastating especially if you didn’t do anything wrong in the first place.

Do you have insurance? Insurance is good to have, but it is simply not enough protection. Insurance companies do everything they possibly can to avoid paying your claims. So you can’t count on insurance to save you in the event of a lawsuit.

Warmest regards,

Matt Bacak

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“Do you or your accountant know these tax codes? They can save you thousands of dollars in taxes.”

Building lasting wealth can elude you if you don’t have the right information. This information is not taught in college or law school. This information was learned the hard way by an attorney. He figured out that he didn’t make any money unless he was working. The moment he went home he stopped making money. To earn a lot of money he had to work 90 hours a week. This type of career meant that he was chained to his work. And unfortunately, this is the type of career that most people have.

The secret to being wealthy is to not work harder for your money, but to have your money work harder for you. While a college education is beneficial it doesn’t give you the tools to create lasting wealth.

What does it mean to build lasting wealth? It doesn’t necessarily mean making more money. Building lasting wealth is about being organized and growing your wealth. You are constantly expanding your wealth. It is not how much money you make, but how much money you keep.

Once your business is working well and humming alone you have two obstacles to face which include: taxes and lawsuits.

Obstacle #1: Taxes
The average person pays 42-55% in taxes. Federal taxes can be up to 39%, state taxes can be up to 9%. FICA/social security taxes take big chunks of your money. You can’t avoid the FICA and social security taxes. Social security is a 7-8% tax plus your employer has to match that so social security tax is really 15%.

If you own your own business then you have to pay the full 15% of social security tax plus self employment tax. If you don’t know any tax strategies then you could end up paying 50% of your income in taxes!

By utilizing the right tax strategies you can slash your 50% in taxes to only 4-5%! This is legal if you know the proper strategies. This is why the rich get richer because they know how to significantly cut their taxes. They use these tax savings for activities that earn them even more money.

All of these tax strategies are legitimate. They come directly out of the US Government tax code book. Your accountant may not even be aware of these codes. They may tell you that you can’t do such and such, but you can point out the exact code in the tax code book. These strategies are fully legal and will not cause any red flags from the IRS.

Essentially, these tax strategies are part of the “educated tax system”. Many accountants need to be taught these tax strategies as well. The IRS is not out to get you. They offer tax codes that you can take advantage of if you have the right knowledge.

So where can you find these tax strategies? They are listed in the IRS tax code booklet. Top tax gurus can point you in the right direction. The key is to acknowledge that these tax codes exist and experience significant tax savings.

Warmest regards,

Matt Bacak

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