Jump Start Your Wealth
There are seven steps to jump start your wealth. You can choose to do any or all of the following steps. The more fully you participate in as many of the steps as possible, the faster and bigger your positive results will be.
1. Create a business. Make sure it’s in the proper business structure and that you have anticipated: (1) at least one clear exit strategy, (2) sources of funding for the business, (3) how to take money out of the business, and (4) a strategy to run the business in a way that reduces risk for you. Sometimes starting a business is as simple as changing your employment status from an employee to an independent contractor.
2. Discover your hidden business deductions. It can be a major eye-opener when the first-time business owner discovers all the things that are now tax-deductible. These are the things you used to spend personal money on. The difference is that they are now deductible. Discover and properly document those expenses. This is how your business can give you money tax free.
3. Pay your taxes. Use proper planning to prepay just enough in taxes at the latest possible time. In this way, you can get 0 percent loans from the government on your tax money. When you have multiple businesses in the right structures, you can often select when you want to pay taxes and defer payment to a far-distant time.
4. What’s left goes into real estate. You might not be able to hit the ideal investment strategy of having all leftover business cash go into real estate. But, the more you can put into real estate, without needing to draw anything for personal living expenses, the faster your income will grow. Make sure your real estate investment is done using the proper leverage with the optimum structures.
5. Real estate income comes out tax free. A good real estate investment will create positive cash flow for you. If you have made a good deal, you’ll have positive cash flow from the first day. And, if you have a good tax plan, you’ll pay zero taxes on that cash flow.
6. Buy a house the right way. You need a place to live and, let’s face it, that’s not an asset that will put money in your pocket. In fact, your home quite likely will be one of the biggest expenses you’ll have. Look for good deals in neighborhoods that are appreciating and make the best deal possible on financing. Make sure you have a contingency plan in case the value drops and your other income goes down. And, above all, use the homestead laws and/or proper business structures to protect your investment.
7. Make your home give you money. The biggest gift that Congress has ever given us is available only for homeowners. The one requirement is that you have to move. You can also take the money out, tax free, from your home to invest in other businesses or real estate properties. It’s a gift — take advantage of all that the IRS allows.
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Tom Humes
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