So you've finally done it: you started your own business. You're making money
and feeling great, maybe even enough to buy that new car or home you've been
coveting. But wait! What about Uncle Sam? Doesn't he want his cut of your new
pie?
Of course he does. And, that guy who wants to sue you for all you've got
because your product caused his little girl to cry wants his share as well.
What's a small business owner to do?
Loral Langemeier, author of The Millionaire Maker (probably the best hands-on
wealth strategy book written to date) has experienced it all, and continuously
comes out the clear winner - completely legally.
It turns out that you can, too. But you'll have to get some help. In her
book, Loral explains what she calls the Wealth Cycle™, a process that's used by
millionaires who want to keep the money they make.
A key part of the Wealth Cycle is what's called "Entity Structuring." That
is, structuring your company as a legal corporation or company and telling the
IRS how you want to be taxed.
What you might not know is that these legal entities were created as much for
you, the little guy, as for the big corporations. That's why if you want to be a
millionaire, you need to know a thing or to about entities.
Protecting your butt while saving your bucks
These legal entities are simply business and tax structures. This includes
corporations, LLC's, and Partnerships. It does not include the sole proprietor.
Entities have two components to them: the legal component and the tax component.
The legal component determines how your business is structured. The tax
component determines how the IRS will tax your company.
Let's take an example. You've probably heard of a "C corporation", right?
This is a business that has decided to structure itself as a corporation and be
taxed under Chapter C of the IRS tax code. An S corporation, alternatively, is a
corporation that has chosen to be taxed under Chapter S of the IRS tax code.
(See why you'll need help?)
Entities are not something you have to use, but smart business owners, even
and especially sole practitioners, do use them.
Why? Say that someone decides to sue your business. If they win and you're
not a legal company or corporation, they can get your house, your car, and
pretty much everything you own. If you ARE a legal entity, all they'll get are
the assets of your company.
The best part is that if you're doing it right, your legal entity won't have
many assets, and you'll keep more of what you earn. Tax benefits are pretty
straightforward. The more of them you have, the more you keep of what you earn.
The IRS gives corporations bigger tax breaks by allowing them to write off a lot
more expenses than individuals.
It's not necessary to know all the details about entities - that's what your
accountant and lawyer are for. But you should certainly get familiar with your
options so you can start managing your life like a millionaire does. "Doing so
will be one of the first steps on your journey to millions," says Loral.
Can you really become a millionaire simply by having a corporation? No, you
can't. In her book, Loral provides numerous examples of how people use entity
structuring to protect themselves and keep more of their money.
If you DO want to make millions (or at least a lot more than you're making
now), be sure to create, as Loral says in The Millionaire Maker, the right
entities at the right time. The Wealth Cycle is your real key to success.
So you've finally done it: you started your own business. You're making money
and feeling great, maybe even enough to buy that new car or home you've been
coveting. But wait! What about Uncle Sam? Doesn't he want his cut of your new
pie?
Of course he does. And, that guy who wants to sue you for all you've got
because your product caused his little girl to cry wants his share as well.
What's a small business owner to do?
Loral Langemeier, author of The Millionaire Maker (probably the best hands-on
wealth strategy book written to date) has experienced it all, and continuously
comes out the clear winner - completely legally.
It turns out that you can, too. But you'll have to get some help. In her
book, Loral explains what she calls the Wealth Cycle™, a process that's used by
millionaires who want to keep the money they make.
A key part of the Wealth Cycle is what's called "Entity Structuring." That
is, structuring your company as a legal corporation or company and telling the
IRS how you want to be taxed.
What you might not know is that these legal entities were created as much for
you, the little guy, as for the big corporations. That's why if you want to be a
millionaire, you need to know a thing or to about entities.
Protecting your butt while saving your bucks
These legal entities are simply business and tax structures. This includes
corporations, LLC's, and Partnerships. It does not include the sole proprietor.
Entities have two components to them: the legal component and the tax component.
The legal component determines how your business is structured. The tax
component determines how the IRS will tax your company.
Let's take an example. You've probably heard of a "C corporation", right?
This is a business that has decided to structure itself as a corporation and be
taxed under Chapter C of the IRS tax code. An S corporation, alternatively, is a
corporation that has chosen to be taxed under Chapter S of the IRS tax code.
(See why you'll need help?)
Entities are not something you have to use, but smart business owners, even
and especially sole practitioners, do use them.
Why? Say that someone decides to sue your business. If they win and you're
not a legal company or corporation, they can get your house, your car, and
pretty much everything you own. If you ARE a legal entity, all they'll get are
the assets of your company.
The best part is that if you're doing it right, your legal entity won't have
many assets, and you'll keep more of what you earn. Tax benefits are pretty
straightforward. The more of them you have, the more you keep of what you earn.
The IRS gives corporations bigger tax breaks by allowing them to write off a lot
more expenses than individuals.
It's not necessary to know all the details about entities - that's what your
accountant and lawyer are for. But you should certainly get familiar with your
options so you can start managing your life like a millionaire does. "Doing so
will be one of the first steps on your journey to millions," says Loral.
Can you really become a millionaire simply by having a corporation? No, you
can't. In her book, Loral provides numerous examples of how people use entity
structuring to protect themselves and keep more of their money.
If you DO want to make millions (or at least a lot more than you're making
now), be sure to create, as Loral says in The Millionaire Maker, the right
entities at the right time. The Wealth Cycle is your real key to success.
