Secrets the Wealthy Know
We are getting lots of inquiries from this blog series “4 Ways to Tame Your Tax Bill”
Today I’m going to share a strategy we use with a number of our high income earning clients.
As entrepreneurs I believe it is our fiscal responsibility to be the leader of our financial picture. Understanding the allowable write offs and strategies available to us is what keeps more of our money in our pocket. I am not talking about tax evasion. Taxes do serve a purpose in how we get to live our lives.
The Government is aware of how much more powerful a dollar is in our pockets than it is in theirs when it comes to impacting the lives of our families and our communities. As such the tax code gives us many options so we are able to keep our dollars and reinvest them in our companies and our families.
For our clients who have a net income over $50,000 we begin to look at strategies to keep them in the lowest tax bracket possible. Often their business is not the only source of income for their tax picture –and it all counts which is why we work with our clients both personally and corporately.
One strategy is to begin to use entity structuring. In the tax system there are two types of tax elections
- S Corporation
- C Corporation
Typically we will look at an S Corporation when putting a business owner on a W2 salary is the best next step for them. However that is not always the best next step! Depending on your long term goals a C Corporation may actually be a better selection. Each entity structure offers great tax benefits and it’s important to understand them before making your selection.
The wealthy have been using this strategy for many years to keep their money working for them. It takes a willingness to learn how to manage and properly document and use these entities. Often it is part of what pulls you forward as the leader of your financial picture.
The money is always for something and the clearer you are on what that is the more willing you are to step into a bigger financial game.
It you feel you are paying too much in tax and want to explore other solutions we would be happy to visit with you. Simply comment below and we will look forward to a conversation.