What do you think of when you hear the word corporation? You probably think of large companies such as Microsoft, Dell Computers, and Exxon. These are huge companies worth billions of dollars. Do you know how they got that way? Well, I’m going to tell you. The answer is through the power of corporations. These companies did not start out as billion dollar conglomorates. They started small and used their corporate entity to shelter their money and create more assets. Yes, you can do the same thing. This article will not tell you everything you need to know, but it will make you think about the possibilities.
Corporations are the main streams of big business. But, small business and internet marketers can use this business entity to create their own empires. The main priority when using a corporate entity is to reduce taxes. Remember the golden rule of money. It’s not how much money you make; it’s how much you keep. Here is an example of what I’m talking about.
With a corporation you can start a tax deferred retirement or pension plan (403b) for yourself. You are allowed to place 17% of your corporate income into this plan. Now, here is the beauty of it. You can make a tax-free loan to yourself. Use the money to purchase a decent real estate property. Rent the property to a tenant, and use their money to pay the money back to you. What you have done is make a tax-free loan to yourself, and let someone else pay the money back to your retirement or pension plan. You have also purchased a new asset that will provide a decent tax break positive cash flow.
You can also establish your families medical and dependent care plan under your corporate entity, and it is tax deductible. Worried that you’re not making enough money from your business to use these options. I’m not saying that forming a corporation is for everyone at first. You need to talk with a tax attorney who has experience with forming and managing corporations. Set your options according to the size of your company.
Now, for the cons of having a corporation. The one major con for the small business owner is double taxation. The money that you allocate to yourself as salary is taxable at the corporate rate. However, it is also taxed again when you declare this income on your personal income tax return. What you have to do is decide if the pros associated with forming a corporation out weigh the cons.
I have only scratched the surface on the subject of corporations. I advise you to start by reading the following books:
Rich Dad, Poor Dad By: Robert Kiyosaki Cashflow Quadrant By: Robert Kiyosaki Multiple Streams of Income By: Robert G. Allen Loop-Holes of the Rich By: Diane Kennedy, C.P.A.
You can purchase these books at discount rates at:
http://entertainmentmust.vstoremisc.com
or visit my web site listed below.
I hope this article got your attention. Now you have to do the research. Read the books I suggested, and talk to a good tax attorney with experience in forming corporations. If you have any questions, feel free to email me anytime.
Steven M. Strowder, Editor
http://www.achieve-financial-freedom.com
mailto:owner@a…
Join my Free newsletter and receive my free ebook:
mailto:subscribe@a…
