Questions I get at seminars tend to be in one category – never mind the facts, what is the BEST business structures, what is the BEST accounting software, who is the BEST CPA, etc…
And, the answer is often, “It depends.” But, there is one “almost fits everyone” answer if you’re looking to quickly create cash flow, build wealth and pay less taxes.
Start a business! If you want some immediate cash flow, start a small Level 2 business that depends on you doing the work. We all know that’s NOT the long-term strategy for building passive income (ie, working day to day in a business that means you have to show up every day), but it’s an almost immediate way to kick some cash.
Some ideas: – Clean out your garage and sell it on eBay. – Take the skill/ability you use in your W-2 job and pick up some business on the side. For example, if you’re involved in an administrative type role, consider preparing resumes or outside typing. If you’re a bookkeeper, wow! The world is your oyster because practically everyone I know is looking for a bookkeeper. – Take a hobby up a notch and start selling whatever your hobby is about.
In David’s and my new book, The Maui Millionaires for Business, we have a section on dozens of ways to immediately kick up the cash flow from your business. The first step, though, is to have a business.
Five years ago, I’d have told you the best tax breaks are for real estate investors, even better than business owners. Boy, have things changed. I never would have thought that Congress would have ignored Alternative Minimum Tax (AMT) issues like they have.
The tax benefits for real estate investors are diminishing because of AMT. For example, for those of you who are counting on the Real Estate Professional loophole to save you – look out. The REP loophole does NOT work for AMT.
There is one area that is exempt, though – business owners. You still get your deductions in a business and you can take 100% of the paper loss from a business against your other income – no matter how much the loss is and how much the other income is. This is NEW loophole that works for both regular income tax and AMT!
In the next few months, you’ll hear me hammering about AMT. This is the question you need to be asking every single one of your business and financial advisors in 2007, “How does this idea/strategy impact AMT?”
I say, “Start a business.” You say, “How does this strategy impact AMT?” I answer, “It’s all deductible for AMT as well.” And, that is why starting a business or ramping up your existing business is the best wealth-building, tax saving strategy for 2007.