I hear you Bold. I think one of the main issues in avoiding getting the 'big tax whallop' is to be familiar with the type of income youre making - whether ordinary, earned, passive or portfolio. Those types of income are taxed differently. Even the manner in which you transfer one type of income to another type of income can determine how much tax you pay.
Also choosing the right entity structure (or combination of structures) is key. I have found that its is common for many businesses to change structures a few times because each business and individual is different. It is often a trial and error basis; as you mentioned, that is why its necessary to consistentely consult with mentors, other business people and accountants.
Another plus to having a corporation is the ability to utilize pre-tax dollars instead of post-tax dollars. This advantage definitely helps a person acquire wealth faster.
And honestly, it is to your benefit for the revenue to be owned by corporation versus that individual. Control and not necessarily ownership is key. But, how the money is distributed out of the corporation is a very important factor. It may be taxed differently depending on if it is salary, bonus, commission, stock option, loan, dividend, insurance, lease, benefit plan, expense account, profit sharing, etc
Nevertheless, as you mentioned having a good accountant, lawyer, mentor, etc. is critical. Forming and maintaing a coporation does involve work and an extensive learning curve if you wish to run it effectively, but I find the pros to outweigh the cons.
Bold, if you havent check out two books... "Loopholes of the Rich" by Diane Kennedy http://www.amazon.com/exec/obidos/tg/detail/-/0446678325/qid=1062268528/sr=2-1/102-5856115-6354514?v=glance&s=books . and "The Secret Millionaire" by John Childers http://www.amazon.com/exec/obidos/tg/detail/-/0910019576/qid=1062268651/sr=1-2/ref=sr_1_2/102-5856115-6354514?v=glance&s=books . These two books are very informative books regarding taxes and they are easy reads...complex books make my head swim too much graemlins/rofl.gif
peace
julian kelly
Originally posted by Bold Soul:
</font><blockquote>quote:</font><hr />Originally posted by Leslie:
</font><blockquote>quote:</font><hr />Originally posted by julian_kelly:
All they do is start a business and form a corporation....it isnt rocket science. Corporations always provide favorable tax advantages. Having one isnt exclusive...any American can set one up.
julian kelly
</font><blockquote>quote:</font><hr />Originally posted by Hk:
"Tax rates being high, the corporae rich are quite nimble in figuring out ways to get income, or the things and experiences that income provides, in such a way as to escape taxation"
"The manner in which the coporate rich pay their taxes is more flexible and provides more opportunities for shrewd interpretations of the law than is true for the middle and lower classexs"
"Long term capital gain, tax-free municipal bonds, family trusts and depletion allowance are just some of the ways that the coporate rich maintain income on a steady basis".
C. Wright Mills, 1956 </font>[/QUOTE]'
The paperwork is available on the internet to set up a coproration, llc, etc...Julian I am so in agreement with you, the days of the information not being available to the masses just is not longer true. If you are willing to sit down and read you can "uncover" all the "secrets" of the rich you want to. Also if you are willing to "network" even amongst your current friends you can learn even more and be accessable to various opportunities - regardless of your education level, income level, etc. If you want it go out and get it. If you get knocked down, get up again and try again - there is such a lack of tenacity these days among people. NOTHING will be handed to you, you have to work at it. The rich work at keeping and attaining more. Hate on Puffy and Jay-Z all you want, they work and earned every penny they have and both started with squat - and neither has a college diploma. </font>[/QUOTE]Great points. My experience is that every corporation isn't a corporation. We've established BOLD SOUL right the first time, but that means quite a bit of legal and accounting issues that, if not taken care of right the first time, mean a big "audit me" sign for the IRS come year end.
For example, did you know that your status as a shareholder is totally effected by your paid-in capital and share purchases. This means that, until you've paid your company for the ownership value you hold, you're not a corporation.
Another point - any revenue you receive for the corporation isn't your money anymore - it's the corps. Say you're a DJ and you incorporate as DJs, Inc. The club pays DJs, Inc. for your services - this is a loan-out deal. As soon as you pay yourself from that money, IRiS gets hers in three ways - corporate tax on the revenue, payroll tax that DJs, Inc. has to pay (i.e. FDIC, FICA, Social Security) and then the income taxes you pay as an individual. Omit any of these and your begging to be audited.
Keep it sharp - the benefits of incorporating are many, but the hazards if you don't have an accountant and lawyer holding it down with you are also many. </font>[/QUOTE]