by Sharon Hiebing | March 16th, 2010
If you're new here, you can receive my posts via an email subscription. Thanks for visiting!
As most people who know me are aware, I am a firm believer in having multiple streams of income for your financial success. In my mid-thirties I quickly realized that the gap between rich and poor people was because 99% of the richest people in the world did one of three things:
- They owned a business.
- They owned real estate investments.
- Both.
I personally own the following:
- A pool company that is set up as an S-Corp.
- Rental income property homes.
- A networking marketing business.
In my first of three posts, I will explore the difference between each of these and why they are all smart ventures to take part in, and most importantly how they can contribute to your overall wealth plan. First up:
Business Entities – Entities allow you to purchase businesses and then separate yourself and your personal assets (i.e. home, savings accounts, mutual funds, etc.) from the business. This is important in cases of business lawsuits. In most cases, someone cannot come after your personal assets if the business in in say an LLC or S-Corp.
Lawsuit hungry people may also have a hard time finding out who owns the company as entities also allow for a certain amount of anonymity in many states. This lessens the chance that they will try to sue you personally in addition to your company.
In addition, the tax benefits you can receive by running your business inside an entity versus a sole proprietor are tremendous – at least double the amount of tax write offs you would have otherwise.
But the most important reason I feel owning an entity is significant is your ability to build the equity of the business so that when you’re ready to sell, you will not walk away empty handed if you’ve done your job right! Too many people spend 20, 30, 40+ years working for someone else’s company, and when they retire they walk away with nothing more than a pension (maybe) and some social security (questionable if this will continue).
Buying a business is hard work, dedication, and can be quite stressful. But at least at the end when you’re ready to close up shop, you’ll have something of value to sell that can allow you to move on to the next phase of your life comfortably.
Someone once told me “Why climb the corporate ladder when you can own it?” Why not indeed!
Hi Sharon, this is a great post. Do you see any benefits of having your network marketing business set up as another business entity? We do ours in our personal names, but I’ve been thinking about whether it would be better to do it in a business name.
Hi Phil! Thanks for reading. Of course I recommend you speak with your CPA first, but I’ve been advised that whenever you begin making more than $3000 from any business, network marketing included, you should be considering an entity – the tax savings alone are worth it.
That’s what I was thinking — time to go talk to the CPA! We do real estate investing as well and always did that through a business entity, but its time to treat the network marketing business the same way! Thanks for your thoughts. Have a great day, Sharon!
I have visited your port before. The more I read, the more I keep coming back!