Seven Steps to “Jump-Start” Your Wealth
The following steps enable you to increase your wealth and decrease your tax liability by taking advantage of legal loopholes in the tax laws (for USA Citizen, might be applicable to other countries as well):
- “Create a business” – An individual employee earns a paycheck. His or her employer deducts taxes; and finally, the employee can spend whatever’s left. However, business owners follow these steps in a different order: their business earns income; they spend money, which they can deduct from their taxes as business expenses; and, finally, they pay their taxes. Of course, you must structure your business correctly, have a source of funding and an exit strategy, and run the business responsibly.
- “Discover your hidden business deductions” – When you own a business, you can deduct any personal expenses from your business income. These include certain costs for your car, bad debt, business start-up, education, entertainment, professional fees, travel, interest, moving, equipment, charitable contributions and taxes.
- “Pay your taxes” – You have more control over your timing when you pay business taxes than you do when you pay personal ones. Ideally, pay your business taxes at the last minute, so you don’t incur a penalty for late payment but you also do not lend the government your money.
- “What’s left goes into real estate” – Because some kinds of real estate appreciate so quickly, “the more you can put into real estate…the faster your income will grow.”
- “Real-estate income comes out tax-free” – By finding a balance between depreciation and income from your property, you can manage not to pay any tax on it.
- “Buy a house the right way” – Although a home is a necessity, it is not necessarily a source of income. However, you can reduce your housing expenses by buying strategically – for example, by moving into a neighbourhood where prices are rising.
- “Make your home give you money” – Tax loopholes allow a homeowner who has lived in a home for two years to sell it without paying capital gains taxes. Other loopholes apply depending on how long you have lived in your house.
“The wrong business structure can be expensive to unwind and can actually cost you extra taxes.”
The jump-start system works because it is flexible: it enables you to leverage various sorts of assets, gives you access to business and other tax loopholes, and provides you with several different income streams.