Episode 020 - Want to Make More Money?
Episode 020 - Want to Make More Money?
Want to make more money? (If not -and- you're independently wealthy -and- want to donate money to your favorite podcaster in the world, then please send me a message!)
For everyone else, a little extra income makes a big difference. There are many ways to make more money, but one frequently overlooked is maximizing tax deductions to keep more money that you already earned. Give yourself a raise by using the tax benefits you already have. "Pay what you owe, but not one penny more," as B likes to say!
SHOW NOTES
- 01:00 – Are you thinking through your finances, your budgets, your income to keep more of your commissions?
- 01:30 – Song of the week: The Who, “Did You Steal My Money”; Are you letting the IRS take your money by not taking advantage of the deductions you are entitled to use? Pay every dime you owe, but not a penny more.
- 05:25 – Is your plan to make more money based solely on selling more homes? There are other ways to make money without selling more homes. Do what smart agents do and set your business up for success. Are you doing things that increase your costs of doing business? STOP!
- 06:15 - $750 expense and have to earn a $1,000 gross income to net $750 to pay the expense, OR you can earn a $750 gross income to pay that $750 expense? Which sounds better?
- 07:20 – Being smart gives you flexibility. Earn $1,000 and give yourself a $250 raise OR work less to earn what you need. Be intentional.
- 09:45 – Disclaimer, I AM NEITHER AN ACCOUNTANT OR ATTORNEY! Get with your financial and legal pros to learn how this applies to you.
- 10:20 – Do you have a budget? Stop living "paycheck-to-paycheck".
- 11:15 – Set up your income as a salary. Don’t pay yourself more or less based on busy or slow months. Help your budget and keep your expenses on track.
- 12:20 – Budgets are flexible. Pay yourself a bonus if you’ve done well in a particular month.
- 13:00 – Set up your business structure. LLC & S-Corps are legal structures and need to be created by a professional. Don’t create an LLC without an operating agreement or articles of incorporation.
- 13:45 – Check with your insurance carriers to verify that your company is covered. Does your auto insurance fully cover you if you work out of your home? Does your homeowner’s policy cover your business and equipment (ex. computers, copiers, etc.) inside your home?
- 14:55 – Consider buying an umbrella insurance policy.
- 15:40 – Cate’s Side Note/Tangent: Cutting your own hair and B’s "man bun".
- 18:35 – Setting up your business structure. (LLC and S-Corp). Both have pros and cons.
- 19:10 – LLC is a legal shield that is not recognized by the IRS. You must tell the IRS how you want that LLC taxed: sole-proprietor, partnership or S-Corp.
- 19:50 – LLC needs a legal document to define and create the legal shield for you. It's called an operating agreement that an attorney can create. Or you can use online resources, such as Legalzoom.com.
- 21:00 – LLC can be taxed and have the benefits of an S-Corp. An S-Corp may have more legal benefits than an LLC. Both can have the same tax benefits.
- 21:55 – Watch for the breakout video related to this episode about saving 7.65%, or more, on taxes by setting up an S-Corp.
- 23:00 – Regarding tax deductions, get with your accountant on what you can do. Legal entities have more flexibility with deductions. Don’t get classified by the IRS as a "hobbyist".
- 24:00 – IMPORTANT NOTE FOR AGENTS: If you work for someone else (managing broker, company) and they cut you a commission check, that commission check must be paid to your business entity and EIN if you want the deductions. DO NOT collect a commission check in your name and social security number and then deposit the commission income into your business account. Make sure the 1099 shows your business and EIN.
- 24:45 – Qualified Business Income (QBI), ask your accountant how this might apply to you and your business.
- 25:00 – Is there anything you can do to reduce your taxes even more? Yes! Consider some type of retirement account such a ROTH, SIMPLE or Traditional IRA, SEP, 401k, etc.
- 25:50 – Health Savings Accounts (HSA) and 529 accounts (if applicable in your state).
- 26:35 – This can get complicated. DON’T let your fear keep you from saving money. You are losing money by setting up a business carelessly. If you can’t do it, hire someone. The cost to create the proper entities will MORE than pay for itself in the long run.
- 27:10 – Get with a CPA! Not H&R Block, Liberty Tax, or TurboTax. Quick tax file services have a purpose, but agents need a CPA. Well worth every penny!
- 27:45 – Cate: Stop living paycheck-to-paycheck. Create a tax plan. Prepare for your future. We’ve all been there. Take it step-by-step. Take one day to work through all of it.
- 28:10 – B’s weekly quote: “You must gain control of your money, or the lack of it will control you.” - Dave Ramsey
SHOW LINKS
- The Who, “Did you Steal My Money” video: https://www.youtube.com/watch?v=VuUUSMNAu30
- IRS website: https://www.irs.gov/
- Umbrella insurance policy defined: https://www.investopedia.com/articles/personal-finance/040115/how-umbrella-insurance-works.asp
- Great Clips: https://www.greatclips.com/
- Create an LLC Operating Agreement: https://www.legalzoom.com/business/business-formation/llc-overview.html
- Indiana College Choice Direct (529) Plan: https://www.collegechoicedirect.com/home.html
- Dave Ramsey: https://www.daveramsey.com/blog/how-to-take-control-of-your-money
BETWEEN THE LINES LINKS
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https://www.facebook.com/groups/realestatebetweenthelines/
https://www.facebook.com/Brian-C-Lee-111822417027919/?
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