Small Business, Taxes and Investing

Why I Like Credit Card Debt in a Small S Corporation

downloadThe tax advantages of organizing as an S corporation or an LLC electing to be treated as an S corporation are significant. Self-employment taxes disappear with the corporate structure and with an S corporation there is no income tax either as all profit flows to the owners. As with all good things, there are pitfalls. The S corporation is no different.

Most small businesses in my office use the S corporation structure. There are a few rules that need to be followed, like the owners paying themselves a reasonable wage. The wage issue is easy to handle; I require S corporation clients to do their payroll in my office. Problem solved.

The other major issue with S corporations is basis. Before your eyes roll back in your head, hear me out. Basis is one of those animals many accountants screw up on or fail to track accurately. You need to have a fundamental understanding of basis if you are business owner. If your accountant messes it up the IRS still sends you the bill, not the accountant.

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Early Retirement, Lifestyle

Wake Up and Die Right


Practicing dead. Eventually I’ll get it right.

We are going to do an exercise today. Nothing that will work up a sweat or anything, but might bring a few tears to your eyes or even abject fear of how bad you have been screwing up.

I want you to close your eyes. (Not now! Finish reading this first, then do the exercise. Did I have to mention that? Okay, back to our story.) Find a comfortable place where you can lay back and close your eyes. We need to do some time travel today and until scientists invent a time machine we will use our mind to get the same results.

Now that you are comfortable and relaxed, your eyes get heavy and slowly close. Your mind races you to a time in the future, maybe the near future, maybe decades down the road. In this future you are lying on your deathbed. You are old and tired. It is only a matter of time before the Grim Reaper claims his prize.

With these last moments of life you have the opportunity to review the life you have lived. What do you see? Are you smiling? Crying? Are you happy with the life you lived?

I Wish I Would Have. . . 

How depressing it would be to lie on your deathbed reviewing your life and muttering, “I wish I would’a. . .” Imagine the tears streaming down your cheeks as friends and family look on wondering why you are in such pain. They pity you as the last spark of life leaves your body. Death is a welcome gift.

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Destroying Fear with Stoicism

20131025_173740Fear destroys dreams and happiness faster than any other thing can. Fear of failure prevents us from starting a business; fear of rejection causes us to pass on a dream date; and fear of the unknown forces us to keep working a job well beyond the point we could retire. This simple four-letter word pushes us back against the wall, draining all the vitality of life from us.

Fear paralyses. The opportunity to speak to a group is unrealized because our stomach turns and our heart stops due to fear, as if the audience will rush the stage and beat you. (Well, there was this one time I was speaking. . .) All the happiness you deserve in life is passed each time you allow fear to rule your decisions. There will be failures and rejections. Once you understand this is part of life you can focus on the important stuff and say “yes” to the opportunity for a date with the girl of your dreams or start that business.

Fear is nothing new. Mankind has felt the fight of flight response from the beginning of time. The ancient Stoics knew uncontrolled emotions destroy faster than anything known to man. And it is all self-inflicted!

FEAR: False Evidence Appearing Real.

It is all in your head. Failing at business is a possibility. When you see as many business owners over the years as I have you start to see a pattern. It becomes obvious who will fail. Most businesses fail because they neglect to take appropriate steps, which all lead back to some sort of fear. If we do that we could lose clients. If we invest in the company we might not earn the investment back. And, of course, once you allow fear to rule it becomes a self-fulfilling prophecy.Continue reading


Get Ready for Suicide Season


Bipolar is not a life of extremes as this drawing illustrates. Bipolar is learning to live along the edges, struggling to control the overwhelming flood of emotions.

September is Suicide Prevention Awareness Month. Suicide is the 10th leading cause of death and 3rd among young adults. The issue is too serious to let slip by without an honest discussion. According to Centers for Disease Control and Prevention (CDC), 41,149 people committed suicide in the United States in 2013, 12.6 per 100,000. The suicide epidemic crosses all age groups and racial barriers, however, young adults (2.5%) made a suicide plan at a higher rate than older adults (1.35% for middle aged adults and .6% for older adults). People of mixed race have the highest rate of suicide while blacks have the lowest. All this is according to the CDC.

Statistics are cold and not what I want to talk about today. The story I want to share is about depression and more to the point, Seasonal Affective Disorder. It might seem like a strange topic for a personal finance blog until you consider socio-economic status does not insulate you from depression, suicidal thoughts, or actually killing yourself. Wealth is not a prescription for awesome mental health. Wealthy people may seek help because they have the money to pay for treatment or might have a stronger support group, but financial independence is not an elixir that cures depression or prevents suicide.


This is a hard article for me to write. Most people have a hard time understanding what I am about to say, especially if they know me or have seen me in a business setting. I suffer from manic-depression and came this close to being one of the statistics listed above. For a long time I could not understand why I felt the way I did when my life was so good. My marriage is great, I have two wonderful (and moral) daughters, a successful business, and financial independence. Drugs are not a part of my family. So why the deep bouts of depression?Continue reading

Small Business

Reader Case Study: Deciding When to Start Your Own Business

accountantSean is a CPA who sent me an email asking a list of questions about how I started my business, how I operate successfully, handle problems, and balance work and personal life. It is a common request from members of the accounting industry. They want to know how I pulled this stunt off. In the past I touched on the subject; today I will dig deep using Sean’s email to drive the narrative.

Even though this story is about my experiences in my business, most of what I do works for other business models with slight modifications. The hardest part for a professional earning good money is to jump into the unknown of private practice and the certain decrease in income as a business is started; the money comes later. There is also fear of the unknown. I will share how I managed these issues. This will sound different from what you hear from other people or the media. The only reason I can give for the dichotomy is 1 in 10 businesses survive the first five years. Since I am one of the survivors, my story will differ from the majority, 9 out of 10 crowd.Continue reading

Early Retirement, Frugal Living, Lifestyle

Library Millionaire


This is your new best friend, the librarian at the reference desk.

How would you like a cool $850 every month in your pocket tax-free? Invested in the Vanguard S&P 500 index fund you should be booking around a million dollars in 30 years, assuming historical averages of 7% returns compounded per year after inflation. Okay, I lied. $850 invested every month for 30 years at 7% comes to $1,049,923.39.

But 30 years is a long time to wait for your million dollars. Well, I didn’t say you couldn’t take a bit out of your paycheck and drop it into your retirement account to supercharge your wealth building (and tax savings). Regardless, a free $850 every month in the First National Bank of Wallet is nothing to sneeze at. And anybody can get the free stuff and the money. In fact, the folks handing out the goodies want you to have the money. Who are these crazy people?

Librarians! Yeah, those people you haven’t visited since your junior year of high school have made some changes to the place while you were gone and you might want to check it out.

You know how some businesses can be rude to paying customers. Well, at the library I have never had that experience. These people are happy to see me and allow me to walk out of the place with stuff you would not believe. Sometimes they actually let me keep it forever! And they still have the regular goods you would expect at a library, like books; you know, those thing made of paper, held together with glue, and have pages. The library likes those back after three or four weeks, however.Continue reading

Early Retirement, Small Business

Taxes and the Sharing Economy


What would you say if your Uber driver drove in with this?

As early retirement and quasi-retirement are easier than ever in our expanding “sharing economy”, the IRS is clarifying the rules on how much you need to share with your least favorite Uncle. For many people “sharing economy” jobs are their real jobs, for others, a way to fill time during retirement or as an adjunct to early retirement.

The goal here is to drive taxes to zero. The “sharing economy” has several opportunities to earn thousands of dollars per year and legally not report it on your tax return. In cases where you are required to report the income we can use tax strategies to significantly reduce or eliminate income or self-employment taxes.

The IRS recently published a new page on their site outlining the rules for taxpayers participating in activities like Uber, Airbnb, DogVacay, TaskRabbit and other similar sources of income.

Some areas of tax law are still unclear as the Tax Court is hearing cases determining issues between independent contractors and employees. These major tax issues generally affect large companies like Uber rather than individuals. As of this writing, most “sharing economy” jobs are treated as small business income and are reportable even if you do not receive a From 1099-MISC.Continue reading


New Publishing Schedule at The Wealthy Accountant

This is the 116th post here at The Wealthy Accountant. The average post has been around 1500 words, meaning I have published approximately 174,000 words this year so far on this site. That is enough words to fill two average sized novels! I also write two other blogs of flash fiction adding another 153,000 words to my output. That is a lot of stuff to say in one year and it is giving me a sore throat.

Before you recoil in horror, understand I am not going away! For next few weeks to two months I am cutting my publishing pace to three posts per week: Monday-Wednesday-Friday. That is still an annual output of 156 posts or a 234,000 word pace, enough to fill three average sized novels. I would post more, but I’ve already told you more than I know. (Keep your eyes on the ball so the fast ones don’t get by you.)

There is a logical reason for the temporary slowdown. I have plenty of ideas to share, but many of my favorites are festering in the queue waiting for the necessary research. You see, many ideas I can lay on paper in a few hours because they don’t need much research or the work is already gathered and just needs organizing on the page. To give these future posts justice I need to make phone calls and research deeper. I could always throw a few basics out and let you figure out the rest, but that is sloppy journalism and robs you, the reader, of the information you expect and deserve.

I am also concerned over my current quality. I have noticed spelling and grammatical errors when I re-read posts weeks later. Without a separate set of eyes reviewing my work things like that can happen. It is important for me to say what I intend. This is communication and ifContinue reading

Frugal Living, Lifestyle

The Friends You Keep

20131109_095843My relationship with the gym is an on-again/off-again affair. Three times a week I lift weights and during the frigid NE Wisconsin winter I also run on the treadmill a time or two each week. It isn’t cheap. I consider my gym membership, which covers Mrs. Accountant and me, a luxury and a spending splurge which sets me back about $800 per year.

Over the years I belonged to three gyms. The first gym went out of business and for several years I avoided costly gym memberships. Then an injury required either expensive physical therapy or a more formalized and regular workout schedule. It was a painful injury. I ruptured several tendons in my right bicep when I was butchering chickens. (Now you have another nugget of trivia on me.)

At first I thought I blew out the rotator cuff because I could not lift 5 pounds with my right arm. A visit to the doctor put that notion to rest. The bicep was another issue. That sucker hurt. A few sessions with the physical therapist quickly drew me to the conclusion I would need to take matters into my own hands if I were to heal in this lifetime.Continue reading


In Support of Law Enforcement

l_camden_mentor_cops-2-1It breaks my heart when I hear reports of police shooting and killing an unarmed black man. This morning I read a report where a police officer in West Virginia was fired because he did NOT kill a man demanding to be shot, a so-called suicide-by-cop incident. Readers of this blog are aware I live in the county where the trial of Steven Avery took place; the topic of the Making a Murderer documentary on Netflix.

Black people are incensed by the killing of unarmed black men by police; they should be. White people are also killed by police, but there does seem to be a bias toward “shoot first, ask questions later” mentality when black men are involved. For a while it looked like retaliation killings of police officers at random would accelerate. It seems to have died down (or I miss the news reports).

Police have been the target of criminals for longer than the Black Lives Matter movement. I agree, black lives do matter and police need to act appropriately regardless the color of skin a suspect has. The moment police are targeted for harm, however, you have to stand up and just as loudly proclaim: Blue Lives Matter, too.

I have been critical of the police most of my life. I am critical of all government. With authority comes responsibility. Police are highly trained professionals asked to run into harm’s way when shit goes down. There is no doubt in my mind 99% of law enforcement officials are men and women of high moral character, values, and ethics. Unfortunately, the 99% of law enforcement officials who are honest are asked to make some very difficult decisions without all the facts, where lives are at stake, and given limited time to make the call. Some days you are damned no matter what you do. There have to be days it sucks to be a cop.Continue reading

Frugal Living, Lifestyle

Save 98% on Laundry Costs


Supplies you will need to make your own laundry detergent.

What people spend on laundry is insane. Today I will show you how to cut your laundry costs to 2 cents per load, plus the cost of the machine (your own or the laundromat). Mixing your own detergent and a clothes drying rack combine to reduce laundry costs so much there is no incentive to reduce it anymore.

Making your own laundry detergent and fabric softener is fun and take only a few minutes. As an added bonus, you feel like a mad scientist as you mix your concoction. The best part is I will talk a whole lot less today as I let the pictures do all the talking for me and any time you can get me to shut up for a day is a good day! (A picture is worth a thousand words so I am technically talking your ear off.)

You will need a few ingredients sometimes hard to find. I have included links to Amazon so you can get to work fast. Amazon prices are pretty good on this stuff. The two hard-to-find items are usually Washing Soda and Fels-Naptha. The rest of the stuff should be available locally.

Here is the mad scientist recipe for laundry detergent:Continue reading