Business ownership is the fastest way to significant net worth and financial independence (FI). It is possible to grow your net worth $2 or more for every dollar you increase your revenue. This is before investment gains! By understanding the accounting behind business valuation, anyone can accumulate a seven figure net worth in as few as five years which can be turned liquid and invested in income producing assets allowing for early retirement.
Building a massive net worth is more difficult, if not impossible, with earned income only. Mega-wealthy people like Warren Buffett and Bill Gates know wealth is created from multiplier effects. Buffett grew Berkshire Hathaway by investing in other successful companies and insurance. Bill Gates grew Microsoft into a world leading software company. In each case the majority of the wealth created, around twenty times the profit level, came from multipliers. Only about 5% of their wealth came from actual profits!Read More
The more traffic grows on The Wealthy Account the more questions I get from accountants wanting to know how to run their office more efficiently. The tips below can be tweaked to work in many business settings and can be applied to personal management of time with family and friends while allowing ample “me” time for reading, thinking, and relaxing.
The workflow process in my office evolved over time as the tax industry changed and my practice transformed from a tax office to an accounting/payroll/bookkeeping office to its current incarnation as a quasi-communications company focusing on tax issues. So you understand my thought process I will walk through how I handled workflow in the past and why I changed procedures when I did. By seeing each stage of my workflow history you can pull the pieces that fit your situation best and modify them for your needs.Read More
For five years I played treasurer at the Wisconsin Writers Association (WWA). The annual conference is their big event. Every year great minds gathered to share ideas writers could use to write better and promote their work. I always tried to snag a spot for a presentation on promotion for writers.
WWA is a small writers association. Only a small portion of the members are actually published, not including self-published books. I had tons of ideas for those few who did have a book in print and in bookstores. When it comes to promoting a small business — and writing is a small business (which can get really big for some) — I have a massive arsenal.Read More
I am writing this as the tax extension deadline is a week away. Tax returns I delegated to my team are starting to boomerang back to my desk. Some issues are beyond the comprehension of everyone but me. This confuses me. How can I be so much smarter than everyone else? What makes me so special?
The first issue perplexing me is the Indispensable Man theory. It goes like this: I want to earn more money but I am unable to close the money accounts. As you can see it does not work. Avoiding the tough cases holds people back in their career. If the boss does the work you can’t claim credit for the project.
The second issue is that the Indispensable Man is only an illusion. There is no tiny bag of pixie dust hanging at my side I can use to fix any problem showing up. Okay, maybe I do. It’s called an absolute confidence I can figure anything out and get it done. I am not asked to perform brain surgery (and if I was I could do it given enough time to research the subject and consult with other professionals); I am asked to perform a task in my field of study. All the resources available to me are available to all tax professionals. Nothing special in my bag of tricks.Read More
There is a heaping plate of steaming crow on the kitchen table cooked especially for me. It all started a year and a half ago. After all these years in business, I was starting to feel my oats. I would brag about the list of clients I had put together. My tax practice was serving some very wealthy and well known people. A few rock bands were in the fold and even a board of director from a company connected to Warren Buffett’s Berkshire Hathaway graced my client list. I had a sales pitch for anyone willing to listen.
Then a brainstorm hit. I would move to the next level by landing a business deal with an influential personal finance blogger. It went better than I ever expected. Instead of inking a collaboration, I got a collaboration and a client and a massive promotion for my tax practice. There was no doubt in my mind I could handle it. I lived through worse. And don’t think for a minute I didn’t let people know about it.Read More
I received an ARC from Jason Navallo, author of American Dream: Interviews with Industry-Leading Professionals. As I suspect with most personal financial bloggers, I get an above average number of requests to review books in advance. Most get put to the side for a later reading, if I get to them at all. American Dream caught my eye because Navello asked politely if I would review the book and he provided a small amount of background in the initial email.
What intrigued me from the beginning is the interview format with six very successful professionals from a variety of unrelated fields. I am a sucker for success stories so I made time to read the book. It blew my mind! American Dream is not a long book which is a good thing because I could not put it down. Navallo used a simple format with each professional. He started by asking each professional interviewed to providing some background on their early life and how they came to lead in the industry they are in. Depending on the path the interview took, he would explore unique characteristics to each professional’s path to success. He ended each interview by asking about their belief in the Power of Attraction, favorite quotes, favorite books, best lesson in life, the key to success, and if they believed the American Dream was dead. The answers surprised me.Read More
When I was a young boy growing up on the family farm we had three sections to the farm: the homestead, Newhouse place, and “up by the other place”. Yeah, we really called it “up by the other place”. We were sophisticated hillbillies, I tell ya.
Up by the other place there was a well with an old style pump you worked by hand. Toward the end of our farming days the pump was fitted with an electric motor, but that doesn’t help with our story.
The old well pump up by the other place was a job I hated. Feeding the animals was okay, but getting the tank filled with water was a chore. And a lesson. That old well taught me more about life and success than any seminar or college class I ever attended. The lesson was so simple. It amazes me to this day more people do not understand the lesson of the pump.Read More
The 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.Read More