XBanker

Updated and Revised "Own Your Own Corporation" Just Released

June 30th, 2008

I am pleased to let you know that the new and updated version of my book “Own Your Own Corporation” has just been released. It is available at Barnes & Noble, Borders and your favorite bookstore, online at amazon.com as well as through Corporate Direct and Success DNA.

I would like to thank you, as a reader of the first version, for making the revised edition even better. Your comments and questions have allowed me to better clarify and define the issues affecting entrepreneurs and investors.

So what is new in the revised addition? Well, we have new chapters and discussions on the following important topics:

• Avoiding Corporate and Tax Scams
• Building Business Credit
• Nevada’s new asset protection laws
• Crossing State Line strategies
• Professional Corporations
• Business Tax Deductions
• Wyoming Corporate Advantages
• Series LLCs and why you should avoid them

In the coming weeks I will be writing about certain key elements of the new material. But if you want the straight scoop right now in 240 wealth and nugget packed pages you really should rush out today and buy “Own Your Own Corporation.” We’re shameless, I know, but I do believe that you will benefit from this book.

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Thoughts On Asset Protection

June 25th, 2008

It is no secret that the United States is the most litigious society in the world. That said, it is important to acknowledge that many of these lawsuits are a necessary component of our legal system, and possibly the only means to right many of the wrongs that occur in our society. However, the other side of this is that a certain portion of these lawsuits are based on nothing more than an attempt by one party to generate a financial windfall from a targeted defendant.

To help combat such legally permitted takings was born the concept of Asset Protection, the legal techniques of protecting one’s assets from judgment. Asset protection is based on the principle that since assets held in your name (minus a few exceptions) can be seized by a judgment creditor, assets not held in your name (and subject to charging order protections) are better protected.

Unfortunately, many “experts” who provide asset protection strategies offer services that range from unethical to illegal. Beware of advisors touting Nevada corporations as a way to “hide” from the Internal Revenue Service (IRS) and thus avoid paying taxes. Take for example the recent case against a very high profile asset protection firm located in Las Vegas, Nevada. At first glance, this company appeared to be a legitimate organization providing advice regarding how to protect yourself and your assets from seizure. They had expensive promotional videos and a nice professional looking office. They even had a well known celebrity endorsing their services in a commercial. However, according to a recent court complaint filed by the Federal Trade Commission, if you cracked the shiny outer coating you found that this group was run by two men, one with a suspended law license and the other a convicted felon. Among the many services that this group provided was the option of having their company listed as the sole signatory on their clients’ corporate bank accounts in an attempt to hide corporate owners from the tax liability of the company. This, according to the group’s marketing materials, helped shield their clients from “capricious federal judges and any government agency”.

Improperly hiding your assets from the government is not a sound asset protection strategy for several reasons.

First, if you owe money to the IRS you owe it. Evading the obligation is a crime. You certainly can use a corporation to minimize taxes and should always do so. But to hide assets and evade taxes leads to big trouble. Second, if you are brought to a debtor’s exam, you will be forced to disclose what assets you have under penalty of perjury. A properly designed asset protection plan allows a debtor to disclose what assets they control, without sacrificing the protection of a proper structure. But anyone who advises you to set up a corporation to hide your assets and avoid paying taxes is going to get you into trouble.

Also be wary of anyone who is advising you to shield yourself through the use of “bearer shares”. Bearer shares are corporation stock certificates which are owned by the person who holds them, the “Bearer”, and are not recorded under the owner’s name. Some unethical asset protection advisors tout bearer shares as a means to shield the corporation. The IRS has been aware of the practice for a long time and if they catch you using bearer shares to avoid paying taxes, be prepared to take an extended vacation in a federally funded resort with no pool and plenty of concrete. Any ethical asset protection advisor will tell you that the use of the bearer share is a bad idea and is now illegal even in Nevada and Wyoming. If an expert is telling you otherwise, politely excuse yourself and run away – quickly.

Further, be aware of advisors telling you it is possible to absolutely bulletproof your corporation from liability. No one can make that claim. There is no magic cloak of protection from liability. That being said, a sound asset protection plan is essential. Although you cannot completely bulletproof yourself due to charging laws and new court decisions, you most certainly can and should protect yourself to the best extent possible. With proper planning and advice, you should be able to adequately limit your personal liability and protect yourself from illegitimate claims and unscrupulous individuals.

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Government Screwing Small Business Owners, Part 1

June 25th, 2008

It must be difficult living life as a politician; you have to pretend to look out for small businesses to win elections, while screwing them through acts of commission or omission the rest of the time. I usually try to ignore politics, I have better things to do – like creating jobs and making money (imagine that). Sometimes I get a bit upset when I hear a career politician talk about all the jobs they’ve created – as if they are the ones that father innovation and birth new ventures. Most of us would be on welfare if we ran our businesses like these clowns run the country.

Business owners are routinely tooled by the government. We are easy prey. We are too busy creating value to show-up at protests. We have better things to do. Which is why politicians typically cater to the unproductive (welfarees) or unproducing (retirees & students). I typically avoid these issues, but I think it is only fair to surface items that I think may impact you. So I’ve decided to start a new series to call-out politicians and bureaucrats that vilify, target or hurt small business owners. Don’t worry, I’m not some partisan hack. I trust politicians about as far as I can throw them, regardless of party.

Yesterday, I stumbled across a story in the Wall Street Journal about a proposed new bill in the Senate that I think we all should be concerned about. The Senate is proposing a bill that will require credit card companies to report business owner credit card spending data to the IRS. Why does the IRS need to see what your business spends at Kinkos next month? They hope to use this data to nab business owners who under-report their income. They hope to confiscate an additional $9.8 Billion from small business owners with this move. The money is already earmarked to further enrich and bail out the banking industry. This seems like a good trade for a politician – they criminalize small business owners so they can line the pockets of the mortgage companies that gave them sweetheart deals on their personal mortgages.

Read the rest of this entry »

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Improper Accounting

June 18th, 2008

Many new business owners make the mistake of not properly accounting for it all. Please know that companies live and die by numbers. They are defined by numbers. They grow with numbers. They bleed with numbers. Numbers define the health of your business at any given time and over time.

To be successful you must have a system to record, classify, report, and analyze your company’s numbers. And you must use this system every day (or pay someone who will). Too many new businesses let the numbers slide. They never establish a system for their accounting, they don’t write down all the incoming and outgoing money, they forget and/or guess at some transactions, they forget to file necessary paperwork. The main reasons for this are: 1) most of us hate dealing with numbers and 2) time taken on accounting is time taken away from business.

The first reason for avoiding accounting (your dislike of numbers) comes under the heading of “too bad.” Numbers are a fact of business life. If you don’t want to keep track of your accounts, that’s fine, but find someone who will. Don’t let your aversion suck the lifeblood out of your company.

The second reason for avoiding accounting (time taken away from your business) is just, to be blunt, ignorant. Whether you sell a product or a service, sales are what makes the time you spend a business rather than a hobby. And sales are defined by numbers. You need to know what you are bringing in and what you are sending out so that you can set appropriate prices, manage your overhead, market, and make a profit. Without a knowledge of income and expenses, you are leaving profit up to chance.

The best way to keep up on your accounting is to have a system – a method or plan – that becomes second-nature with repetition. This won’t happen overnight. After all, it takes 90 days to form a habit. And it may take a while for you to find a system, that suits your temperament and your business needs. But once the habit is in place, you no longer have to think about it every day.

Regardless of the system you use – computer program, ledger, accountant, book keeper – your system will fall into one of two categories: cash-based method (you count income when it comes in and expenses when they go out) or accrual-based method (you count income when you invoice and expenses when you commit to pay). The difference is timing and can be important if you regularly have inventory or if credit is a part of your business. The accrual method is better under some circumstances, but the cash method is simpler. However, if you make more than $5 million you may have no choice but to use the accrual system, since the IRS may require it.

Accounting can be complicated, but it is also predictable. Here is a very basic outline of what you can expect:

Every day you need to record the day’s transactions.

On a regular basis (dependent upon your personality, your business, and your revenue and expense levels), you will want to post all your sales and expenses to a general ledger.

Just as regularly, it’s a good idea to adjust the ledger so that you don’t lose sight of anything that doesn’t get recorded on the day of the transaction.

At the end of your accounting cycle (usually monthly), when the ledger is complete, balanced, and up to date, post the profits to the owner’s equity account. This balances revenue and expense accounts back to zero, preparing you for the next cycle.

The cycles add up to an accounting period. At the end of that period, you will compile your financial reports to give a picture of all financial activity during that period.

While there is much financial data you will want to keep in-house (and there are regulations stating how long you need to keep different records), much of it is also dependent on filing. If it isn’t filed, it doesn’t exist. Keep on top of those numbers.

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Introducing RateSpeed – The Transparent Mortgage Search Engine

June 17th, 2008

The mortgage industry just experienced an earthquake – 10.0 on the Richter scale! RateSpeed, the world’s first transparent mortgage search engine launched into Beta today. RateSpeed gives consumers direct access to the rates they actually qualify for – straight from the banks. You will not be able to find a lower rate than what you see on RateSpeed, because these rates are coming directly from the banks that brokers are using and the rates can’t be manipulated or marked up.

In the Finance Traps report, I discuss the concept of YSP or Yield Spread Premium. Whenever you have a brokerage model, one where an independent broker is packaging a loan or lease with a particular bank, you will encounter YSP. Banks will tell a broker what rate you qualify for, and if you elect to have a higher rate, the banks pay the broker more commissions on the loan. This rebate is called YSP. It was designed to help pay closing costs – so rather than pay your closing costs, you can take a slightly higher interest rate and use that rebate at closing. Unfortunately, most brokers don’t explain or even disclose YSP. Instead, they markup the rates that they show you – pocketing over $3 billion in YSP rebates each year. This gravy train just got derailed.

RateSpeed will do for mortgages what Travelocity did for travel. The mortgage finance world is about to change, as is expected when you offer consumers transparent pricing and access to once-privileged data. With RateSpeed you can enter your loan information, anonymously, and pull completely transparent mortgage rates. You can see exactly how much YSP you can use to offset your closing costs, and all the loan data that your broker sees. Progressive mortgage professionals will flock to RateSpeed, some out of necessity, others out of a desire to offer flat-fee mortgages, transparently. Go to www.ratespeed.com and search mortgage rates today.

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