You’re Working More than You Need to and Here’s Why
The High Cost of Unknowingly Working Unproductively: What’s the real cost of paying more than your obligated to pay in taxes?
For most successful people we tend view the CPA as the guru who knows all there is about tax matters, saves you from costly mistakes and paying unnecessary taxes. When in fact the CPA as it relates to supplemental benefit plans for the professional or business owner may be the least equipped to advise you. For more information go to: Your CPA may be costing you millions.
I’m not questioning their overall tax knowledge, but benefit plans for the professional or business owner requires an entirely different set of skills and knowledge far outside the common type of plans they’ve seen time and again; the 401(k) or profit sharing arrangements.
It’s because of their unfamiliarity with professional or owner benefit plans, their lack of understanding and familiarity with decades of code sections, technical memorandums and how to interpret the intent of the Internal Revenue Service that they fail to understand these types of benefits, their availability and potential relevance to their clients. They also fail their clients by summarily dismissing legitimate opportunities they are unfamiliar with costing their clients millions in overpayments of taxes and lost wealth accumulation.
What they don’t know can hurt you, or can it? Let me illustrate an example:
For illustration purposes, assume a gross income of $150,000 taxed at a combined rate of 40% produces a net income of $90,000. In some states, the rate is higher.
That’s a real loss of earned income of $60,000. This is your mandatory tax obligation, or is it?
Furthermore, how many hours of work do the $60,000 represent, a week, a month, two months?
Professionals are always trying to manage the bottom line which frequently is about savings small percentages. Yet one of the larger non-productive expenditures, our federal tax obligations, is often larger than the percentages you retain. Federal expenditures are one of the most wasteful expenditures of capital, which directly affects productivity.
So here’s what’s been missed!
As of 2000, many professionals regardless of the underlying business entity or corporate structure may now be entitled to considerable new deductions of as little as $70,000 up to $350,000 annually per participant.
In the process when there are employees, they are left in the 401(k) or profit sharing plan while the professionals or owners are carved out into a stand-alone plans where the afore-mentioned tax dollars are automatically saved and directed into the plan generating notable new tax savings with unprecedented accelerated accumulations using tax dollars you were previously mailing off to the IRS.
Remember the earlier question: how many weeks or months were lost just to pay your tax obligation?
By eliminating that obligation, what’s your bottom line now?
What happened to your productivity?
People scramble to gain just a single additional point or two in their portfolios.
Your return is 40% with minor effort on your part.
That’s real money you’ll keep and benefit from. The question isn’t what do you have to loose, but how much do you want to gain?
Successful people understand the difference between working harder versus working smarter. By utilizing these and other strategic financial strategies, sustainable wealth is either created or accelerated. The choice is yours. After all, “It’s Your Money”.