RG 162 – What Do the New U.S. Taxes Mean for the Investing Landscape? with Diane Gardner
Nuts and bolts
Diane is an expert tax coach who specialises in helping entrepreneurs and business owners when they move into the 7 figure income bracket. When people move into this bracket they experience more expenses and taxes so they need to create a new tax lpan. Diane is a certified tax accountant and a best selling author who has saved her clients over 3 million in taxes. Diane made her first dollar grading tests for her neighbour who was a drivers ed teacher, this was before she was old enough to get a license. When she graduated she got an accounting degree and worked for a traditional accounting firm and then moved to California to start her own company. In 1989 there was an earthquake that levelled half of her work so she sold the business to raise capital and moved home to Idaho to start over again.
Trump’s new tax rules changed the tax rate for many people including the corporate world. The tax rate went from 35% to 21% and for smaller corporations can take the net profit of the business and multiply by 20% and drop a new deduction on the income tax return. There were also lower income tax rates for people owning and renting properties, approximately 20% in income for someone who owns a property in an LLC. For high earners tax strategies depend on the earner and their net income, for example if the net is also growing in addition to the growth and there’s enough money to do tight planning the Diane might look at the retirement options and do a full analysis. What worked for you yesterday might not fit today.
In the process of growing a business the owners’ heads go down and they don’t think about taxes and then suddenly the tax year comes around and it can be painful. We all need to acknowledge that planning is necessary because taxes are inevitable. Diane suggests that a good tax strategy is to start your own insurance company. All of the biggest buildings in town are owned by insurance companies so there’s clearly a lot of cash in the business, so pay yourself for your own insurance company. Set up as a separate corporate entity and part of a pool of other businesses doing the same thing, and then instead of of buying liability from a local insurance broker just buy is from your own insurance company. The only catch is that you need to show the IRS that this wasn’t a tax move, it was a liability move. Now you can insure things like loss of business etc, which were things you couldn’t afford to insure before. Going forward invest in properties through the insurance company.
There comes a time when you might outgrow your tax advisor, you can tell when this is happening because they start to avoid your calls, stay out of contact or don’t answer your questions. This shows that you’ve grown too much for them to know what to do anymore. At this point find someone unbiased and unconnected to do an overview.
Top tips
- Most important habit – Accountability group for setting goals
- Most influential person – One of her coaches
- Most important tool – Excel
- taxcoach4you.com/investintheus
