Today’s training focuses on the benefits of owning a corporation. Learn why it is important for you to own your corporation and how to get started.
00:45 Major Tax Benefits
02:23 Lawsuit Protection
03:30 Owning a Corporation is an Asset
Struggling to find time to build your business?
Use this worksheet to figure out when you can build your business around your busy lifestyle!
Hey, everybody. In this video, we’re going to talk about why you need a corporation now.
All right, let’s jump into this. Listen, it’s no secret that in today’s world with all the uncertainty, no one wants to be just a number on someone else’s corporate cutbacks. And so it’s extremely important that you own your own corporation, but I’m going to give you three advantages of owning a corporation that I think are some of the obvious reasons that hopefully will push you to go out and get your own corporation.
Major Tax Benefits
Number one is the tax benefit alone. So on average, somewhere between five and $7,000 per year can be saved on your personal income taxes if you own a corporation by having deductions available to you that you wouldn’t have unless you own the corporation. Now, the corporation is not going to cost you that much. The corporation’s only going to cost you a few hundred to may be a thousand or so dollars. It’s not going to cost you four or $5,000.
So at the end of the day if just for no other reason, you should absolutely own a corporation for the tax savings you will get. Now, when it comes to taxes, one of the reasons why the wealthy have corporations and multi corporations is because as an employee, you get taxed first and get what’s leftover. As a business owner, you receive the money, you allocate the money maybe to expenses and payroll and you get taxed on what’s left, the profits, not the gross. And so there are a lot of entrepreneurs that are able to run their corporations at lower thresholds of profit, thus less money to be taxed on. It’s a completely different paradigm than paying your taxes first. It’s controlling your money first and paying taxes on what’s left.
Second reason you want a corporation is for protection in a world where people are very sue happy, very, very anxious to jump into lawsuits. And with corporations, you’re able to put up kind of a firewall. A firewall is something that’s put in place to save an entire building. If a fire starts in one room, it’s there so that it doesn’t take over the entire house or the sequential other apartments that might be attached to the building or surroundings. And the same thing needs to be in place for you.
There may be a fire someday in one of your financial worlds, one of your investments and it’s important that that investment or that potential legal problem doesn’t funnel over to your other personal life or corporations. And honestly, if structured correctly, you can separate the wealth. You can separate your personal wealth from what the company owns. Thus,. If something happens within the company, doesn’t affect you personally as much as it would if it was all lumped under just your name personally.
Owning a Corporation is an Asset
And the third reason and maybe the most important reason is you’re building an asset. As an employee, there is no asset. If you’re fired the money stops. If you build a corporation, if you build a business you’re building an asset, something that hopefully one day will present you a positive cashflow. Because at the end of the day that’s really what we need in order to live a life that gives us more choices is cash flow. So by building a business where you have employees coming in, you’re able to leverage their efforts. You work, they work, you pay them, but you get the efforts, not only of your work, but also their work. And as you expand and do things right, eventually if done right, you’ll get cashflow.
The other thing is it can be sold. So not only is it an asset that might produce cash flow, but it’s something that you can sell in the future. Something that should appreciate. And lastly, it’s something that you can pass onto your kids, an inheritance. Something to give to them so that they can enjoy a little bit of the hard work that you put in versus as an employee working hard for someone else with nothing to pass on.
And how do you do this? How do you set up the corporation? It’s different in every state, but it’s pretty simple. I will tell you there are different type corporations. And it’s important that you set up your corporation properly, whether it’s an S class, C class, LLCs, limited partnerships. Consult with an attorney. That would be my advice to you. It might cost you a few bucks to do that. But in the long run, you won’t have to set up another corporation because you set the worst one up wrong.
Consultant an attorney, set up the corporation. You can do it online. There’s a little bit of maintenance every year, according to your state laws. But I can assure you that setting up a corporation today is in your benefit if for no other reason the three that I outlined today.
If you like this information, pass this on to other people. Just hit that share button, grab the link, send it out to others, invite them to this YouTube channel and also the cunninghamcollective.com. There is going to be a lot of information like this so that you can improve your financial status and also grow with us. So I hope you enjoyed this. See you on the next video.