Don’t Play Fair

Let’s play word association. Or to be more accurate, acronym association. I’ll go first.


“Invasive.” “Confiscatory.” “Heartless.” “Unbending.” “Bureaucratic.” “Dictatorial.” “Arbitrary.” “Capricious.”

Okay, that’s a start. Here’s another one: “Anti-business.”

Or more specifically, anti-sole proprietorship.

If you’ve spent as much time trudging the depths of our nation’s tax code as I have, you reach two inevitable conclusions:

1. The whole colossal, unreadable, internally contradictory thing needs to be demolished;

2. As it stands right now, it treats regular salaried workers worse than it treats anyone else.

No one pays through the nose come April 15 worse than Lunchpail Larry and Cubicle Candice alike. And who benefits while they suffer? Those no-good businessmen, that’s who.

You developed a skill, became an expert in your field, found clients, made them happy, continue to, and now you’re turning profits. The American dream — better living through entrepreneurship. Everything is going great, so should you bother with the extra work and the legality of it all?

If all you do is create a product or perform a service that people love and are willing to pay for, you will be pecked to death by state and federal income taxes.  So much so that you’ll want to give up your aspirations of self-determination.

Play The Game

You can rail about the unfairness of this. Or you can do what almost everyone can, but few bother to: play the IRS’s game; only make sure that you’re on the winning team.

In other words, if you own and/or operate a business, incorporate. Create an artificial entity that doesn’t eat, sleep, or breathe. All it does is get tax breaks.

Tax Breaks

“Tax breaks” is a vague term, but for our purposes, we’ll define it as being taxes that a salaried worker pays that an entrepreneur doesn’t. By the way, it’s not like there’s some special 4-year training period you have to complete to become an official entrepreneur. Nor do you need a prohibitive amount of money. The ranks are wide open. When you incorporate, you reduce the tax liability for you and everyone else who owns a piece of your company.

Liability Protection

Say your business loses a massive amount of money in a short time, by incurring an unforeseen, uninsured expenditure like a civil suit. The sole proprietorship could end up owing more money than the business itself is worth.  So where would the additional money come from? You, the owner. That’s called personal liability, and it sucks all manner of foodstuffs.

When you structure your business as a corporation, you’re taking advantage of the legal principle of limited liability: (your share of) the business can’t be responsible for any more than what you put into it. For example, if you owned $2,000 worth of Enron shares, and it turned out that the company didn’t really produce anything, the worst that could happen to you as a shareholder was that you’d be out your $2,000 when the stock price fell to $0. No one who sued the company (and there were plenty) could sue you, as an owner, for more than your investment. Now if you were a director of Enron, on the other hand…

This is called the corporate veil, and it really comes in handy on the smaller scale of a you-sized business. Considering that 2/3 of new businesses fail, you have to protect yourself against any inevitable downside. Unless you’re so masochistic that you enjoy having creditors come after your car, house, personal bank accounts, and maybe your baby if it’s healthy and has all its organs.

2 Ways to Incorporate Your Business

If you know even a little bit about this, you might know that there are two common ways for your business to incorporate. The more common one is called an S Corporation, the other is as a limited liability company.

Under either an S corporation or an LLC, your private assets are protected. No one who feels slighted by your company can “sue you for all you’re worth”, as the invective goes. This isn’t the case when you’re a sole proprietor: for legal and tax purposes, you’re indistinguishable from the business itself.

An LLC doesn’t technically pay taxes. Instead, the government taxes the LLC’s (taxable) profits, which are distributed among the owners. Those profits get taxed at the same rate as regular income. Your LLC issues you a K-1 statement, which lists your share of the LLC’s income and expenses, to be transferred to your 1040.

An S corporation is a little more work, but usually worth it.

There are minutes, resolutions, the election of officers, formal financial statements, etc. You’re even supposed to hold an annual shareholder meeting, but that’s not hard to do if you own all the shares.

From a tax standpoint, there’s virtually no difference between an LLC and an S corporation. The biggest difference between them is how the IRS treats excess profits. If you own and operate an S Corporation and pay yourself a “reasonable” salary, the remaining profit is “distributed” to you at the end of the year and isn’t subject to 15.3% self-employment tax. Not so with an LLC.

Other Reasons to Incorporate

Hopefully, your business gets so successful that you end up selling it. Which for most of us is the ultimate goal anyway. Take it from someone who’s been there; while a sole proprietorship is easy to create, it’s a pain to sell.

If you operate your real estate business as a sole proprietorship, you have to sell every single asset individually. If you incorporate, the entire business moves as a unit.

Besides, if your business is viable and the new owner halfway intelligent, the first thing he’ll do is incorporate anyway.  Save him the trouble and do the incorporating yourself, then add the incorporation fee into the price. And charge a premium for the privilege, of course.

Even if your business has multiple owners, and even if those owners are just you and a spouse or a sibling, selling your share will remain a snap if you’re incorporated.

Are you ready to play the game?

Or you could just keep filing your annual 1040s, and try to figure out why you’re not getting rich.


Obligatory legal disclaimer:  Although most states allow a real estate licensee to operate under a single-member LLC, you should check with your state real estate division to be sure.  Ask your attorney or accountant if an LLC or an S Corporation is the right choice for you.

Think, Plan, Do, Achieve

4 easy steps to success



Who do you want to be?

What does your future look, feel & sound like?

Create a picture of what you want through stories, drawings or photographs.
The future is yours. All you have to do is create it.


How do you get there from here?

Find out where you are now then plot a route to where you want to be.
Once you’re on the path, every action moves you closer to your outcome.


To achieve your goal, you have to act.  Implement your plan today.  Be accountable for your behavior. Stay on the path, don’t make excuses and don’t get distracted.


If you have a compelling vision, create a plan and take action on that plan every day; you will succeed.

What are you waiting for?


Happy Birthday Dad!

Watch my latest webinar: Planning for Success

Poverty in America. Can we Get Some Context Please?

If you’re a family of 4 in America earning $22,350, you’re eligible for  the following free* goodies:

Food stamps (SNAP)3,179
Free breakfast and lunch for 2 kids during the schooll year3,600
Section 8 rental assistance (assume $1100 monthly rent)10,188
Home energy assistance858
Free cell phone with 250 minutes per month600
Up to 24 months of Temporary Assistance for Needy Families (TANF)5,376
Earned income credit5,000

Poverty in America means a family of 4 is living on gross income of $54,301, getting more in government taxpayer money then they earn. No wonder we’re broke.

*Free to the recipient, extremely expensive to everyone who pays taxes.

Let’s Hit the Links: Week #7


Many years ago, I led my daughter’s Girl Scout troop during cookie sale season. These girls were ruthless. They met their sales goal and earned a camping trip to the now-defunct Peppermill Hotel and Casino in Mesquite, NV.  What? You thought they were going to sleep on the ground, pee in a hole in the ground and subsist on campfire rations?

Selling cookies taught the girls how to: 1) set and achieve a goal; 2) convince someone to buy something unnecessary; and 3) manipulate their parents into helping them succeed.  It prepared each girl for the life of an entrepreneur. Next time you’re at the grocery store, pick up a box of Thin Mints and help a girl succeed.

This crazy article about finding your cat-loving soul mate is from

If there is a lack of cat talk, that is not a good sign. Somebody who doesn’t make cats part of your initial chat may not want to be part of you (sic) or your cat’s real life later on.

Is this site funny? I can’t decide.

The advice in this Huffington Post piece entitled 15 Gay Reasons to Watch the Super Bowl (Not Counting Madonna) is timeless:

Tom Brady is very, very handsome. Remember all those pics from VMan a few years back? And Eli Manning, though not as Bruce-Weber-ly handsome as Brady, possesses his own dorky cuteness. (They tried to dress him up for Men’s Vogue a few years back. An adorable effort.)

Here are dueling trash Trent Hamm posts from Control Your Cash:

Trent Hamm is a 30-something American who claims to function in the modern world. People actually read this dunderhead. By the way, his stratagem about taking showers (and using underarm deodorant) comes from the same invaluable post in which he tells us to brush our teeth.

and Financial Uproar:

Trent goes on to explain that you could save $10 per year by just adjusting the temperature. He doesn’t actually bother to do the math or anything (this isn’t such a bad thing) he just pulls the number out of his ass.

Because I’m not done with football yet, here’s a fascinating article from’s new Football Freakanomics blog:

Our latest Football Freakonomics episode — the last one this season — argues that the draft is much more of a crapshoot than most of its practitioners would have us think. The evidence is everywhere. Consider the research of research of Cade Massey and Richard Thaler, who find top draft picks to be seriously overvalued.


What did you do last weekend?

Yep, that's a moat


From Wikipedia:

The Dry Tortugas, [Commodore John Rodgers] reported, consisted of 11 small keys and surrounding reefs and banks, over which the sea broke. There was an outer and an inner harbor. The former afforded a safe anchorage at all seasons, and was large enough to let a large number of ships ride at anchor. Of more importance, the inner harbor combined a sufficient depth of water for ships-of-the-line, with a narrow entrance of not more than 120 yards. Rogers said that if a hostile power should occupy the Dry Tortugas, United States shipping in the Gulf would be in deadly peril, and “nothing but absolute naval superiority” could prevail. However, if occupied and fortified by the U.S., the Dry Tortugas would constitute the “advance post” for a defense of the Gulf Coast.

The fort, which takes up almost all of Garden Key, was never finished. It’s now a ghost town 67 miles west of Key West, FL, and comprises most of Dry Tortugas National Park. Access to Garden Key is via seaplane or daily scheduled ferry. There’s a cadre of National Park staff and a small vistor center/bookstore, but no other public facilities.  There’s great snorkeling, tours of the fort* (ranger- or self-guided) and a moat. The tour’s highlight is the cell where Dr. Samuel Mudd was incarcerated after he was convicted for conspiracy in the assasination of Abraham Lincoln. In 2010 just 53,890 people visited Dry Tortugas.

Carnivals and Links:

No carnivals this week but Dr. Dean of the Millionaire Nurse threw me some link love.

Product Placement:

The Business of Your Business: Formula, Financials, Function and Freedom

I wrote this class for the Women’s Council of REALTORS® but the information and tactics work for anyone who wants to start or improve their business.

By the end of the online video course, you’ll be able to:

  • Evaluate your net income and ensure increased profits by planning growth.
  • Position your personal production by leveraging your assets.
  • Manage your activities to create more money and personal freedom.
  • Organize your business, freeing up your time to concentrate on your personal investments.
Get more information here.

What’s on my Kindle:

Jacqueline Kennedy: Historic Conversations on Life with John F. Kennedy By Caroline Kennedy and Michael Beschloss

Outliers: The Story of Success By Malcolm Gladwell

Notes from the Cracked Ceiling: Hillary Clinton, Sarah Palin, and What It Will Take for a Woman to Win By Anne E. Kornblut

Undaunted Courage: Meriwether Lewis, Thomas Jefferson, and the Opening of the American West By Stephen Ambrose

6 Reasons You’re Still Poor



Why aren’t you rich? Probably because you fall into one or all of these categories:

You don’t have an education

To succeed in America, you must have a high school diploma and either a college degree or trade skills. You don’t have to spend have a lot of money on your education, you just have to know enough to get a job. Spending too much on your degree defeats the purpose of your schooling. Go to school to get a job.

You don’t have a job

Get a job. Any job. Worry about the salary later.

Work hard. Learn stuff.  Solve problems. You’ll soon be rewarded with opportunities to earn more money.

You’re single

2 incomes are better than 1.

A few caveats: 1) Don’t go into debt getting married; 2) You and your spouse must each have an income; 3) Don’t marry someone with debt. Single with no debt is better than married with debt and a spouse who doesn’t work.

You have kids (and aren’t married)

Single-parent households are more likely than 2-parent households to live in poverty. Same goes for the children when they reach adulthood. Ladies, here’s the easiest way to create wealth: keep your legs together until you’re married to someone with a job, have a job yourself, and are debt-free.

You have an addiction

Alcohol, drugs (legal or otherwise), gambling, smoking or shopping. I’m sure I missed one or two. Rule of thumb: If it costs money, makes you unemployable, damages your health or otherwise interferes in your ability to control the first 4 items on this list, stop doing it.

You love to play the victim

You can never catch a break. You blame others for your problems. You expect society to take care of you and yours. Until you change your mindset, you’ll never be successful, wealthy or happy.

Adam Carolla profanely and succinctly cuts to the chase:

Pull out, get a fucking job  and stop counting on the government. We’re Americans. We don’t hope for shit, we do shit.

Walter Williams sums it up a little more genteelly:

Avoiding long-term poverty is not rocket science. First, graduate from high school. Second, get married before you have children, and stay married. Third, work at any kind of job, even one that starts out paying the minimum wage. And, finally, avoid engaging in criminal behavior.

Now you know the secret to getting rich.  It’s time to take control and build your perfect life.

The Rabbi’s Gift



A famous monastery had fallen on hard times. Formerly its many buildings were filled with young monks, but now it was all but deserted. People no longer came there to be nourished by prayer, and only a handful of old monks shuffled through the cloisters serving God with heavy hearts. On the edge of the monastery woods, an old rabbi had built a little hut. He would come there, from time to time, to fast and pray. No one ever spoke with him, but whenever he appeared, the word would be passed from monk to monk: ‘The rabbi walks in the woods.’ And, for as long as he was there, the monks would feel sustained by his prayerful presence.

One day the abbot decided to visit the rabbi and open his heavy heart to him. So, after the morning Eucharist, he set out through the woods. As he approached the hut, the abbot saw the rabbi standing in the doorway, as if he had been awaiting the abbot’s arrival, his arms outstretched in welcome. They embraced like long-lost brothers. The two entered the hut where, in the middle of the room, stood a wooden table with the scriptures open on it. They sat for a moment in the presence of the Book.

Then the rabbi began to weep. The abbot could not contain himself. He covered his face with his hands and began to cry too. For the first time in his life, he cried his heart out. The two men sat there like lost children, filling the hut with their shared pain and tears. But soon the tears ceased and all was quiet. The rabbi lifted his head. ‘You and your brothers are serving God with heavy hearts,’ he said. ‘You have come to ask a teaching of me. I will give you a teaching, but you can repeat it only once. After that, no one must ever say it aloud again.’

The rabbi looked straight at the abbot and said, ‘The Messiah is among you.’ For a while, all was silent. The rabbi said, ‘Now you must go.’ The abbot left without a word and without ever looking back. The next morning, the abbot called his monks together in the chapter room. He told them he had received a teaching from the ‘rabbi who walks in the woods’ and that the teaching was never again to be spoken aloud. Then he looked at the group of assembled brothers and said, ‘The rabbi said that one of us is the Messiah.’ The monks were startled by this saying.

‘What could it mean?’ they asked themselves. ‘Is Brother John the Messiah? Or Brother Matthew or Brother Thomas? Am I the Messiah? What could all this mean?’ They were all deeply puzzled by the rabbi’s teaching, but no one ever mentioned it again. As time went by, the monks began to treat one another with a new and very special reverence. A gentle, warm-hearted, concern began to grow among them which was hard to describe but easy to notice. They began to live with each other as people who had finally found the special something they were looking for, yet they prayer the Scriptures together as people who were always looking for something else.

When visitors came to the monastery they found themselves deeply moved by the life of these monks. Word spread, and before long people were coming from far and wide to be nourished by the prayer life of the monks and to experience the loving reverence in which they held each other. Soon, other young men were asking, once again, to become a part of the community, and the community grew and prospered. In those days, the rabbi no longer walked in the woods. His hut had fallen into ruins. Yet somehow, the old monks who had taken his teaching to heart still felt sustained by his wise and prayerful presence.

A story by Fr. Francis Dorff, O. Praem from the book A World of Stories for Preachers and Teachers: And All Who Love Stories That Move and Challenge by William J. Bausch.

That Small, Still Voice Inside

Meditation is a way to get in touch with your soul, your inner voice, the part of you that is most closely connected to GOD.  Being still and listening to your inner voice is how you stay connected to the spiritual and ensure that you’re on the right path.

To begin, find a quiet and comfortable place where you can sit and relax; one free from distractions. Turn off the phone, TV, radio. Close your eyes and breathe deeply, but naturally. Imagine yourself in the most peaceful and soothing place you’ve ever been.  If you can’t think of a real location, make one up.

It may be the top of a mountain at sunrise or your garden in the springtime. As you form this picture of the perfect place, use all five senses to experience it.  What does it look, smell and feel like?  What can you hear and taste?

Here’s an example using my favorite place: a beach on Maui at sunset.

I’m sitting on the beach looking out over the ocean.  The sky is light blue with white clouds that look like cotton batting.  The setting sun is a bright orange ball sitting on the top of the ocean.  It looks as if it’s sinking. I hear the waves crashing against the sand, the distant voices of the surfers making one more run before it’s too dark.  As I inhale, deeply, I smell the salt of the waves and the sweetness of the tropical flowers that flourish throughout the island. The air tastes hot & moist. I dig my feet into the gritty sand, tunneling through the warmth of the surface to the cooler layers beneath.

Once you’ve created your private place, it’s time to think about the question. Ask yourself, aloud or silently, What is my purpose? What are my talents? How may I be of service?

After each question, pause and listen.  Whatever comes back to you, just take it in. Feel it, hear it, but don’t judge it.

Be silent and listen to what your inner voice is telling you.

It’s okay if you don’t understand the answers.

When you have finished your meditation, write down or use a tape recorder to note what you’ve learned.  Write or say exactly what you heard during your meditation.  It’s okay if it doesn’t make sense.

Try to do this every day for 3 days, going through the process, writing down your thoughts and feelings.  You may find that during this time, you’re also remembering dreams.  If you are, write those down too.  It also helps to write down a little bit of background on what’s happening in your real life right now.

After 3 days, go back and read through your writings. You’ll start to make connections among your notes, the dreams, and things happening in your life.  You’ll be amazed at how quickly your true passion will be revealed.  Once you know the truth, it’s up to you to take action.

Let’s Hit the Links: Week #6


Oh yeah!


Forget the Super Bowl. Read these articles instead. Okay, read them during the commercials.

This Deadspin article about the replay process is either groundbreaking or a waste of time. You decide.

44% of challenges on 1080i-broadcast games resulted in a reversal, compared to only 38% on 720p broadcasts. Taking the different number of challenges on each network into account, a replay challenge of a game broadcast on NBC, CBS, or the NFL Network was 5% more likely to reverse the call on the field than one on other networks.

Greg was welcomed back at ProBlogger with this article about blog carnivals.

I’m not talking about running guest posts, nor contributions from freelance or staff writers. I mean leveraging the work of dozens of other bloggers in your genre, for your mutual benefit.

Kathryn at Kathryn’s Conversations explains why ugly people have such a hard time in life:

Even when no sex is involved, good-looking people charm interviewers, get hired faster, are more likely to make more sales and get more raises. You look good and you’re compensated in return. People like to do business with people that they like, and people they like to look at. Being good at your job is a bonus.

Kathyrn’s bio tells us she’s “an expert in cutting through the onslaught of excess information; I read over fifty daily news briefs and pop culture trends (more on my research experience below), then curate and communicate any information that will help you to grow both financially and personally.”  Which means she can curate and communicate to us that attractive means to attract attention, prosperity and admirers.

I like when people agree with me. Eric Nisall at wrote:

Rather than choosing something that is realistic and achievable, people tend to set their sights on things that are unrealistic, then look to point the finger elsewhere rather than take responsibility and be accountable for the decisions they make. 

Keeping with the responsibility theme, Teacher Man from tells recent college grads to (wo)man up and get on with their lives:

I can see the attraction to piking your head out of the proverbial gopher hole that is your university/college, being terrified of the chaos around you, and diving right back into safer surroundings in the form of a graduate degree.  This will definitely extend your period of youthful bliss and allow you to feel intellectually superior to man around you; HOWEVER, it is probably not what is best for you in the long-term, at least not from a personal finance perspective.

No wonder those college students don’t want to leave academia. Atlanta’s CBS TV affiliate looked into the startling trend of college students receiving food stamps.

A sum of $200 is awarded to program participants each month, which is to be used toward grocery bills.

According to this story, a basic meal plan at Georgia State University runs $1,700. Why doesn’t the state just buy these students said meal plan and save $700?

Finally, 2 entries from the category of “Who put this guy in charge of the economy?”

Steve Sailor wrote about the Obama family finances:

The Obama thinking appears to have been:

1. Borrow against home equity and consume.
3. Get rich!

But, hey, it worked.

Over at the Washington TimesRichard Rahn takes a closer looks at the President’s proposed Buffett Rule:

 The actual tax rate Mitt Romney, Warren Buffett and most other wealthy people pay on dividends, when correctly calculated, is about 52%, as reported by the Organization for Economic Cooperation and Development (OECD), which includes the federal and state corporate-level profits tax burden, plus federal and state taxes on dividends.

There’s a lot more good stuff about double taxation, the difference between dividend, capital gains and ordinary income and how the US stacks up against other industrialized nations vis-a-vis the taxation of these different kinds of income.  Read it all before you start talking about inequity in the current tax system.


What did you do last weekend?

Exhausted after climbing Florida's highest (mole)hill

Britton Hill in Lakewood Park, Florida is the home to the lowest state high point. The park, along with commemorative marker (shown above), is so far north it’s almost in Alabama. According to Wikipedia: ” …as of 2010, the roof of the Four Seasons Hotel Miami is the highest non-natural point in Florida. Topping out at 789 feet, the tower is more than twice as high as Britton Hill

Carnivals and Links:

Don’t Mess with Taxes included my article Don’t Play Fair in the Tax Carnival #96-Dealing with Tax Dragons

Product Placement:

Receive paycheck – deposit – pay bills – hope you have enough to cover them – repeat. That’s no way to live. Nor does it have to be.

You’re just one person, with the same daily 24-hour allotment everyone else has. In other words, how much you can earn is far more limited than how much your money can earn. If you work 40 hours a week and want to double your income, there are two direct ways to do it:

1. Put your money to work for you.
2. Work 80 hours a week.

The people who build wealth via passive income vastly outnumber those who do it just by the sweat of their brows.

Read The Unglamorous Secret to Riches and find out how the people who earn more than you (while somehow having more time on their hands than you) manage to do so.

It’s not a get-rich-quick scheme. You don’t have to sell anything, or even talk to anyone. AND NO, IT’S NOT MULTI-LEVEL MARKETING, EITHER. COME ON, GIVE US A LITTLE BIT OF CREDIT.
But it works. And it’s relatively simple. And no, it’s not particularly exciting.

Pick-up my latest eBook through Amazon Kindle:

What’s on my Kindle:

3 great business reads:

Winning by Jack Welch and Suzy Welch
Switch by Chip Heath and Dan Heath
Good to Great by Jim Collins