The Entrepreneur DNA - The Ultimate Tax and Asset Protection Plan for Entrepreneurs | Tommy Thornburgh | EP 37

Episode Date: September 16, 2024

SCHEDULE YOUR CALL TODAY for Entity Structure + BOI Filing for $0 + State Fees & Hard Costs! Go to http://primepartner.info/EntrepreneurDNA --- Today I sit down with my good friend Tommy Thornburgh, a tax and business expert from Prime Corporate Services, to dive deep into critical tax strategies and asset protection tactics for entrepreneurs. Tommy shares key insights on how business owners can avoid hefty $500/day fines by staying compliant with new government regulations and highlights the importance of proactive tax planning throughout the year. He explains how leveraging tools like Health Savings Accounts (HSAs), real estate depreciation, and business deductions can help entrepreneurs save thousands in taxes. The conversation also covers the significance of properly structuring business entities to maximize tax benefits and safeguard personal assets, as well as the often-overlooked importance of setting up trusts for estate planning. Tommy provides real-life examples, from using the Augusta Rule to avoid claiming rental income to navigating complex tax deductions, all aimed at helping entrepreneurs protect their wealth while growing their businesses. Whether you're a new or seasoned business owner, this episode offers a comprehensive guide to optimizing your tax strategy and ensuring long-term financial security. --- Connect with Tommy! Instagram - @tommythornburgh LinkedIn - linkedin.com/in/tommy-thornburgh-9495a3b9 Website - https://www.primecorporateservices.com  Tommy Thornburgh, President of Prime Corporate Services, is an incredibly accomplished and highly sought-after business advisor with more than 15 years of industry experience in entity formation and tax strategy. On top of helping entrepreneurs establish their own businesses, Tommy maintains a diverse set of entrepreneurial ventures of his own in real estate, stocks, and more.      

I go back once again, the most important thing from a tax standpoint, do you know your profit and loss? Our clients that track their expenses save an average of over $9,000 a year. And that's an average. There's high, there's low, but $9,000 a year in just tracking business-related expenses. So tracking expenses is critical identifying active versus passive and it makes it easier to diversify whether it's a cupcake company if you own the building of the cupcake company own the building have a property management company that you're renting it out to like the strategies are endless it's just about planning and making it happen that really allows you to not only protect yourself but save a ton of money in taxes.

What's up, guys? Welcome back to the Entrepreneur DNA. I have a very close friend of mine who has worked with over 150,000 business owners. And I got to tell you right now, Tommy Thornburg, what the hell is up with this $500 a day fine that we're looking at as entrepreneurs? Dude, it's crazy. Alabama actually just deemed it unconstitutional. So Alabama right now does not have to follow it. But it's the Financial Crimes Enforcement Network.

It's a totally separate government agency, so it doesn't affect your privacy, your anonymity at all. But if you set up a business before January 1st, you have to file this report by January 1st, 2025. If you set up a business in 2024, you have 90 days to complete it. Or like you said, they're threatening $500 a day fines and even up to two years in jail. So listen, I'll tell you now, if you didn't do this for me, I wouldn't even know about it. So prime corporate services, PCS, get there, find them all over social media, find them on my social media, prime corporate services, PCS, they will help you out the same way they did me. Cause if I didn't know about this January 28 would have come and I would have been clicking off yep five hundred dollars a day it's uh we put together an amazing portal it's really cool so all of yours that we did for you you have that you can log in you can enter in all your information we'll send you a once a year update

you have to put a picture of your driver's license or your passport. And if your passport's going to expire, your driver's license, it'll send you a notification so that you make sure you stay compliant. It's insane. It's above my pay grade. I can't make the change. But it's just part of doing it. What's funny is you didn't know about it. And a lot of the business owners that we work with that are super successful, they don't know about it either. But I mean, that's been around for 20 years. Yeah. The people that are brand new tend to overthink it. It's really not that big of a deal. We can help with it. We have an amazing portal. You have to do it. So we might as well just knock it out. Let's look at it like filing an LLC, paying the state fee to do it.

It's just part of the process now. So for sure go to PCS, but what specifically should they go? Who should they look up? Is there a website beyond just PCS? Yeah, we'll get a link for the show notes that we can put in there. Yeah, yeah. Make sure that we know you're following old Justin JC over here, and we'll take good care of you.

We'll make sure to give you a discount, get you into the portal, but make sure you file it, please. Yeah. I don't want anyone to have to deal with that. It's been a nightmare for us putting it all together. Last year, they said they were going to have the portal ready going into the fourth quarter, and two days before the end of the year, they said they were going to have the portal ready going into the fourth quarter.

And two days before the end of the year, they sent out the portal. Our attorneys are calling me. They're like, it's live. It's live. So it's been a mess the entire time. Yeah. I think it's ridiculous. They are saying it's to avoid money laundering and scammers and tax avoiders. If I'm scamming someone, I don't think it's the first thing I'm going to do is jump in and enter in all my information. But once again,

it's part of the process. Make it happen. Get it done. Check it off your list. Focus on making money. Yeah. So listen, you worked with, as a whole, I brought that up because it is definitely like hot and heavy topic. but as a whole, you've worked with over 150,000 business owners. Let's just talk about some, some of the real shit. Like what are some downsides that you see with business owners that you could say, guys, these are things like this. This is a great example. They don't, they're not aware of these things. They go start an LLC, they go interact, They engage. They do deals. They make money. But they're not thinking through a lot of the other things. What are some things that you can highlight as, I don't know, blind spots, I guess, for entrepreneurs?

Yep. One of my favorite books is Rocket Fuel at Geno Wickman. And it identifies visionaries and integrators. And it's different for those personalities. If you're a visionary, you just run, you make money, you work your ass off and you just make it happen. That's right. If you're an integrator, you're struggling to take action. You're overthinking things you're doing. So depending on the type of personality that you more identify with, there's a little bit of a mix.

But for people that are visionaries, a lot of times they're running so hard and so fast, they don't take a second to smell the roses, if you will, right? You got to make sure you're organized. You need to know what your profit and loss is. You need to be a little bit more strategic on a dollar out means how much money back in depending on your income. So the number one mistake there is tracking expenses and being able to keep in depending on your income. So the number one mistake there is tracking expenses and being able to keep more money in your pocket. From the other side, as an integrator, one of the biggest problems that I see is just overthinking to the point where you're not spending that dollar to get the $2 in return. So everyone talks about action. The reason everyone talks about taking action and actually making decisions is because that's the only way you can actually make money happen.

Yeah. Right. So that's never been my problem. I actually had a coach a couple of years ago and said, Justin, you'll never go broke. You'll always be able to make money. Yeah. But if you prioritize efficiencies and like genuine business practices, you're going to actually keep the money you make. Yeah. And so you focus a lot on that in your business, right? Like how many, how many of your clients actually like don't even know how to read a P&L or don't even put their tax return as a priority, right? I mean, the tax return part is huge. Like think about when we're recording, this is tax season right now for entrepreneurs. Yep. If our, our biggest statement that we make when we talk to new clients is there's a big difference between proactive planning

and reactive planning. And what I mean by that is if you're waiting until February, March, and April to put all your documents together, it's too late. All you can do is put money into a retirement account and hope that you get a tax return or don't overpay in taxes. But tax planning happens throughout the course of the year. And I don't like getting our clients into bookkeeping unless they actually need it. But whether you have bookkeeping or not, every quarter you need to know what your profit and loss is because the fourth quarter, that's business shopping spree season. That's it.

Pay for a coach. Pay for an advisor. Pay for marketing. Buy a house. You need expenses. Do something that's going to lower your tax liability to create cash flow in the future. And if you don't know what your numbers look like, you're probably overpaying. Do something that's going to lower your tax liability to create cash flow in the future.

And if you don't know what your numbers look like, you're probably overpaying. I'll give you a great example personally. And you know this because I called you to vent about it. My bookkeeper didn't help me for 2023, right? So my accountant calls me and he's like, everything I'm looking at, you have this ridiculously high tax bill coming. And I said, well, damn it. But the one thing I knew in my ace in the pocket was I'm a real estate guy. Yep.

Said, well, I'm going to counteract that with a big commercial purchase. So at least I have an asset versus paying the IRS. But not everyone's at this level, right? So what are some things that you can kind of preach about, like the things that you could help, whether it's a new entrepreneur, like in the middle of the runway, maybe someone like myself been doing this 20 some years, what would be the things that you could devise on? So the first thing that I will say to this, if any of you are married, working with a significant other, filing taxes jointly, I'll use you and beautiful Steph, for example, here. If you weren't a real estate professional, I would love to see Steph as a real estate professional. There you go.

Fortunately, you are, right? So that's going to allow you to not only buy assets that cashflow, but take that additional depreciation. Myself as the example, my wife got her real estate license probably three, four years ago. And we've been buying real estate strictly to depreciate and take the tax benefit. Matter of fact, some of those properties I'm not doing very well on it. I don't even care because it saves so much money in taxes, right? But if you're listening to this, what I will tell you is here's three very simple things you can do. Number one, if you don't have a health savings account, please, for the love of God, get a health savings account. If you're single, you can put $4,000 and some change.

If you're married, it's $8,000 and some change. It's one of the only triple deductions. You put money in, it's deductible. You take it out, it's deductible. You pay medical expenses, it's deductible. So shout out to your new baby boy. Put that money in, take it out, pay for the medical expenses for having the baby. And it's a $20,000 write-off just like that, that you'll be able to implement

directly against your business. So HSAs are great. Okay. Go ahead. We'll ask number one. What's number two that they can do to like, like I'm always on the hunt, right? So I'm trying to fast forward people's learning curve. Like what could they do out of the gate? Cause I didn't know anything about this. Like you're one of my closest friends. I still didn't know. Right. So what could they do out of the gate? Number two that I would go with here is you are going to plan. You are going to build and grow this business.

You already have the intent. Set up a business entity. Show it. Right. The Augusta rule is something that is commonly talked about on social media. And for any of you that want a tax tracker, schedule a call or reach out to us. I'm happy to give it to anyone listening to this, but you're going to have meetings. You're going to have planning. So how I implement this on the fifth of every month, my business rents out my house. I go over minutes, meetings, bookkeeping, monthly

goals, quarterly goals, annual goals, and I pay myself to rent out my house. Now, as long as it's less than 14 days a year, you don't have to claim the income. So I get the deduction as a business owner. I don't have to claim the income personally. And for a lot of our clients, it's an eight to $15,000 write-off. And it's things like that, that you are going to do anyways. It's part of your business. Just implement it, document it, and it'll save you thousands of dollars. I'll tell you, there's so many great real estate plays, right? That people just don't, like, you don't necessarily have to be me and go all in on real estate. But if you understand

strategically a little bit of real estate, it can go a long ways. The reason why I love it is you understand if you're going to cut a check, why cut it to the IRS? Why not cut it to just assets, right? I mean, that's the reality is, is to me, again, I'm the real estate guy, but like, why wouldn't every one of your clients start buying as many assets they can? Getting, getting a tax refund is, uh, is the worst thing in the world in my eyes. Very biased opinion. Hold, hold on your shorts here. But the reason I say that is because all that means is that you gave the IRS an interest-free loan for the entire year. And they said, oh, shit, we took too much of your money. Have some of it back.

I've never heard it. I'm going to pause you because my accountant says the same thing. He says it different. My accountant says if you pay the IRS anything, you don't make enough money. Yes. So that's how he says it, right? Yeah. Which there's some truth to that. Right. It's a very accountant response, but I respect it. I understand. I like your spin on it better. Yeah. They're going to take as much money from you as possible because guess what? They lend it out. Yep. Their whole job is to turn money just like ours has been, Sonners, right? I mean, that's the reality is they're going to take that money.

They're going to lend it out. They're going to get a return better than they're paying you. Yep. And they're going to give you whatever they overtook. I know you've got a massive real estate following. I know it's a lot of entrepreneurs in general. I currently own 78 doors and I've got 12 in Missouri directly. And I am losing my ass.

Yeah. People moving out, trashing properties, but it's the longterm game. I can take depreciation. It can save me money in taxes. When you get into that fourth quarter of the year, what do you want to do?

What's going to better your business? I would so much rather give you money and have you teach me the secrets around marketing, social media, branding, then give it to Uncle Sam. Totally. Right. My mama says you can't choose your family. And it's a tax write-off, right? You can't choose your business partner. And that's Uncle Sam. It is a business write-off. Yeah. Right. Write those things off to be able to build and develop your brand for future years to create more cashflow. It's a no brainer. What other, just because we're on taxes and it's tax season, so it's top of mind for me. For sure. What other tax write-offs can

you give? Like I have a buddy who's like, dude, we should buy a private jet. I'm not saying it's a bad idea, but when those things break, they don't break for like a thousand bucks or 1500 bucks. They break for like, oh, it's an $80,000 little thing we got to go buy. But what else like that is, is something that entrepreneurs right now watching this, listening to this can be like, I should be doing this. Funny story about the private jet. So my partner, Steve Harward, who you know very well, CEO of prime corporate, he's got two jets currently. And one time the technician didn't turn the key all the way to turn the jet off yeah it burnt the battery 30 grand stop it's crazy 30 grand i

bitch about my like 800 battery in my car 30 grand he's over it i can tell you that right now he's over it but it's it goes back to YouTube University saying to buy a G-Wagon, Range Rover. Beautiful Range Rover, by the way. Thank you, bro. I love it. Thank you. I'm going to send it to my wife. Tommy, I want that.

She doesn't sound like that. Shout out. Shout out, Alona. But there's the depreciation on over 6,000 pounds. It's the same thing as a vehicle, just on a higher level. Yep. And I think that's the big takeaway is there's levels to this, right? We had a client one time that came to us, and because they weren't taxed properly on their LLC, we submitted a form to the IRS, which is free, a 2553 form, changed the LLC so it's taxed as an S-Corp, saved him $600,000.

$600,000 in a given year. There's levels to this. He was making a ton of money. I was going to say, I mean, he's printing money at that point. Printing money. But he wasn't complaining about the savings. I can tell you that right now, right? And there's little things like that.

Are you generating active income or passive income, right? If you're running a salon, your active income is being generated by exchanging time for money. That's right. If you buy rental properties, you have passive income. They're taxed completely different rates. Everyone's heard, don't put all your eggs in one basket. No one told you what eggs to put in what baskets. Yeah, it's just not all in one. Separate your liabilities, know your profit and loss. Give yourself the opportunity in October to say, great, business A needs to make an investment. Business B, like me on these Missouri properties, is losing its ass, but we're

still going to depreciate. You can do that and separate out those liabilities. Well, and I think the other thing that I think a lot of entrepreneurs don't understand is it's not an or. It's an and. For sure. It really is an and. I think that the leading thing is let's go make as much money as possible. Yes. But then why not keep more of it, right? I think people don't, if you're watching this, you need to reach out to Tommy, follow him on Instagram, but also reach out to PCS. They will help you.

Like people don't think this way. They think I need leads, I need sales, I need conversion, I need revenue. But then you go make, let's just say a million dollars and you don't keep it. And it's because they don't think in the way of what we're talking about right now. Like as an entrepreneur, you have every tax option possible. They just need to understand where and how and how do they do it? Like, let's just say we're speaking to a cupcake owner. Sure. They do great cupcakes, small little shop. It's great. small little shop it's great they do higher up like

what would you tell someone who has a business like that i love cupcakes me too no i don't actually i hate them i love donuts i'm a donut not a cupcake i love i love it but what do you tell a retail shop like that like every business owner should understand a lot of these things. The first thing I would say is create an online presence. And I say that because I'm terrible at it, right? This is something that you are amazing at. This is something that you excel at. You're very, very good at it. It's been something that I've struggled with since we started Prime in 2012 and it doesn't come natural. It's hard. And people say, do the things that you don't want to

do. I don't want to do those things. Right. And it goes both ways. Do the things that you enjoy doing. You're a phenomenal baker in this instance. You make phenomenal cupcakes. Do the things that you want to do and hire out the rest. Right. When you're looking at what you make on a monthly basis, break that up and say, if you were to hire a bookkeeper for $100 a month, is that worth your time to be able to work on your craft to find the enjoyment in being self-employed? Because when you're first getting started, you're everything. Right. You're doing it all. You're cleaning the toilets. You're taking out the garbage.

You're baking the toilets, you're taking out the garbage, you're baking the cupcakes, but what do you like the least and know that you're embracing it and you're loving it and you've done it. And then how can you hire it out to focus on your genius? And I think the sooner that you can do that in your business, the more enjoyment that you will find, because we talk about this all the time. I mean, I call Justin all the time. I'm like, dude, man, it's, I'm finding enjoyment. Right. And I think that that's something that you're really good at is helping people understand that there's things that you're good at. Yeah. And if you can focus on those and understand that you're temporarily doing the tasks that you don't like, whether it be bookkeeping, cleaning, whatever else it is, hire out the things that you don't want

because it's not all about the money. It isn't. It is, but it isn't. And I say only that because like, so I'm at a place and you know this because I'd go through PCS to do this. So again, take note, PCS. And primecorporateservices.com, by the way,

like trusts and putting things in trust. A lot of people don't have an awareness of why you do it, why it's important, but essentially at some level of your life, you should have enough money coming in, wealth accumulated that you want to start to shelter some of this. You want to actually create longevity. Let's talk a little bit about trust here. Yeah, I love it. Estate planning in general is not just for the rich. And I think that that's a common misconception. A lot of people think that estate planning is for very wealthy individuals. It's not. It's for people that own assets. If you have a bank account, if you have a retirement account, if you have a life insurance account, if you have a retirement account, if you have a life insurance policy, if you have a business,

if you own your house, a car, one of the biggest disputes that we've ever seen was over like a 1990 station wagon. Sweet. It was badass. There needs to be a rap song about station wagons. That would be nice. Let's do that. But estate planning is something that's critical for everyone.

And when we do estate plans, we do all four components. Trust, will, living will, power of attorney. In most states, a trust is what's going to allow you to avoid probate. We have spent a ton of money, and I'm very proud of what we've recently put together. We have a portal where you can log in, you can put all of your information. And when you buy another property, when you start another business, when you have a life-changing event, like having your baby boy, you can add it directly in. So really, really cool.

We've put an amazing portal, a lot of resources together for it. But everyone that owns assets should have an estate plan. And if you feel like you're not there, that's okay. Put it on the vision board. Put it on the Y wall. So let's just talk to the people that think they're not there like is there like a level of like a hundred thousand dollars with assets like crypto stocks cars whatever like is there like a level that you'd say at this point you should be there you should be doing that thinking about it really really good question. I would say if you have $500,000 of anything, equity.

Equity in your house. Equity in your house. Stop. Everyone watching this, listening to this, there's a lot of people that have $500,000 sitting in their house. For sure. What do you tell them? Set up a trust. Put the home to trust?

Please set up a trust. Just a personal story here there's a end of last year my uncle um unexpectedly passed away and uh my cousins called me and they were like if if if uncle pete didn't have these resources in place i i don't know what we would have done. Imagine how much you have that your family doesn't know about. Totally. Credit cards. Yeah. Bank accounts, retirement accounts, cryptocurrencies. The way that I think about it is like, and he was in California. Any of you in California, you're paying for the weather. That's it. If anything happens, you know that they're

taking that money. It's not Thanksgiving dinner conversation, but ask your friends, ask your loved ones, ask your family members. Because on the flip side, my wife's aunt passed away and she didn't have these things in place. And it's not only about the money the emotional damage that happened between the siblings in this situation was absolutely terrible they no longer talk over a couple bucks like when i pass i want my girls to be spoiled rotten i don't want the state taking a dollar that's it i want those girls dripping in gold baby but that's why you do so let's talk about why you would do certain things, right? So my mom passed when I was 24, so it's been almost 20 years now.

Yeah. Now, we didn't have a lot, right? But she had a home that we lived in that her mom owned, that she inherited, that we lived in. And so when she passed, I was the next to get it. Yep. So it wasn't a lot of money, but like I had an executor of the will. So she had at least a will, but there was no family trust. There was no nothing.

And I'm 24 being like, what is a 24 year old now? Right. So let's talk about why you would maybe set up what. And again, I'll tell you guys, like he's here because I use him in prime corporate services to do this for me. If it's good enough for me and you're watching this YouTube, listening to this podcast, you need to reach out to PCS prime corporate services.com book a call, let them know what you guys have. Like this is, there's a reason why people fall short in life and it's little things it's just they don't know this little thing yep i uh there's

an entire real estate industry in play around probate and you would know this better than i obviously you've done probate deals right and uh the reason for it is because there's so much distress. And as I have gotten a little bit older and less wise, wiser, wiser, I've got two little girls that has changed my entire life. Yeah. And it is them that I think about with every decision that is made. And those of you that have kids, those of you that aspire to have children, um, for me personally, I've been talking about this since 2012. I didn't set up my estate plan until my daughter was born three years ago. I'm the same way, by the way. I've been doing this since 2012.

So this is a pretty hypocritical thing of me. You got to care more about someone else than yourself. And once that happens these things are no-brainer agreed 100 by the way you hit it like when my daughter was born I was in Las Vegas with Greg and I said dude I need to what am I doing like I need to start setting up longevity yeah and so this is exactly what I did called got trust going and it's because you don't know you know you and I travel a lot you're on stages constantly I'm on stages constantly not to say not to be dark about it but the reality is like ubers are driving or like in accident I have a friend that lost his

cousin's wife right so a little removed from me yeah she's sober driving her car for her 18 wheeler through the median through the median and if you don't have things you just don't know and so i don't i don't want to take this in a dark spot but i would tell you life is too short and people get too cocky and like i'll do that tomorrow yep i'll do it next week oh what was that justin primecorporateservices.com I'll call them next like literally as you're listening and watching this book a call because it doesn't

take much and you are not set up for this right it's crazy and you guys have a lot of different clientele in terms of you know what they're doing but there's always the level of we're all entrepreneurs. Yep.

And if we aren't teaching them the things that should be happening, knowing the experiences that you and I have, you guys have 150,000 clients. Yeah. You've seen a lot. For sure. Right? And they need to know, like,

what are the minimum things that I should be doing? What kind of, I'll give a great example. Like, every time I need to go start a new entity, who do I call? You know, every time. Hey, do I need this entity? I love those texts. Yeah, yeah. What's up, bro?

I need an LLC. Need another one. Needed it yesterday. You mind? It's so good. But the reality is there's reasons why I do that. It's because not everything should be in one LLC. Talk a little bit about that. Like entity and like what entities and why and how many should you have? Some people start a new entity for every real estate deal they do. That's not necessary. Not me.

Right? So talk a little bit about like the entity structure and why you would do what. what? Here's one of the things that I'm most proud about with Prime Corporate Services 12 years in is when you go ask an attorney this question, you get, it depends, or set up an LLC for every single property. If you ask an accountant, they say, usually the path of least resistance, just keep it together. Wait till you're making money. The truth is often sometimes in the middle for you as an entrepreneur. That's right. So separate out your liabilities based off of industry, based off of risk. Here are the three things I tell everyone to take into consideration whenever you set up a business entity. Number one, privacy and protection. How much privacy do you want?

I know you don't want your address and your name listed. You don't have to worry about it because you get to just text me and say, hurry up. But you don't want your name listed on state websites. You want the privacy, right? Number two is tax benefits, profit or loss. So what is your liability? How many deductions do you have? What is your profit? And how can we maximize? Is your LLC or your corporation structured properly from a tax standpoint? Number three, credibility. Be a business owner. You're the owner of a cupcake business. You're the owner of a gym. You're the owner of this real estate business, whatever it may be, give yourself that credibility. And I truly think it really goes a long way. All the financial accolades and all the wins and my favorite financial moment looking back when I was 18 years old, I went and knocked door to door selling pest control. Nice. Raleigh, North Carolina. Pest control. Have I told you this? No.

Oh, my gosh. 100 degrees, 100% humidity. Oh, yeah. Door slammed in your face. Got a gun pulled on me once. Love it. It was the best experience of my life. But the guy was like, you need an LLC and a bank account.

So I remember walking out of the bank with a business bank account folder and $25 in this account because that was what was required to open an account. Yes, sir. That's all I had. And it was one of the best feelings I ever had was having a business bank account. $100,000 was a really cool milestone, but that feeling of being a business owner, there's so many doubters, so many naysayers, so many family members that say, you can't do it, you won't do it. Set it up, be the business owner, play the role. And I hate the term fake it until you make it because everyone has this imposter syndrome, even as you grow, even as you scale. And I think that

setting it up the right way is a benefit no matter what business you're in. And there are different. So the reason why I tell you guys not to just keep pumping you, but the reason why you want to go to prime corporate is because like, there are different reasons to set up different ways. It is not always black and white. For sure. There's going to be accountants or lawyers that will say this is the best way. But if they don't know the nuance of what you do, how you do it, where's revenue coming from, what are you trying to really achieve? They're not going to treat it the same way, right?

Like, so when I buy apartments, the bigger reason why I'm currently doing it in my phase of life is the tax write-off. Yes. Yes, I want the income. Yes, I want the upside in five or 10 years or whenever. But like right now I'm like, how do I negate the taxes? So that should be structured in a certain way. If you're selling cupcakes, maybe there is a better way because I don't sell cupcakes. Maybe there is a better way. Maybe it shouldn't be totally the same structure. And so booking a call with prime corporate, at least everyone here is going to get the answers of like, okay, I'm starting a hair salon or a cupcakes or I am a real estate investor or I want to be.

Let me ask you this. Should everyone have some level of LLC or corporation or something just for time, even if they do nothing and bring in no revenue? Is there any argument for that? or something just for tax, even if they do nothing and bring in no revenue. Is there any argument for that? This is the most biased opinion in the entire world. So take note. Yes. Okay.

And here's why. There's no tax code that says you have to be great at running a business. But there is a tax code that says as long as you show the intent, you can take business-related deductions. I kid you not, once my daughter can pour lemonade into a cup without spilling it, we're setting up an LLC for that stand. I had a client a couple years ago that made $55,000 a year W-2. It was in December. I met him at an event. He said, Tommy, I'm not setting this up until January. I said, I'm going to set you up an LLC for free. I'm going to file your taxes for

free just so that I can tell this story in situations like these. And we wrote off $5,000 in startup expenses, $5,000 in organizational expenses, and he saved $5,400 in his taxes. Someone that makes $55,000 a year. That's a lot of money. That's a lot of money. Yeah, yeah, yeah. And it's use it or lose it when it comes to the tax code.

Totally. Every year there's tax code changes. They just barely were trying to get it passed. Right now it's 80%. I'm sorry, it's 60%. It was 80 last year. 60% depreciation on cost segs. And unfortunately, the Senate just denied it. So big election year, a lot going on. Next year, it drops to 40, unless there's a change. So G-wagons, Range Rovers, vehicles, planes, cars, houses, depreciation. The reason that apartment building is so valuable to you, of course, the cash flow, of course, the asset, but it's the depreciation running the cost seg and accelerating all of it that I'm sure gets you excited this time of year. Oh, of course. I mean, it is, again, I'm biased,

right? This is a buy. Like why wouldn't everyone be in real estate? To me, it is the best vertical and the biggest mistake I've always made or tell everyone, but that I did make is I didn't buy real estate soon enough. Yeah. Right. Like to me, the person that buys one rental or two rentals, okay, fine. Yeah. But if you bought real estate your entire life slowly. Yeah, it takes time. But you get the benefits, right? Like even if you buy a single family home, you have a 27 and a half, right? 27 and a half year depreciation cycle.

Yeah, but just keep buying them every year. And you keep getting more and more tax write-offs on active income from the rental, right? But if you surpass more and more tax write-offs on active income from the rental, right? But if you surpass that and your tax write-off is more than the income, it goes into your own personal. The reason that I'm okay with losing money on those Missouri properties, like I talked about earlier, is I get to take the tax benefit the year that I purchased them and a couple of years prior, but it's all long-term play, right? And this is where I see a lot of people that don't want to give up the W-2, like the W-2, just want to have additional revenue and passive income. Cashflow is king, but is it really that big of a deal to break even, or even lose a little

bit of money? If you're looking into the future, I know it's not ideal. I know it's not what you teach and what you want to do, but what's, what really matters and what are your five-year, 10-year goals? And if you can protect those and set it up the right way and save money in taxes, the tax code is a game it's 70 000 pages there's changes every year bro it's that is up long term it is for sure and i go to you as just like my consigliere almost like i call my accountant i go tell me what the fuck you just i mean that's really me right and so i would say this the um what's the boi yep this is the first thing right this second go book a call because do not mistake this for a joke like they're coming five hundred dollars a

day two years in jail that part i'm not certain if i don't know how they'll i don't know yeah they're gonna but they're threatening it it's in it's on the website so make sure you do it let's just scratch it off the list. It takes two minutes. Right. It's very, very easy. Get with Tommy. Get with PrimeCorporateServices.com, PCS. The other three things that I just need people to understand, like the value of, right?

We just talked about the trusts. Yep. Figuring out how to plan for life is something I didn't do early enough. You're younger than me, but I literally didn't think about it until my daughter was born three years ago. Yep. People need to think about it before me, like my whole point of this podcast.

So you learn the things that I know now, not when I was 25, 28, 30, 35. Right. Um, we need to talk about taxes.

Taxes are big right now. Everyone should be talking to you guys about at least what are my right options. And do you guys ever take people that maybe they think they did it right and you're able to be like, okay, what's your agenda here? Because you're actually structured the wrong way based around what you want. To me, that's been a huge factor of like my active income structure is totally different than my wealth accumulation structure. Do you ever help people? Like, like I would tell people and maybe correct me if you're wrong, they should get on the phone with Prime and you and the company because they might not be set up for what they're trying to do.

Yep. I, uh, I had a very, very crazy situation with a client that was a big multifamily investor and he loved his W-2. He was a pharmacist and he didn't want to give it up. And when we were able to look at what him being a real estate professional in comparison to his love for being a pharmacist was he saved more money in taxes than keeping the income from being a pharmacist. Right. That just shows the power of understanding your situation. That's right. And the reality is everyone's different. It's not one size fits all. It really isn't. What are your goals? What do you want out of this he decided to stay as a pharmacist because he loves it and that's okay too totally but at least he has the knowledge to understand this is what he's after right so i go back once again the most important thing from a tax standpoint

do you know your profit and loss our clients that track their expenses save an average of over $9,000 a year. And that's an average. There's high, there's low, but $9,000 a year in just tracking business related expenses. So tracking expenses is critical. Identifying active versus passive, and it makes it easier to diversify, it's a cupcake company if you own the building of the cupcake company cupcake cupcake cupcake cupcake company own the building have a property management company that you're renting it out to like the strategies are endless it's just about planning and making it happen uh that really allows you to not only protect yourself, but save a ton of money in taxes. 100%.

Guys, if you need to set up an entity, you need to save money in taxes, you need to understand your retirement and trust in what you're doing for estate planning, you got to get to Prime Corporate Services. Look up Tommy himself. He will respond to you. He's there for it. He's all over my social media, but PCS prime corporate service.com. My brother, thank you for showing up.

Thank you, dude. Let's go. All right, y'all. If this was helpful at all, and it had to be, make sure you share this with two of the people you think need to hear this

stuff. And then I'll see you on the next episode with another incredible guest. Peace.