Drew Miles | Tax Deductions | Asset Protection

Drew Miles Reviews Scams Facing Taxpayers

noreply@blogger.com (Drew Miles) — Thu, 26 Jun 2008 19:24:00 +0000

No one wants to pay more taxes than they are lawfully required to. But sometimes in their quest for lower taxes, many people will fall prey to many scams that promise a lower tax bill. In the end, these scams are always more trouble than they are worth.

My name is Drew Miles, and I am known as the Tax Savings Attorney. My goal is to help as many people lower their taxes to the absolute legal minimum, without any risk of facing problems with the IRS. I don'twant anyone going through an audit or facing IRS penalties, so I want to show you a few common tax scams to look out for.

One of the most common scams comes from those who oppose any taxation by the IRS. They claim that there is no law requiring you to pay taxes, and they say that filing is voluntary. Whether or not the law is on their side, if you don't file your taxes, the IRS is going to come after you. A similar scam is to file a "zero return" claiming noincome. This raises a huge red flag with the IRS, and is going to get you in trouble.

Another common scam comes from those who prepare your taxes, and claim they can greatly reduce your taxes or promise you a large refund. Dishonest return preparers can cause many headaches for taxpayers who fall victim to their schemes. Such preparers derive financial gain by skimming a portion of their clients' refunds and charging inflated fees for return preparation services.

Taxpayers should choose carefully when hiring a tax preparer. As the old saying goes, "If it sounds too good to be true, it probably is."And remember, no matter who prepares the return, the taxpayer is ultimately responsible for its accuracy. Since 2002, the courts have issued injunctions ordering dozens of individuals to cease preparing returns, and the Department of Justice has filed complaints against dozens of others. During fiscal year 2005, more than 110 tax return preparers were convicted of tax crimes.

One common scam involves offshore transactions. Individuals continueto try to avoid U.S. taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance to do so. The IRS and the tax agencies of U.S. states and possessions continue to aggressively pursue taxpayers and promoters involved in such abusive transactions. If you think that an offshore account is the ticket to lower taxes, you need to think again.

People always ask me "Drew Miles, with all these scams out there, how can I legally lower my taxes?" The short answer is by taking advantage of the overlooked legal tax deductions, which can drastically reduce your taxable income. The most powerful tax saving strategy you can use is to clearly understand the distinction between your personal and business expenses, and work to legally convert your largest personal expenses into legitimate business expenses. Its the small items that most preparers overlook that add up to big savings.

When you apply legal tax saving strategies to your finances, your taxes will not only be lower than if you had listened to any of these unscrupulous tax scammers, but you will not have to worry about being challenged by the IRS.

To learn more about legal tax savings, pickup a copy of my free CD, Tax Secrets of The Rich, at http://www.taxsavingconcepts.com/

Take Advantage of Tax Write Offs

noreply@blogger.com (Drew Miles) — Fri, 02 Mar 2007 22:59:00 +0000

If you are in business for yourself, there is a good chance you are paying entirely too much in taxes. Why? Because you aren’t taking advantage of the more than 300 tax write offs available to business owners. Everyone knows that you pay a certain amount in taxes based on the amount of income you generate, and that this percentage varies with income. Now it’s obvious that the less income you make, the less tax you will have to pay. So how can tax write-offs help? Well, the way it works is that you deduct (or ”write off”) all of your business expenses, then you only have to pay taxes on what’s left. So if you make $50,000 but have expenses of $10,000 in the course of running your business, you will only have to pay tax on the $40,000. The more legitimate tax deductions you take, the lower your taxable income and the less you hand over to the IRS. It’s important to only take legitimate tax deductions, as trying to write off personal expenses can get you into trouble with the IRS, and you don’t want that.

If you are looking for a way to lower your taxes, protect your assets from lawsuits, and plan for your retirement, please sign up for a complementary tax strategy session with a professional from Pathfinder Business Strategies. We will help you find business deductions you may have never knew existed, and can save you from overpaying your taxes by thousands of dollars every year!

If You Fail to Plan, Plan To Fail

noreply@blogger.com (Drew Miles) — Wed, 23 Aug 2006 00:40:00 +0000

In order to succeed at anything you’ve got to have a plan. Business is no different. Yet, depending on the type of business you’re operating, the plan will vary.

For example, if you are raising money from investors or bringing a company public, you need a lengthy and comprehensive plan. It must not only provide a realistic strategy for running the business successfully, but it must also demonstrate to potential investors your knowledge of the business and your ability to foresee problems and solve them. A good plan will also include comprehensive market research and your response to it, and a detailed proforma that shows worst case, best case and most likely financial projections over a three to five year period. It takes three to five months to put a comprehensive business plan together.

These days it’s much easier to put together a “canned” business plan. Just buy one of a hundred “fill in the blanks” software applications or download the forms from the web and tailor it to your needs. In an hour or so you’ll have a 40 or 50 page professional looking business plan with financial projections and color coded diagrams. The problem is that your professional looking plan will be almost useless.

It's a Road Map

A business plan is no different than any other plan. Things happen along the way that may take you off course. The question is how should you respond to the distractions?

Years ago I decided to make a vacation of seeing the beauty of this country by going from national park to national park camping in a tent. Because I was beginning my journey in Long Island, New York, I had little choice other than to head west. I plotted a course that included the most interesting and beautiful places I knew of and laid it all out on a map.

I became a member of AAA (mentors), both for their road side assistance program and for their incredible flip-chart style maps. I bought the needed supplies, got my car checked out by a mechanic, and planned my departure date. Everything was ready.

I figured I’d get a good night’s sleep that night and get on the road early to beat the traffic. I got to bed early and laid there waiting to fall asleep. I was too excited – there was no way I could get myself to sleep. So I got up at 11 p.m., took a quick shower and hit the road 4 and a half hours early. My trip had barely begun and I was already off plan.

By six a.m. I was very sleepy, so I took a nap in the car at a truck stop. I arrived in St. Louis a little earlier than originally anticipated, but fairly close to the plan I had put together. And so it went for the rest of the trip – my carefully crafted plan was more of a road map (literally) than a set of hard and fast rules.

And so it will be with your business plan. There will be detours; some positive, some negative. The key to success is distinguishing between the two types of detours and working through them appropriately.

There's More Than One Right Way

One hint is to be concerned more with the outcome (results) than with the path (method). In other words, if the deviation is simply a different way of producing the same or a better outcome, it’s a positive deviation. If the deviation results in missing an important goal or deadline, it’s a negative deviation.

This is why building a successful business is more of an art than a science.

Dishonest Partner(s), inconsistent employees and unreliable vendors are all negative deviations. If you find yourself in business with these types of people, you need to make big changes. You cannot build a successful business surrounded with these kinds of people.

Missed goals, surges in orders, running slightly behind schedule, an ad campaign that under-produces. These are all deviations that can be worked around, and overcome. You need to evaluate them as part of the “big picture” and decide whether they are heading you down a dead end, or pointing to another path that will get you to a better result.

Here’s a technique that will help you to evaluate deviations and help you overcome them:

Have ten backups for each major part of your plan and five backups for the minor parts of the plan!

As a kid, I was enthralled with the Apollo space program. I watched every launch, every moon landing and every moon walk on T.V. During one of the press conferences after the Apollo 11 mission, a reporter asked Neil Armstrong, “Sir, suppose you were sitting there in the Lunar Module about to blast off from the moon and the rocket didn’t fire. You’ve only got 2 hours of oxygen left at that point. What would you do? Would you pray, would you ask to speak to your wife on the radio? How would you spend your last two hours?”

Armstrong answered without hesitation. He said, “I’d spend the two hours fixing the problem.” That’s the difference between success and failure. Successful people solve problems; unsuccessful people get stopped by them.

Many people now realize that a big part of an astronaut’s training is working in flight simulators responding to problems. In fact, those simulators are programmed with every imaginable problem they can encounter and the astronauts are trained to “work the solutions” one at a time until the problem is solved.

Business is no different. You will be faced with problems. A big part of handling them effectively is thinking them through ahead of time and preparing your responses in advance. The more alternative solutions you can develop, the better prepared for setbacks you will be.

If you want more confidence and certainty, you can do this process with every area of your business plan. Sit down by yourself or with your partner (or mentor) and brainstorm each issue. The more alternative solutions you have, the better prepared you’ll be.

Put the Pedal to the Metal and Drive Yourself from Zero to Success: Get two FREE Chapters of my book to rev up your engines and shift into high gear

Fast Track Your Life by Working with Mentors and Coaches

noreply@blogger.com (Drew Miles) — Sat, 19 Aug 2006 22:13:00 +0000

The Biggest mistake I made as a young entrepreneur was to try to do it all and figure it all out on my own. It was my nature, back then, to be something of a rebel. I was competitive, so my rebellious nature served me well, especially in sports. Perseverance, determination and a good measure of toughness allowed me to excel as a young athlete. However, as one of my mentors later observed – for most people, their greatest strength can turn into their biggest weakness. In many ways, that was true for me.

In law school, my colleagues were trying to get the attention of the big law firms and to land a “great job”. I was committed to starting my own firm – which I did immediately upon graduating and passing the bar exam. I was bold and that is a definite asset in business. But at times, I think I had more guts than smarts and my boldness could get me into trouble.

What happened for me is that even with my early mentors, I was brazen and impatient. If I didn’t like what they suggested, I’d storm off and do things my own way. I felt like they just didn’t understand. Before long, I found myself without any mentors. That’s what happens if you think you know it all.

I began to read books and listen to audio programs. I was searching. I knew that something was amiss, but I couldn’t put my finger on exactly what it was.

Then one morning it all came together. As I took the long walk from the front door of my office to the mail box it hit me. I stood there on Main Street and looked west. As I did I recalled the earlier conversations with my colleagues about how proud they were for how long and hard they had worked. Then, I looked east and recalled similar conversations I had had with the attorneys whose offices were in that direction.

I had a realization.

If I continued on the path I was on, I’d wind up in the same shape they were in. Older, overworked, tired, spending more time telling war stories than planning an exciting future. And it was in that moment that I vowed to find a better way.

I realized that I needed help. If I continued to do it on my own, I would continue to get the same, now unacceptable, results. I had to find others who had found a better way – one that was perhaps similar to what I had in mind, and ask them for direction.

In short, the remedy was to become coachable.

I spent the next five years re-tooling. I went to every seminar I could and I listened intently to the successful people that spoke at them. And I started to see a pattern. Many of their stories were similar in that they too had coaches and mentors. The lesson I was learning is that no matter how bright or gifted you are there are areas where you can learn more and where you can improve.

The single most important thing you can do is to seek out Mentors and Coaches and follow their advice. I am always working with at least one coach and one mentor.

Put the Pedal to the Metal and Drive Yourself from Zero to Success: Get two FREE Chapters of my new book, which compels you to rev up your engines and shift into high gear.

Pump Up the Volume with Power Days

noreply@blogger.com (Drew Miles) — Thu, 17 Aug 2006 13:45:00 +0000

I'm all for being organized and planning my days. It's essential, and most of the time things work out fine. But sometimes, as the song says, life is what happens while you're making other plans.

Sometimes there are days where, for one reason or another, my plate is overflowing and I absolutely must squeeze the most out of every minute. While I don’t like working like this all the time, I go into power day mode when necessary.

As a kid growing up on Long Island in the ‘70’s, I was naturally a big fan of the New York Islanders. During their “dynasty years” they raised themselves from the worst team in the league to four consecutive world championships. Several times during this incredible run, they found themselves facing elimination from the playoffs. The first time they went down 0-3 in a series, it came out that no team had overcome such a deficit since 1942. They had to win 4 straight games against the very team that had just beaten them three games in a row. The odds were against them.

Sure enough, they pulled it off and won the series. Then they went on to win two more seven game series and another championship.

During one of the post-game interviews the coach was asked how he rallied his team in the face of almost certain elimination. He explained, “I told them that from that (4th) game on, we were going to play the game one line shift at a time. Our goal is to win every single line shift (for those readers who are not hockey fans, the team puts five new players on the ice at a time – each group is called a line. Each line plays for about one and a half minutes before being replaced by the next line so they can rest and catch their breath).

In other words, he divided the 60 minute game into one and a half minute increments. He told his team we must win each one of these mini (minute and a half) games. By doing so, we’ll win the real game. And sure enough, they did.

How does that apply to you? You can divide your day into fifteen minute increments? Then, endeavor to accomplish as much as possible in each fifteen minute section of your day. Don’t take unnecessary phone calls, don’t allow any interruptions. During each fifteen minute section, stay focused and on track. You will accomplish a great deal.

Here's an example. Let's say you feel like the odometer is running, but your car is up on the block, so you're getting nowhere. That's when you need to call a power day. Choose a day and warn anyone around you that you aren't taking any calls or interruptions on that day. Set up a calendar that is divided into fifteen minute segments. Make a list of all the things you need to power through on that day and place them on the calendar. Don't stop until you reach the end. Have plenty of water and "power foods" around so you don't need a lot of breaks. Yes, this will be an intense day, so plan ahead to make it successful.

As I said, I like to limit the number of power days I engage in because they can be pretty intense. Doing them too often leads me to burnout and with my travel schedule I have enough to combat. So be discriminating in your use of Power Days and make the most out of them.

Put the Pedal to the Metal and Drive Yourself from Zero to Success: Two FREE Chapters of my new book compel you to rev up your engines and shift into high gear

Financial Immortality Can Be Yours

noreply@blogger.com (Drew Miles) — Wed, 16 Aug 2006 10:52:00 +0000

Ignorance is bliss?

You've heard the expression "Ignorance is Bliss". It refers to the idea that it's easier to stay happy when we aren't aware of the obstacles that face us. The problem is that ignorance will also get you and keep you broke.

Perhaps you find yourself having less income than you would like. You probably work hard for 40, 50 maybe 60 hours a week. Whether you are employed by another or self employed, I'll bet you give it all you've got. Yet, if you can be honest for a moment, I also bet that you're not getting ahead financially as quickly as you'd like. Maybe you're even backsliding.

That's because you've been sold a myth, a bag of goods. The myth is that the way to financial success is through hard work. Haven't you been taught from the time you were a kid that the only way to success is through hard work? How is that working out for you? Not so great, right?

Or maybe you're one of the lucky people that generate a high income. You may make $250,000, $500,000 or a million dollars a year. By most people's standards, you are very successful. But you know the ugly truth. You've leveraged a lifestyle. Your monthly home payment would gag most people. Your car payments are through the roof. And your savings and investment portfolio is anemic, at best. As the guy on T.V says, "I've got everything I want and I'm drowning in a sea of debt"

You see, the key to building wealth is not simply to work hard or have a high income. The key to building wealth is in what you do with your income you've earned. If you're interested in learning how to build lasting wealth, you've got to get a copy of my Wealth Accumulation program. Its jam packed with 37 ways to build and protect your wealth for generations to come.Decide today that you've waited long enough and get on the fast track to wealth.

Financial Immortality can be yours- starting NOW!

I've been thinking about this whole idea of financial immortality, what it is, how I can help people achieve it. Of course, it starts with a basic mind - shift (or paradigm shift for you champagne drinkers). This shift is subtle, yet it can make a HUGE difference to you financially. The whole idea starts when you spend less than you make and you save the difference. This key habit can turn you from a financial train wreck to a lasting wealth builder.

Think about it, if you never put something away for a rainy day, what happens when it finally rains? You lose your job, you face a business reversal. If you haven't taken a clue from the squirrels and stored up a few nuts for the winter, you can pay a devastating price. Liquidation. Fire Sale. Motivated Seller. Everything Must Go! These are the words of poor planning and financial disaster.

If you want to learn how to avoid these things in your life, pick up a copy of my Wealth Accumulation Program. It contains 2 hours of powerful, yet practical information that can help you get on top financially, and the forms and financial logs that you need to track your progress.

Start today by opening up a "Financial Freedom" account at your local bank. Its nothing fancy - just a simple bank account that you can start to build into a powerful wealth tool. And here's a secret that will make the whole process of saving easy. Have the bank automatically transfer money into your financial freedom account every week. You won't even feel it, because it never passed through your hands.

Start with $500 or $100 if you need to. Heck start with $10 if that's all you've got. But as you begin to build your income and your asset column, consistently and incrementally increase your weekly deposit amount. Before long, you'll have a small nest egg, then a larger one and before you know it, you'll have the whole nest! Sign up now.

All the best,
Drew Miles, The Wealth Building Attorney

Financial Vertigo

noreply@blogger.com (Drew Miles) — Tue, 02 May 2006 18:17:00 +0000

Although Pathfinder focuses on generating money, this lesson covers one of the biggest misconceptions we have about money: if we make more money, we’ll be better off. It doesn’t matter how much money we make, but rather how we spend and save it. Take two Pathfinder clients as examples: Client A worked at Home Depot making $30,000 a year and had his finances in order and spent less money than he made. He was financially free. Client B was a doctor making $250,000 a year and was financially upside down; as he received salary increases, he’d incrementally spend the increase and more.

The more people make, the more they spend. Being upside down financially affects every aspect of your life: family, marriage, leisure activities, emotional health and the list goes on. Whether you earn a salary of $50,000 and you spend $55,000 or if you’re organized and have your finances in a row—there’s always room for improvement and new information to learn.

Purpose of the Pathfinder Program:
Learn how to get out of debt completely (including your home mortgage in nine years or less)
Improve your relationships
Pay up to 50 percent less taxes each year
Learn how to make a smooth transition into retirement
Establish lasting wealth for generations to come

Navigating the promotional maze

noreply@blogger.com (Drew Miles) — Mon, 01 May 2006 14:55:00 +0000

Pros and cons to three hot topics

Invited to be officer on the board—flattering or dangerous?
Officer and director liability is staggering. If a friend of yours is starting a company or charity and she asks you to sit on the board, carefully make your decision to accept or decline the position. If a mistake happens and the shareholders file a lawsuit, you could be named in the lawsuit because you’re a director or officer of the company; you are also personally liable for the salary of any salaried employees (if you’re an officer of a company). Before you casually accept an offer to become an officer or director of a company, make sure you have insurance, which is called “director of liability policy.” If you’re not pursuing the position and it’s something you’re invited to accept, you may want to ask them to pay the premiums on your insurance.

Limited partnership vs. general partnerships
Limited partnership: Your liability is limited to the amount of your investment
General partners: You have unlimited liability. Because you have the day-to-day control of the company, the trade off is more liability.

Smile. Some debt can be great
Good debt verses bad debt is another way to say credit verses debt. Not all debt is bad. Credit that entitles you to invest is good, such as your home mortgage (assuming your house has appreciated), starting a business, or purchasing investment properties. What determines if it’s good or bad is what you do with it. If you’re buying depreciating assets, you’re not incurring good debt.

Also, be sure to read up on these Wealth Building Tax Tips

Wealth Building Tips from Drew

noreply@blogger.com (Drew Miles) — Thu, 27 Apr 2006 19:36:00 +0000

The big O—Organize!
Get organized, period. Pathfinder advocates separate files for each expense: utilities, phone, electric, Internet, auto, etc. Each month, invoices (such as repairs or maintenance) go in those files. The invoices are then categorized by group and chronologically (ex. January car bills, February car bills, etc.). When 2007 comes around, copy the file names from last year and start a new file bin for the next year. You can then take this to your accountant’s office along with your tax diary and you’re set.

If you don’t already have an electronic bookkeeping system such as Quicken, Quick Books or others, get one and use it immediately. I learned this lesson the hard way. When I was practicing law, my accountant had me list all of my expenses. It took me 40 to 50 hours to do. The following year I changed over to Quick Books, which condensed those countless hours to the push of one button. Lists off of Quick Books (or other like program) can easily be emailed directly to your accountant.

Get out of dodge
It’s absolutely necessary to get away from business. I need to get away 100 percent, meaning no calls, no email--no business at all. For me to be creative, I need to be recharged and take two or three weeks to see friends, ski, do nothing and relax. When I take a three-week break in December every year, I come back to business in January and it all looks different and I’m energized.

The wealthiest and most successful people don’t run themselves ragged. They stop long before running out of steam, taking small- and large-scale breaks to re-charge when needed. You can’t do your best thinking when you’re running at 80 percent. Take at least two or three three-day weekends each quarter to recharge your batteries.

[from Mastering your money Part 1, Track 1-12]

This is just one of many wealth building tips I have for you.

ROI-calculating accurately

noreply@blogger.com (Drew Miles) — Thu, 20 Apr 2006 18:59:00 +0000

The phrase “return on investment” (ROI) is thrown around a lot, but do you know what it really means and how to calculate it?

Three ways to calculate ROI
Cash-on-cash If $20,000 is invested and it grows by $10,000, it’s a 50 percent cash-on-cash rate of return, which is great for wealth building.
Total amount of investment If you put $20,000 down for a $200,000 mortgage, the growth is happening on the $200,000, not what you originally put in. This is arguably less relevant because the amount made on what was originally put in is more important and helpful.
Lost opportunity cost When you’re looking to raise money with another person’s money, you need to demonstrate the loss he could incur if he doesn’t invest. If you have an investment that pays a 20 percent interest and the lender has money in something that only pays 5 percent, you need to show him how much he is losing if he passes up your opportunity.

What the rich do that we don’t
The rich develop a wealth building niche that allows them huge rates of return on what they do—real estate, investing in the market, your day-to-day business. Once they make the money, without fail, the wealthiest of the wealthy buy bonds, key bills or some other type of fund that pays a return of three percent to five percent. They want to protect their principle. They only roll the dice in an area of expertise where they can expect a safe return.

Interested in Tax Tips and Wealth Building, be sure to visit the Pathfinder website.

Smart Yearend Planning—Corporate Formalities

noreply@blogger.com (Drew Miles) — Wed, 19 Apr 2006 18:43:00 +0000

There are three main areas we need to keep in mind as the year ends:
1. Taxes
2. Corporate formalities
3. Planning for next year

The power of documentation—shifting the burden of proof
For those who have an LLC (opposed to a sole proprietorship, S Corporation or C Corporation), it’s always better to over-document. By keeping a tax diary, you shift the burden of proof from yourself to the IRS, who then has to disprove its validity.

Annual meeting—an opportunity to have some fun
Make sure you’ve done your annual meeting by the end of the year. Why you’re at it, you might as well make it fun. You can hold it anywhere in the continental United States without a problem, and you can hold the meeting abroad or Hawaii or Alaska if you can show why you needed to hold the meeting there.

Get corporate minutes and meetings in line.
Prepare a notice or waiver of notice (available on Pathfinder’s Web site). When you have a corporation, you need to notify in writing by certified mail all the shareholders of the meeting. If you’re the only shareholder, you certainly do not need to send a notice to yourself; instead, you can print out a waiver of notice because the notice is unnecessary.
Print out a form for the meeting’s minutes. Minutes are what you discuss at the meeting (or think about, if it is just you at the meeting). You can hold your annual meeting in Aspen and ski. When you’re in the lodge thinking about what you want to do the next year for marketing, etc. and jotting down ideas, this could be your annual meeting.
Extracurricular things need a resolution. Resolutions are decisions you made at the annual meeting. You don’t need one to take a client to dinner or attend a seminar. You do, however, need one if you rent new space, open up a new bank account, buy a car. It’s better to be safe than sorry and have a resolution.
This is a good time to make sure you have a medical reimbursement plan in writing. Fill out the form off Pathfinder’s Web site and keep it in the corporate kit. Use the same advice in regard to your educational assistance plan. Preparing this document does not take long, but it’s very important.

Read more about IRAs and Wealth Building

Uneducated Tax System v. Educated Tax System

noreply@blogger.com (Drew Miles) — Fri, 14 Apr 2006 20:16:00 +0000

The line under your income on your pay stub is where these two systems differ. With the uneducated tax system, you deduct the three lines under your income and the remainder is what you receive. With the educated tax system, the first line is your reported income as with the uneducated tax system. However, the second line is the money you spent on the business, and you pay taxes on what is left. This is because when a business spends money it is called a business expense or tax deduction. Therefore, having your own business and being in the educated tax system, you can reduce your taxes by 40-70%. To break this down even further: If you are making $35,000 a year this could save you up to $10,000. That means it does not matter if you are making millions of dollars or a few thousand dollars. These strategies apply to you! A marginally profitable business can become a thriving business by applying these strategies.

A case study: One of my students, Stephanie, was making $50,000 a year. She took these strategies to her CPA who had been working with her families for years and always had her best interest in mind. He replied that although this program sounded interesting, he was already utilizing every deduction available able to her. Stephanie’s CPA agreed to participate in a conference call with me at Stephanie’s request. Stephanie’s CPA explained that she was paying $12,000 in taxes. While this was much less than the average person, she could have been paying even less. I introduced three strategies: helping her to reduce her FICA, deducting her healthcare, deducting education (both her and her daughter’s). We were able to reduce her total taxes paid to $800. In 15 minutes and with only three strategies, we were able to save her over $11,200!
I have had students save well over $100,000. Just think what you could do with that money!
We can start by converting your largest expenses into business expenses. We can teach you lesser known deductions (e.g. travel and entertainment, medical, seminars, books, etc.) and shift them over to business expenses. You pay them with pre-tax dollars and not after-tax dollars, reducing your taxable income.

Learn more Tax Tips with Pathfinder Business Strategies

Entity Structuring

noreply@blogger.com (Drew Miles) — Thu, 13 Apr 2006 14:21:00 +0000

Entity structuring is the use of limited partnerships, limited liabilities, and corporations. These can help you accomplish three things:1. Bullet-proofing your assets so that the bad guys are worse of if they try and take them away from you.2. Slashing your taxes so that they are within single digits.3. Protecting your privacy and building lasting wealth.
Let me explain how this works with the following example:
A case study: My friend Patrick grew up with the family business. His family sold expensive boats. His business grew. He was a financially intelligent man so he wanted to add a stream of income. Therefore, he decided to start a Marina, a land storage facility, a parts shop and a show room. I wanted to make sure he was properly protected and that he had bullet-proofed his assets. However, he was too busy making money to focus on it at that time. This was his fatal flaw. One day, I got that dreaded call from Patrick. The sheriff deputy was there to shut down his businesses: the Marina, the parts shop, the storage facility, and the show room. His business was locked down with pad locks in a matter of hours. Within six months, he lost all of his personal assets and filed both personal and corporate bankruptcy. The tragedy here is beyond his loses but the fact that this situation was completely avoidable. You can prevent this from happening to your business by using two power tools:1. Limited Partnerships: separate legal entities. They separate your personal assets from business investments. 2. Limited Liability: similar to Limited Partnerships as they form a wall between you and the creditors and predators.
These two power tools include a built-in charging order that does not apply to your typical “S” or “C” corporations. A charging order basically states that the “bad guys” can not go after your assets. They will be able to go after income but not after you employ the following strategy. We can set up a separate management company for you. Then, you can shift your money from your LLC or LP into your separate management company. The last step in your protection is called imputing income, and it finalizes the prevention of lawsuits. The IRS can step in and tax these bad guys for the money they are suing for (even when they are unable to collect this money.) This ensures the fact that suing you will not be worth the effort.
In summary: They can not touch your assets because you have protected them. They can not receive the income because you have shifted it out. They are left with heavy taxes imposed by the IRS. Therefore, the likelihood of you being sued is next to nothing.

Interested in Wealth Building or Tax Deductions?

Heads up on co-signing loans

noreply@blogger.com (Drew Miles) — Tue, 11 Apr 2006 20:19:00 +0000

In my opinion, if you co-sign a loan with a family member or a friend, you’re looking for trouble. Granted, if you want to help your child buy his first car, you may need to co-sign because the child does not have credit history yet. The danger is that if your son makes a late payment, the bank will come to you to pay it off. Be extremely judicious who you co-sign for. Because of the risk that another person could damage my credit, I will never co-sign for a friend or family.

It’s not homework, it’s an assignmentOutline the following; read these documents and understand every clause. There’s good and bad risk. Make sure you have the skill set to take a calculated risk?
1. home mortgage(s)2. credit card agreements and statements3. car loans or leases4. insurance contracts
Get answers to these questions:Do I understand the rules of this contract? Do I understand the amount of risk I’m taking by agreeing to this contract? Do I understand tax laws surrounding the contract?Does the contract fit my priorities? Forget whether you think you deserve it (because you probably do)—can you afford it?Can I afford to lose all or part of my money by engaging in this contract?

Another helpful strategy is realizing your possible Tax Deductions.

Smart Yearend Planning - Tax Deductions

noreply@blogger.com (Drew Miles) — Mon, 10 Apr 2006 19:21:00 +0000

There are three main areas we need to keep in mind as the year ends:1. Taxes2. Corporate formalities3. Planning for next year
Revisit the idea of converting your 10 largest expenses. This is an ongoing process that should be done at least twice the first year. It’s not realistic to expect you will convert all of your biggest expenses the first time around because it’s too big of a task—this is a habit needing to be developed over time. Our largest expenses, habits, and businesses all change over time. As your life evolves, so should your deductions, so keep current.
Strategy: upstreaming income. The goal of upstreaming income is to shift income from this tax year to the next tax year. Whatever your operating account balance is on December 31 will get added, as of January 1, to your last year’s income. If you have a $50,000 balance, for example, going into the next year, that’s taxable income. You therefore should upstream the money, making it no longer taxable for that year. This strategy is applicable if you have an S Corp, partnership, limited partnership or sole proprietorship.
How to upstream income Upstreaming income is accomplished by setting up a new entity such as a management company with a different yearend than your business. A business’s income can then be shifted out of the 2006 tax year to 2007. You will want a contract and invoices to reflect this agreement between your business and management company. Move the $50,000 balance to your management company with a June 1 yearend, for example. The money should be moved ideally at least on a monthly basis, not just once at the end of the year. I recommend taking five to 10 checks out of your checkbook and put them in a file for the upcoming year. In January, if you find out you had some expenses you missed—it’d be a lot better to have a check in sequence that you can write from December.

Tax Tips - By Drew Miles

Chew slowly and digest the rules

noreply@blogger.com (Drew Miles) — Fri, 07 Apr 2006 21:51:00 +0000

It’s hard to understand all of “the rules” and fine print on all of our policies since we have limited time. But it’s imperative you take the time to become familiar with your coverage. Go through your mortgage, note, insurance, bank statements, employment contract, tax deductions, shareholders agreement—at least once, then briefly once a year after that. You don’t need to review all documents at once; take one every few days until you’re done. Don’t trust others to make the right wealth building decisions for you instead of taking responsibility yourself, a pitfall too common for too many people make. You’re responsible for your own finances. Responsibility is the freedom to respond.
Case in point: One of my mentors is very well known and respected. He invested his entire retirement fund with an investor. The investor was featured in a publication and bragged a lot throughout the interview and raised some red flags. The FCC found out he was no longer successfully trading and had indeed lied to his family and the public about his company’s trading history. My mentor lost all of his savings for retirement with this investor and it took him years to get back on his feet. Eventually he was standing again, because he took responsibility.
Insurance—know your policies intimatelyWhether it’s homeowners, investment, car, health or another type of insurance, you need to know exactly what you’re covered for. There are always exclusions and it always seems like the exclusions apply to you. Know what you’ve got.

Read more about Wealth Building

The Two Biggest Thieves In Regards To Wealth Building

noreply@blogger.com (Drew Miles) — Thu, 06 Apr 2006 19:22:00 +0000

The two biggest wealth thieves a person will encounter are tax deductions and lawsuits. Taxes work against you by chipping away at your wealth. These include federal income taxes (deducting up to 39% of your income), state taxes (deducting up to 9.6%), and self employment or social security (over 15.5 %.). The average American is paying 42-55% in taxes. Ironically, the wealthiest people in the U.S. are paying only single digits taxes. Rest assured, because there is something you can do about this, and it won’t cost you the $500/hr that these wealthy people are paying for tax tips from their specialists.
Next, lawsuits are the other evil. This is not the slow reduction of your wealth as with taxes. It is the sudden confiscation of the money you worked hard to build. You can literally fall from the top of the totem pole to the bottom of the barrel overnight. I believe there are no winners in lawsuits because even “winning” a lawsuit takes up time and money that will set you back. Once again, you can protect yourself by learning how to structure yourself properly. You can "bullet-proof" your assets. You can even avoid lawsuits all together.
Crucial to understanding these strategies is differentiating the concepts of asset and liability. Ask yourself the following: Is a real estate investment an asset or a liability? You may be thinking, “It generates income and provides equity; therefore, it has to be an asset.However, the answer is more complex. You must look at how you hold title to that property. If you own it incorrectly and are not properly structured, you could be putting yourself at risk. If you have your home, your car, your bank accounts all lumped together, someone can take them all away in one sweep. Therefore, you must learn how entity structure.

Click here for more tips on Wealth Building

Take Waste Out Of Your Spending

noreply@blogger.com (Drew Miles) — Wed, 05 Apr 2006 15:07:00 +0000

Buyer Beware:The ability to save money has nothing to do with income. Take waste out of your spending and you’ll drive the haste out of your life. Continue to learn “the rules,” as they’re always changing.
Learn the rulesWe’re not taught “the rules” in school—high school, college, law school. So we go through life in the dark, not understanding why it’s so hard to get ahead. Hard work and perseverance unfortunately aren’t enough—you have to know the rules to become financially free.
CARThe first time I bought a new car, I’d just gotten out of law school. When I asked how much the car was, the salesperson asked how much I could pay each month, instead of telling me how much the car was. He never told me how much the car was, but I still bought it. This is not a smart way to buy a car. A few of unexpected life events and suddenly I was struggling to make the car payments. I bought it under their rules, not mine.
MORTGAGEPrepayment penalty—Many mortgage companies want to entice you to keep the mortgage in place for the life of the loan. For many people, very little money goes toward paying down the principle the first seven years of a loan. Some mortgage notes have prepayment penalties so that if you pay the mortgage off earlier, you get penalized. Know what is on your note. You need to make informed decisions instead of being whisked along by a strong breeze—direct your own choices.
Adjustable rate mortgages—These adjust no more than X%/per year and X% over the life of the loan, with a lifetime cap. Be prepared to pay the maximum adjustable amount, incase rates increase. When the stock market crashed in 1987, my mortgage increased $1,000/month, an amount I couldn’t afford and had no backup plan for paying.
The mortgage broker is trained to help you get in the home you want, as is the real estate agent. If you say your maximum is $300,000 for a home, the agent will show you homes at $350,000. Then when you insist on only seeing homes in your price range, suddenly you really want a more expensive home and are likely to buy something more expensive. Remember, money is emotional. Stick to what you can afford and master money’s power over you.

Find out more about Roth IRA

Tips to Avoid Identity Theft

noreply@blogger.com (Drew Miles) — Wed, 29 Mar 2006 14:21:00 +0000

What is rampant, spreading like wildfire and can kill life as you know it? No, not a deadly virus (but close). Answer: Identity theft. My stepson, Aaron, was a victim of identity theft recently. Someone stole his bank cards, deposited fake checks into his account, then withdrew cash. The deposited fraudulent checks and overdraft charges hurt his credit, and he’s slowly recovering and rebuilding his score.

Tips to avoid identity theft:
1. Buy a shredder. Aggressively protect your social security, credit card or bank numbers.
2. Use a lock-in mailbox. This isn’t 100% safe, but it’s much safer than one without a lock.
3. Protect your out-going mail. Get it into the box or the hands of a postal clerk. Heavily trafficked offices often have out-going mail in the entryway. While this may save time, it’s not safe.
4. Keep receipts and compare to your statements when they come once a month. Banks make mistakes all the time.
5. Keep financial documents under lock and key (at the bank or in a home safe).
6. Don’t give out your social security card—ever. 7. Know what’s in your wallet. Do you know how many credit cards are in your wallet?
8. Don’t discuss detailed financial information on a cordless or cell phone. That information can be intercepted.
9. Monitor your credit reports. You can sign up for a monitoring service or do it yourself periodically. Your credit is one of your assets, so protect it.

If someone steals your credit card information, get help from these reputable resources—Federal Trade Commission www.consumer.gov/idtheft or 877-382-4357
Identity Theft Resource Center at http://www.idtheftcenter.org/ 858-693-7935
Privacy Rights Clearinghouse http://www.privacyrights.org/ or 619-298-3396

Find more tax tips!

Repairing Your Credit

noreply@blogger.com (Drew Miles) — Tue, 28 Mar 2006 04:20:00 +0000

Fixing your credit report and repairing your credit are two distinct processes and problems. If your credit is bad, you can implement some of the strategies below to fix a low score.

Negotiate down the amount of debt (it’s easiest with private individuals). To do this, you must demonstrate the reason for falling behind. One of the tools you can use as leverage is offering something (not the full amount) rather than nothing. For example, explain why the lender should take $5,000 instead of $10,000. You can say “I’m calling five other creditors today. I’m offering you $0.50 on the dollar and if you aren’t interested, I’ll file for bankruptcy,” in which case they wouldn’t get a nickel).

Negotiate a forbearance with credit card companies and clients with mortgages. If there was an illness, death of a breadwinner, divorce or some other legitimate reason incurring severe financial difficulty, you may have a case. Show them you had a good reason for falling behind, agree to stay current on the current payment and offer to pay X amount per month toward what you owe. You also can stick the amount owed on the back of the loan. These are legitimate ways to negotiate and repair your credit.

Beware of illegitimate ways to repair credit
Watch out for companies that will put together new tax returns for you. They’re essentially offering to dummy up tax returns. Another scam is when they take advantage of the credit reporting service’s limited window to answer disputes. If, for example, the window is 14 days, they’ll write a letter saying you don’t owe (when you actually do). It’s just a matter of time before the bank fails to meet the 14-day window; when they miss deadline, you are not required to pay the disputed amount. Not only is this wrong ethically, but it doesn’t fix your credit problem. Additionally, companies that charge you an upfront fee to get you new credit (often ranging from $100 to $1,000), especially out of other countries, is a scam.

Recommended Read
I recommend “Your Credit Score” by Liz Weston, a helpful book on different strategies of legitimate ways to improve your credit score on your own. If you feel like you need/want help, there are legitimate services available to you as well.

Find out more about tax deductions!

Fixing Your Credit Report

noreply@blogger.com (Drew Miles) — Fri, 24 Mar 2006 04:19:00 +0000

Fixing your credit report and repairing your credit are two distinct processes and problems. Below are practical ways to fix your credit report if it’s wrong.

Look through a magnifying glass
Check the identifying information. Sometimes they make a simple mistake (wrong name or social security number).
Review the credit accounts. The report might be for an account that is simply not yours. It may include delinquencies in old accounts that were closed. You should report the debt of your spouse before you’re married since it isn’t your responsibility and you don’t want it to affect your score.
Look through the list of inquiries. Any inquiries older than two years shouldn’t come up on a credit report. Also, inquiries you didn’t authorize, shouldn’t be factored into your credit.
Collections and public records. Look for judgments and bankruptcies older than seven years; neither should impact or be on your score. You can improve your credit score after filing for bankruptcy and qualify for a loan as long as you can prove you made payments on time consistently for the last two years. It’s easier to get your score restored when you can explain the circumstances that contributed to the bankruptcy.

Proactive steps
Dispute the errors. Write a letter: include the account number and billing address and photocopied report with issues in dispute highlighted. Federal law requires them to respond within a set amount of time.
Pay current bills on time.
Don’t close your credit card or revolving account.
Apply for new credit sparingly.

Fixing your credit report and repairing your credit are two distinct processes and problems. Below are practical ways to fix your credit report if it’s wrong.

Look through a magnifying glass
Check the identifying information. Sometimes they make a simple mistake (wrong name or social security number).
Review the credit accounts. The report might be for an account that is simply not yours. It may include delinquencies in old accounts that were closed. You should report the debt of your spouse before you’re married since it isn’t your responsibility and you don’t want it to affect your score.
Look through the list of inquiries. Any inquiries older than two years shouldn’t come up on a credit report. Also, inquiries you didn’t authorize, shouldn’t be factored into your credit.
Collections and public records. Look for judgments and bankruptcies older than seven years; neither should impact or be on your score. You can improve your credit score after filing for bankruptcy and qualify for a loan as long as you can prove you made payments on time consistently for the last two years. It’s easier to get your score restored when you can explain the circumstances that contributed to the bankruptcy.

Proactive steps
Dispute the errors. Write a letter: include the account number and billing address and photocopied report with issues in dispute highlighted. Federal law requires them to respond within a set amount of time.
Pay current bills on time.
Don’t close your credit card or revolving account.
Apply for new credit sparingly.

Find out more about retirement plans!

A Love/Hate Relationship: How your credit score can open and slam doors for you

noreply@blogger.com (Drew Miles) — Wed, 22 Mar 2006 04:16:00 +0000

There are many ways to get ahead financially: attend seminars where you cut up your credit cards with hundreds of other people, participate in debt consolidation services that help you take out a home equity loan or refinance your home, or you can transfer debt on one credit card to another credit card with an introductory rate of 0% (which goes up to 12% six months down the road). The reason these methods don’t work is because we don’t concurrently cut our expenses while implementing these strategies. Even if we’re making more money, unless we cut expenses, we will continue to spend more money than we have and incur debt. Manage yourself and your money. Money is like food; we don’t eat only when we’re hungry, and we certainly don’t spend only when we need something.

Beware: Debt forgiveness can hurt you. The company that forgives your debt can issue a 1099C, which means the forgiven amount gets added to your taxed income.

When there’s a will, there’s another way

Your credit score (also called your FICO or Beacon score) will affect the interest rate you’re able to secure. Credit scores range from 500 to 850. Where are you on the scale?

What’s in a number?

500 and below—your in serious trouble
650 to 680 you probably will have a difficult time getting credit, and if you do it will be at higher rates
700+--excellent score

How you got your credit score
a) Payment history (35% of score). Make payments on time or early.
b) Amounts you owe (30% of score)
c) Credit history (15% of score). The longer you have credit, the higher your score can be.
d) New credit (10% of score). New credit cards.
e) Type of credit you have in use. Mortgages, Bloomingdale’s, etc.

There are three reporting services that can give you your score: Equifax.com, Experian.com and Transunion.com. At least once, do an experiment and order a report from all three. They probably will provide a complimentary report each year, per person.
You will most likely find inconsistencies in the reports such as missing and incorrect information. Each time a credit report is run on you, your score is lowered by two or three points. You still want to shop around for a mortgage, but consider using a mortgage broker who runs one report to shop around the loan. If you go to five different banks, that can drop your score 15 points.

Get a guard dog:
If you email monitorit@successdna.com to have them monitor your credit report, they will let you know who is checking your credit, how often and when. No one should be looking into your credit unless you authorize it.

Find more tax tips!

Action Plan: How to power down your debt NOW

noreply@blogger.com (Drew Miles) — Fri, 17 Mar 2006 14:41:00 +0000

It will take you on average between 25 to 30 years to pay off your credit card at the minimal amount. This will not do.

Make a list of all of your credit cards (including all consumer debt such as doctor bills, furniture stores and your home).

List the following in columns: the type of credit card, principle amount, regular payment amount, power down payment, interest rate, total number of payments left on the card, estimated payoff date. Put your list in order of how many payments are left from least to most. If you make a minimum payment of $55/month on one of your cards until it is paid off in full, you then have $55/month freed up to add to the minimum monthly payment for the next credit card. After you pay off the second card, the amount you were paying on that one can be applied toward the third card. By doing this, you will decrease the number of years required to pay off your credit cards from approximately 30 years to nine years.

Using this strategy, think about the other ways you can free up money. If you spend about $100 at Starbucks each month, think about spending that money toward your credit card payments.

Remember, money is emotional. We spend and make money based on emotional compulsion. Go back and see what you spent money on in the last week and how much you spent. It’s not how much money you make that matters, but how well you manage it that counts.

Find out more about tax deductions!

It’s no Secret—We’re getting older and broker

noreply@blogger.com (Drew Miles) — Thu, 16 Mar 2006 14:41:00 +0000

Not so fun facts:
· By 2015, 77 million Americans will be over 50 years old and only approximately one-third of them will be able to retire.
· During the economic boom in 1997, the average net worth of the richest 1 percent of families was $9.7 million, while the bottom 40 percent’s average net worth was $3,000.

So if your net worth is $3,000, and you spend $3,000 each month in living expenses, you only have one month of living stored up for when you get ill, lose your job or encounter an emergency. Work to get 10 percent in a savings account for rough times. A practical action plan for successfully building a savings account is to set aside 1 percent in savings, 1 percent for tithing, then up it to 2 percent for savings, two percent for tithing, etc. Baby steps are better than standing still!

Find out more about retirement plans!

Pay Yourself First

noreply@blogger.com (Drew Miles) — Wed, 15 Mar 2006 14:40:00 +0000

Schools do not teach thrift: college, high school, junior high—our system doesn’t place a high priority on frugality. And what a shame. We should put money aside regularly using a simple system—pay yourself first.

For example, when you pay your utility bill, pay yourself first. I’ve talked to people who have mastered saving money who have become very wealthy. Many of them have had to make tough choices—pay the phone bill or savings account? All of them chose to pay themselves first. They got on the phone with the phone company to buy time and negotiate a payment plan. Figure out a way, but pay yourself always.

You must pay yourself first, or you’ll negotiate away your savings. You want to have at least six months of living expenses, liquid. Savings is money you set aside that you never spend. Ultimately, you’ll invest it, generate passive income and get out of the rat race.

Recommended savings
60% Long-term savings
20% Emergencies
optional % “Emotional” (vacation/car savings account) (optional)

Or another way to think about it…

10% Yourself
10% Tithe
10% Pay down any debt you have (and commit yourself to not run up more debt)
70% Do anything you want with it

Once you get the ball rolling, you can shift your savings into a CD, then shift it again into something with stronger returns. Your initial goal is to live on 90 percent of your earnings. The average American lives on 110 percent of his earnings. You can do it.
Another, separate, prong of this saving strategy is to tithe another 10 percent. It could be given to your church, the Red Cross, Habitat for Humanity, or any other organization you’d like to benefit. In my opinion, we owe it to our community and each other to be responsible and giving stewards of our money and do good in the world. I encourage us all to incorporate tithing into our savings plan of action. Your generosity will come back to you.

Find more tax tips!