It’s so common. I always ask the question to our prospects who are realtors, ‘”How do you receive your commissions?” Most come back to me with a simple , “I receive them in my checking account.” And most pay ordinary income tax on their earnings.
Here is a secret…you’re a business, so structure your “Business” as a business, not a sole proprietorship. The following should be confirmed by your CPA.
- Set up an LLC that files as a S-corp. Ever heard of Warren Buffet? He once said that he paid, percentage wise, less taxes than his secretary. How is that possible? It’s all in how receives his income. How do you receive your income?
- Deductions. Depending how your “business” is structured, deductions can be a big savings. Mileage, advertising, entertainment.
- Set up a retirement plan. As a small business, you have the opportunity to set up a 401(k), SEP or a Simple IRA. Great way to save for the future.
With 2015 tax’s due this month, begin to plan for 2016 tax season now. For more information on this and other financial planning strategies, contact me, Trent Grinkmeyer, at 205-266-7509 or email me at firstname.lastname@example.org