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Episode 18: The Drum Beat Inside You – Starting a Business and Beyond
361 Plays7 years ago
You have an idea that excites you. Maybe you’ve jumped right in and started a business out of it. But there is a lot to consider – what is the end goal? Can I set it up to run when I’m not around? Can I find a way to monetize it after-hours (residual income)?
That’s what this duocast is all about. We’re looking at uncommon ways of looking at traditional business. Like setting up an LLC to lease space from yourself. Or figuring out health care for you and your family while you are pursuing this “crazy dream.” We tackle all those questions and more.
You’ve got that drum beat inside of you; that urge to monetize that idea that’s been grabbing your attention and won’t let go. It is possible. Building your brand, gaining traction, fulfilling your passion – it is all possible. We have some fun and get into some nitty gritty details all in one fascinating conversation.
What You’ll Learn in this Episode:
- Different ways to establish a business as a legal entity
- What to consider before deciding on the legal corporate structure
- How a C Corp differs from an S Corp
- The importance of knowing from the outset what you hope to achieve by being in business
- The right time to incorporate your business
- Two of our favorite books: The E-Myth Revisited, and Cashflow Quadrant
- Finding a process to develop residual income from your business
- Renting space to your own business for cash flow
- Why you should not diversify too soon
- Why a Health Reimbursement Account (HRA) might be a better option than a HSA
Recommended
Transcript
Introduction to Uncommon Life Project
00:00:02
Speaker
Everyone dreams about living an uncommon life, but how we define that dream is very different for each of us. And for most, it's a lifelong pursuit. Welcome to the Uncommon Life Project podcast. We're going to introduce you to people who are living that life or enjoying the journey to get there. We're going to also give you some tools, tricks, and tips for starting or accelerating your own efforts to live an uncommon life.
00:00:27
Speaker
a life worth celebrating and savoring.
Meet the Hosts: Philip and Brian
00:00:30
Speaker
Please welcome your hosts, Brian Dewhurst and Philip Ramsey. Hello everybody to another episode of the Uncommon Life Project and I am your host Philip Ramsey. And I am Brian Dewhurst. Today we are talking about another one of the seven sources of residual income traditional business.
Understanding Residual Income Sources
00:00:46
Speaker
The old business is business time. Yep. Thank you so much, Cindy, for that wonderful intro. We always appreciate that. I love her consistency. She's just on point every time. For us, not so consistent, but we are going to give it a shot. We do have a fun episode for you guys today. This is actually one of the episodes that Brian and I get most jazzed out of.
00:01:08
Speaker
jazzed up about because it's like the intro to this uncommon thought process and you're starting to see people starting to take ownership of where they're at. Man, it just gets us fired up. In fact, we just talked to a guy out in California, shout out to Ian, who's starting this process and you could just see the enthusiasm building throughout this whole process of maybe I've got an idea that I've always had in the back of my mind and now I get to kind of
00:01:35
Speaker
Jump on this idea and go down this path. So this is definitely my favorite topic of The seven sources of residual income because it's it's not only uncommon, but it's unlimited. It's just amazes me the ingenuity of just all the different potential businesses that are out there that we've seen and Taking that idea
00:01:59
Speaker
in your head and your gut. Typically that's a multi-year process.
Generational Trends in Entrepreneurship
00:02:03
Speaker
You've got something that's on your heart for multiple years and then you just can't ignore that beat. I liken it too. If you've seen the movie Jumanji which is just remade and the board game has that beat that draws the person in to play the game. I think being a business owner we have that beat with inside of us and
00:02:26
Speaker
I just don't think there's a lot in the country or in the marketplace that encourages that, maybe like there used to be. I heard a statistic that in 1900, 90% of people owned a business or were self-employed and now it's less than 10% in a decade or in a century. I thought that was just staggering.
00:02:47
Speaker
And it would go back to the point that we've made before that we have seen my grandparents be more entrepreneurial than our parents' generation. And now our generation is more entrepreneurial than our parents. And so we get to walk through people or walk through with people in this uncommon
00:03:07
Speaker
I guess, approach. But traditional business, there's many types out there. So let's start out with what are some types of businesses that you can create, entities that you can create and things like
Business Entity Structures Explained
00:03:21
Speaker
that. Sure. So when we kind of talk about entity, we're referring to a corporate structure or legal structure
00:03:29
Speaker
And so that would either be like an LLC, a C Corp, an S Corp, there's nonprofit, foundation, co-ops. Self-employed. And you could just be self-employed, sole proprietor. There's just a bunch of different tax structures out there. And it just kind of depends on what you're trying to accomplish with your business and which one is right for you.
00:03:56
Speaker
Yeah, and it really does. The corporate structure for Brian and I seems to be like the secondary issue. The first thing is getting that idea and hearing that drum beat louder and louder as Brian's analogy is.
00:04:12
Speaker
As we're talking to people, it's not the first thing that we'll say is like, oh, you need a corporate structure around that. But we will start formulizing like, okay, what's the name? What's the business plan? Who's the customer base?
00:04:28
Speaker
What's the pricing that you're thinking about doing and just start walking through help facilitating this person or a client through what's that going to look like. And then after that's all finalized or there's a good path or a good road down that path then we might start talking about okay when would we want to start
00:04:46
Speaker
maybe putting a corporation around that, what's that gonna look like? And that's when we'll maybe talk through that. And I think from just our own experience and then we have a good relationship with our accountant, the corporate structure a lot of times too is dictated by just how much cashflow you have and how predictable it is and how that scaling and your vision for the overall company. And so it's different for everybody.
00:05:12
Speaker
Candidly, Philip and I are both organized as an S corp, LLC legally, S corp tax filing. And so we, we converted to that a few years ago and it's been beneficial for us and probably, I don't really see anything changing in that front anytime soon.
Tax Benefits for Business Owners
00:05:31
Speaker
But yeah, I think it's mostly driven on the vision and then cashflow and predictability. So.
00:05:36
Speaker
And I think the other thing overarching of why business is so powerful is not only about your passion, but from a tax standpoint, I guess, stay on that vein is the IRS tax code is more geared towards business owners because we are taking risk.
00:05:53
Speaker
We're creating products, we're creating jobs, we're creating opportunity, and that takes capital. And so to do that, the tax code is incentivized towards business owners to mitigate the risk that we take in seeing fourth vision and investing large sums of money to create those things.
00:06:15
Speaker
Yeah, and for the compliance caveat, we are not tax planners. Yes. Nor do we pose to be, but it is true that the tax code is really bent towards business owners. So depending on where people are at the beginning depends on where they need to go at the end. And so I think the biggest thing
00:06:35
Speaker
that people forget is knowing the end, what is the end game, right? Usually they're, oh, we got this great idea.
Strategic Business Planning: Knowing Your End Game
00:06:43
Speaker
This is amazing. But they never talk about what's the end game for themselves or the business. They just go straight to the, let's just jump into it. And that's a big component of this. And I think a lot of people will forget.
00:06:56
Speaker
I was just talking through, at the end of this whole thing, what's gonna be in it for me? What's the benefit that all this hard work has created? That's something I see that new business owners fail to do. What other things could you see? Well, I think on that, because you're a big fan of the E-Myth book, correct? Oh, I just love that book. So it's E-Myth and E-Myth Revisited, same guy. Just read E-Myth Revisited if you haven't read it.
00:07:26
Speaker
I think there's two things in that vein. One is the book, The E-Myth, which talks about the entrepreneur, the technician, and the manager, right? Those three personalities and how typically an entrepreneur lives in all three of those personalities but has a dominant one and has to essentially hire to the others that he's not as strongly suited in.
00:07:50
Speaker
but also starting with the end in mind, like you said.
Recommended Business Literature
00:07:54
Speaker
And then I think the other side of that coin is Robert Kiyosaki with what I always tell people is one of the top five books that's mandatory in business to read is Cashflow Quadrant. And that is, do you want to do this as self-employed or do you want to do this as a business or are you investing in this and you don't want an active role in the company?
00:08:16
Speaker
Uh, the fourth quadrant is an employee. So there's basically the employee and the self-employed are on one half and then the business owner and, um, the investor on the other half of the quadrant. So, um, pivotal, those two pivotal books, I think, you know, anybody should read if they're looking or thinking about starting a business. Yeah. And for the email, they talk about the pie maker and how she just jumped in because she was good at making pies. Well.
00:08:40
Speaker
at the end it wasn't scalable so a big thing for them and that book is understand and work towards a way that you can franchise your business meaning that you can plug in other people to do what you're doing so then you can either have multiple
00:08:55
Speaker
stores or you can maybe go on a vacation now or then.
Residual Income vs. Daily Operations
00:08:59
Speaker
Totally. But without that component, it seems like people jump in with a great idea and all of a sudden they're like just created a job. They just create a job. I think this is an important point. I'm glad you brought up the pie maker because I always go to the taco house. I just like tacos, but same, same principle. You're making something.
00:09:18
Speaker
I think this is a huge important distinction for our podcast because our podcast is focused on residual income and not all businesses are residual. I think the pie maker and the taco person or the taco stand are perfect examples of that because you have to get in there every day, turn the lights on, make those pies and tacos.
00:09:40
Speaker
And if nobody walks in your door, you really have no revenue coming in. And so I think that's the other thing that we challenge a lot of our clients with is how do you make this business scalable? How do you make it repeatable? So what's your process to, you know, perfect what you're selling and then how do you make it residual? So how do you make money when the lights aren't on?
Real Estate and Residual Income
00:10:06
Speaker
And I think that, for me, dovetails into what I would say is the next powerful thing about owning a business is real estate. So can you share it, Philip, with our listeners of how a business would earn residual through real estate?
00:10:21
Speaker
I mean, definitely like rent is a good one. Yeah, renting the space that they're operating their business in. Or they could be operating a business inside a building that they own, and that business then could be paying them rent.
00:10:36
Speaker
There's just a couple of different ways and quirky ways that I don't think a lot of people think about when thinking of real estate They always think that we have to go get a rental or renter to rent from us But what if we were the renters and we know that we can pay the bills. We know that we're consistent So that's what?
00:10:54
Speaker
Yeah, it's creating the second asset. So you have the one asset that is your business and the brand that you're creating with your primary, you know, if that's tacos, you have your taco business. But then that taco business has to be housed somewhere. Now, let's say you have a thriving taco business. We were just an amazing taco place in Sioux City. I mean, a line out the door, you ask anybody in town where to get this place.
00:11:20
Speaker
La Juanitas. La Juanitas. Shout out. La Juanitas. And they have an amazing business. And then I hope they own the business or the building that they're in because otherwise they're paying rent and they could just be paying themselves. They could be paying themselves the rent and rent too from a tax perspective. Again, we're not tax advisors, but tax rental income is one of the best forms of income from a tax perspective.
00:11:48
Speaker
and can generally be a separate entity. So you could have, let's say your main business of selling tacos is an S corp.
00:11:55
Speaker
You could have a separate entity as an LLC that owns the building that your taco business is in and the taco business is paying your LLC rent for being there in that building. And then over time, you not only could sell the taco business, but you could sell the building as well. And so you create that second asset with essentially the money you're going to give away anyway for rent to somebody else. Yeah.
00:12:19
Speaker
So that's kind of what we mean. Um, and it all candor like Brian and I house we office out of our house. And so we, our business pays us rent, rent, which it should. And so that's what, how we were doing it. And I think eventually we could get into the point where we would buy a business or a building where our office could rent out of that. Um, but right now we just didn't want to go and just sign a 10 year lease.
00:12:45
Speaker
Because we're just paying somebody else's bill, which doesn't seem efficient. Totally. I think another thing that I see business owners doing too soon is diversifying.
The Risks of Early Diversification
00:12:54
Speaker
I totally agree. Totally agree. Crazy. And the reason I bring this one up for me is because I'm guilty of this. I'm definitely the idea guy. I have lots of ideas.
00:13:06
Speaker
Which is fun for our clients because we give them lots and lots of ideas and it's honestly one of my favorite things to do and and I think where I've you know where I just am so passionate about but It's been interesting, you know, Philip and I candidly we've had three essential different brands as we've been in this business getting our foundation set and Not all of those were our decision. We didn't really want to do one of them but now that we're under the uncommon brand and
00:13:36
Speaker
I have never felt more at home professionally in my entire life, but with that,
00:13:41
Speaker
When I think about doing something to add an additional revenue stream, I think before when we didn't own our brand, because we were underneath somebody else's brand, instinctually it was to start a company or a brand outside of what we were doing. And that takes you away from the primary function. Now that we own Uncommon Wealth Partners, and it is such a fit, I'm now gravitating towards rolling out something that would enhance the brand, would enhance or build Uncommon Wealth Partners and generate even more income.
00:14:11
Speaker
Thanks.
00:14:12
Speaker
and bring more value to our clients. And so we see a lot of times too, business owners, they make good money, they're turning a profit, and then they wanna dovetail into real estate. And I don't mean like just buying your building, I mean like building a real estate portfolio or they're pulling all their cash out of their business to put into the stock market, which they don't really know or control. And so I think a lot of times that energy and capital diffuses the power of your brand and your potential.
00:14:42
Speaker
And I mean, the one, the one that comes to my mind for the interview that we've done is Caleb Walsh. And I think he's the perfect example. He was, he had a job, he owned some rental properties. He figures out the power of owning, you know, multifamily, you know, mobile home park.
00:14:59
Speaker
And he sells that for a profit, and he sees that he basically could go back to the life that he had if he blows that money. And within 15 days, he launches his next project, has a purchase agreement on his next property, and then he launches a brand, 500 Doors. And I think so many people own real estate in hiding.
00:15:21
Speaker
And he turned it into a business and that business has generated more opportunity in real estate than he ever would if he, if he was just doing it kind of behind the scenes. And that's what I mean about branding and building something and not diversifying out of it. And so many times we meet people like, Oh, I want to invest in the stock market. We have a little bit of profit and it's like, man, invest that profit into your business and you could do this and this.
00:15:47
Speaker
which has two or three different revenue streams, which just further protects the sustainability of that operation. Yeah. I want to go back to a couple points there. And one is when should someone, they have an idea, they might be going down this path. When should they start to think about incorporating for their business?
00:16:09
Speaker
I'm not saying I'm the end all be all on this answer, but I think it really depends. I think if you're in a position, we just had an example of a gentleman kind of pushing all of his chips in quarter million dollars, 10 year lease, and he's doing a franchise and he's got to buy a bunch of stuff. I think if you're doing that and you're putting your chips in, you got to incorporate and protect the house and you're all in.
00:16:33
Speaker
A lot of times we see people where they have an idea, they have a good paying job, that chasm between predictability, comfortability, and all that. And this idea, and I have no idea what we're going to make or how we're going to pay our bills, that's a big chasm for a lot of people. And so if you're towing into that water and trying to
00:16:57
Speaker
come up with a product or a website on the side at night and you're just trying to get your side hustle on. I think you don't even need to do that until you've made 10, 15 grand. You know, you're covered through the tax code on some level. There's been a lot of changes to that. So I want to be very careful not to give tax advice here. But yeah, you can do basic things from a business standpoint on a basic tax return under self-employment or self-proprietor.
When to Establish a Corporate Structure
00:17:25
Speaker
But
00:17:27
Speaker
But I think if you're going to make a massive business investment beyond $10,000, then you need to look at setting up a corporate structure. Yeah, depending on what the revenue is, that's when you say like, okay, that's something. And I think too of like what you're doing, right? Like if you're helping people climb, rock climb, there's a lot of risk in that if you fall off the rock,
00:17:50
Speaker
versus maybe you're selling pumpkins out of your front yard, that's not a very risky business. And so I think it also dovetails into what product are you selling and what liability might you have if something goes wrong with that.
00:18:05
Speaker
Okay, so I want to talk about what the benefits are of a C Corp or S Corp or LLC. So let's start with a C Corp. And the thing that I think is probably one of the bigger benefits, and there's a lot of benefits, this seems to be, for Brian and I, something that you would probably incorporate and go this direction. If you had a bigger organization
00:18:30
Speaker
And I think another advantage would be that you can make your fiscal year, whatever date you want. And so that's a huge benefit for people who want to maybe push this side of the revenue over there. Yeah. And I think for seasonal businesses, it would be powerful. Real estate agents come to my mind. A lot of them are incorporated individually.
00:18:55
Speaker
Their peak season is, you know, obviously probably March through August, September, at least in the Midwest. I mean, if you're in coastal areas or whatever in the South, it's probably year round. But, you know, Midwest and up, it's, you know, during the summer, obviously. And so, yeah, you could set up a C Corp to have a different fiscal year end.
00:19:15
Speaker
you know, if you wanted to not kind of handle that stuff, you could make it in November or you could make it in September to a way to adjust your cash flow and reporting. So that's one there. I would also say any of these, your CPA account can really walk through the benefits. We're just trying to give you some high level ideas. I think that's another great point when we tell every, certainly of all of our business owner clients to have an account.
00:19:43
Speaker
If you are trying to navigate doing your tax returns by yourself and you're owning or running a business that's making any type of legitimate money to you, we just think it's invaluable to have that professional backing you up in your life and spending more of your time in and on your business.
00:20:04
Speaker
Yeah, unless you're going to be an accountant yourself. But I honestly like that really goes back to you've got to hire people out so you can do what you are passionate and excited about doing or else you get stuck doing these jobs where you never wanted to do in the first place, but you're just saving a dollar here or there. And that's what I think maybe a downside for all these corporations would be is that you have to do a tax return at the end of the year. And if you don't know what that is or
00:20:30
Speaker
what that's all about, like you'll have to pay, and you don't want to do that by yourself. I would probably contest that you don't want to do that by yourself. So let's talk about the S corp and why we think that is powerful for our clients. So in terms of an S corp, it's considered a pass-through entity.
00:20:48
Speaker
But the main difference is when you look at tax, there's three layers of tax if you're in a state that has income tax. We are in Iowa. So you have federal income tax, state income tax, and then there's payroll tax.
00:21:01
Speaker
And the main difference of your self-employed and you make $100,000, that $100,000 is automatically calculated against payroll tax at 15%. And there's really not much you can do about it. If you have an S corp and you make $100,000, you can pay yourself a W-2 wage. Which is reasonable. Which is reasonable. So consult your accountant on that, what's reasonable for your profession.
00:21:27
Speaker
And you would pay payroll tax on that amount. Let's say that's $70,000. You're going to pay W2 wages, $70,000. Then let's say you were able to take another $20,000 out. It's called a distribution because you had a profit at the end of the year.
00:21:42
Speaker
Well, you don't pay payroll tax under the S corp on distributions. Um, so that's the main distinction of an S corp between self-employed is the ability to take distributions and not pay payroll tax. You'll still just about 15%. Yeah. You're still going to pay state and federal income tax on the distribution, but
00:22:03
Speaker
You're going to save the 15% on payroll tax. Yeah. And so an LLC, so LLC is something for a legal protection wise. And then you can, you can then file as an S Corp or a C Corp. That's what Brian and I have chosen to do and for various reasons. And we got tax advice for that too. So.
00:22:27
Speaker
The other cool thing I think about an S-corp, and I'm kind of more focused on single-member S-corps with this, is you can do what's called an HRA, which is a health reimbursement account, and essentially it allows you to deduct 100% of your medical expenses and medical insurance through
Healthcare Reimbursement Arrangements (HRAs)
00:22:48
Speaker
your business.
00:22:50
Speaker
If you use MediShare or Samaritan's Ministries, which Philip and I both do MediShare, so you cannot deduct MediShare against your corporation because it's not considered health insurance. But you can add an HRA, which allows you and your spouse and your family to deduct your medical expenses against your income, which depending on your situation, you have a baby or whatever, it's nice. And because you get to control your health-related decisions,
00:23:18
Speaker
with how you handle and access the healthcare market, gives you a lot of control and a lot of, you know, flexibility and the ability to deduct that against your income is really powerful. And you can do an HRA with S-Corp and C-Corp. But I want to go back to that because this is kind of the last thing that we really want to focus on today. And it is this HRA. And many people have no idea what it is, but I'll tell you what people do know, HSA.
00:23:46
Speaker
So the HSA is what people usually know and understand and that's when you conduct something from your paycheck and it goes into an account and then if you go use that for health reimbursement, it's never taxed.
00:24:00
Speaker
So, but that's great for people who are employed because they're getting a consistent check and they can just automatically do that. Well, that, that usually is up to like what, 5,000? I think the family's like 6,000 or something. Yeah. So you can do that every year and $6,000. And then if you need to go to the doctor, you can go off your HSA account. Well, business owners, we like that idea, but we don't want to separate ourselves from the cashflow of it. Come on.
00:24:29
Speaker
So what we've kind of understood after doing some research is there's a thing called H.R.A. That's what Brian is talking about and the powerful thing with that is you don't ever have to put that money aside like an H.S.A. You can earmark something out of your W2 which actually is up to half of your W2
00:24:52
Speaker
And that can go towards kind of an HSA type account, but it doesn't have to sit in that account. Right. And so when you go to the doctor or chiropractor or anybody you want to see, yeah.
00:25:06
Speaker
you can now submit your receipt to a company that does all your accounting for you. And then at the end of the year, you get to write that off. So I want you to talk more about that because it is a huge deal. And I'm sure when people hear this, they're like, I didn't, I never heard anything about this. So.
00:25:23
Speaker
Sure. So let's use real numbers. Let's say your W2 income is $50,000. That means your HRA cap would be $25,000. So we like this for our older clients, not just our younger clients, because we see a lot of people sell their business and then retire, but you actually would like to keep that corporate protection.
00:25:45
Speaker
And then we can run an HRA in your corporation in retirement. And you can still be retired, but let's say you own a couple of eight plexes and you, and we set up an HRA and you're a property manager. And again, you got to do this kind of legally. And we're not talking about, you know, scamming hundreds of thousands of dollars, but this is all legal above board stuff. And you could run your medical expenses through that HRA. So let's, you know, back to our initial example, you have $25,000.
00:26:14
Speaker
And then you just pay for your medical expenses out of pocket like you normally would anyways. If you're a business owner, you're probably doing that anyways. You don't have that savings account set up yet or maybe you do, great. But yeah, you just pay the medical expenses out of pocket and then you submit the receipts to a company we use based online. They're in Adel, Iowa. They've been amazing to work with.
00:26:36
Speaker
They just have a little web portal and you submit the receipts, you know, quarterly and then they give you a printout at the end of the year and you give that to your accountant and you deduct those expenses against your corporation and.
00:26:48
Speaker
The corporation is essentially reimbursing your personal account for those expenses, but the power of a thing you nailed is you don't have to put that $25,000 in a separate account that only does one thing, which is pay medical bills. It's kind of like an escrow account or a cap, but you just don't fund it.
00:27:07
Speaker
Now this is I think the coolest part because if you don't use the $25,000 for health, let's say 10. Next year what happens to that $15,000? So your cap or your limit was $25,000, you spent $10,000, so you have $15,000 left over that you didn't use.
00:27:25
Speaker
with this HRA system, as long as you continue to stay in compliance and maintain the HRA, you can roll that $15,000 over to the next year on top of your new $25,000. So your new cap in the following year would be $40,000. So let's say then you had this major
00:27:45
Speaker
health thing and you got twenty thirty thousand dollars in medical bills that you got to pay you could still deduct all of that against your income because you're still gonna have to pay it out of pocket and you could still have that ceiling with your HRA to deduct that against your income. So it's an extremely powerful vehicle especially if you think about the new statistic we just heard this the other day that a retired couple should expect to spend
00:28:14
Speaker
upwards of a quarter million dollars before they die in health-related expenses. So if you had a corporation in retirement that was, you know, however you can do it, and we love kind of walking people through this, but if you had an HRA in place with that vehicle,
00:28:33
Speaker
You know, we're really fighting inflation and fighting those rising medical expenses into retirement. And not only that, it also covers Medicare, Medicare supplement. And, you know, when you age, you don't, you know, like hearing aids, glasses, and your dental work, that stuff's not covered by Medicare. And so you got to do that out of pocket.
00:28:57
Speaker
And I mean, I guess these hearing aids cost like three to six thousand dollars, you know, and then if your husband's senile, I'm not pointing fingers to anybody and they lose it all the time, it can be quite expensive. So having an HRA can be super beneficial as you age. And so, yeah, they've just been extremely powerful and we've helped a lot of business owners set these up. I think the one caveat because I don't want to over promote this
00:29:22
Speaker
is these really work for more single member S-corps or C-corps where if you've got 30 employees, you've got to kind of do a different strategy based online, can actually help you with that. So they're actually very good in both markets, but the kind of advantages we're talking about are single member S-corps or C-corps.
00:29:43
Speaker
And so if you have any questions on the HRA, you can call us, but we're just going to forward you on to base online and have you walk through your specific scenario with them to see the benefits for you and maybe what HRA can do for you. And I think shameless plug. Um, I think the great thing about base is that they do take a similarly, kind of like we approach our clients with a consultative approach. They're not just trying to fit you into something to sell you something. They really,
00:30:08
Speaker
Really learn about your business, your operation, what you're trying to accomplish, and then they fit the best solution to your situation. And that's $250 a year, right? Something like that. It might be a little bit more than that, actually. Let's just say it's $300 to be safe. But it's not that much to get the benefit of what they do. Sure, yeah. Just send them your receipts.
00:30:28
Speaker
Yeah, if you're if you're expensing or deducting, you know, three to five thousand dollars of medical expenses a year, I mean, it's more than worth it. So totally. And we spent a little bit more time on that because it's a lot of times a big obstacle for people who are thinking about this great idea. But what do I do about health insurance? I'm going to walk away from this benefit and trust us when we say we understand. Yeah.
00:30:51
Speaker
We understand and that's why we had to try to come up with a solution, an uncommon solution for that problem. And so that's what we've kind of figured out and maybe it fits for you. Maybe it helps you get over that hurdle. We hope it does. Okay. Lastly, I want to talk about, I thought that was going to be the last thing, but I feel like I keep having more. Just keep going. Yeah. Why not? I want to talk about foundations.
00:31:14
Speaker
We are starting to get more and more people who are wanting kind of a longer type legacy kind of in a business, but maybe something different.
Foundations for Lasting Business Impact
00:31:25
Speaker
So let's talk about foundations quickly. Let's do it quick. And I think we need to do another episode specifically on the foundation. And then I want to do another episode in regards to business.
00:31:36
Speaker
On on just totally the formation like I've got an idea. How do I get a logo? How do I get a brand? How do I get the URL? We've we've encountered that a lot lately and I think we need to do a deeper dive So with that we got more episodes coming on business and then foundation but quickly a foundation is a separate recognized tax structure part of the IRS code and It's kind of like
00:32:02
Speaker
Typically their their private family foundations, you know, the Clintons have a foundation bill and Melinda Gates have a foundation Rockefeller's had a foundation and so it's kind of similar to a nonprofit but with more control and Typically, they're funded by one family. That's not always the case but it's typical and
00:32:25
Speaker
The advantages are that you can contribute money to your own foundation. You can deduct that against your income, but still kind of control the asset.
00:32:34
Speaker
And I think they're powerful for business minded people because, you know, I don't ever view myself as retiring. And we have several clients that are in their mid fifties, you know, mid sixties that aren't slowing down anytime soon. And I think, you know, as, as Christians, you and me, and as whether you're Christian or not, I think there's just a lot of people that like giving money away to charity and helping people and benefiting people. And so,
00:32:59
Speaker
If you're that type of business builder, you're an entrepreneur at heart, and you like giving your money away and blessing other people, the foundation has a lot of upside.
00:33:11
Speaker
If you're really, yeah, totally. You have to get organized. There's certain rules that you have to follow. You have to genuinely be giving the money away. You have to genuinely be marketing the foundation in a way that the people that you're benefiting can find you. So if you're doing a scholarship for your high school, well, you've got to be promoting that to the families at your high school that they can actually try to get the money.
00:33:40
Speaker
And so, but the cool thing is, and I think the advantages, just to caveat them here, is that you can pay yourself a reasonable wage. There's that word again, reasonable. You can pay yourself a reasonable wage out of the foundation.
00:33:57
Speaker
to manage and grow that foundation. You can also gift real estate that's paid for into that foundation. So if you had farmland or a rental property or something that was near and dear to you or your business, you could gift it into that foundation and avoid the tax consequences. That real estate property could still generate rent or income to benefit the foundation.
00:34:25
Speaker
And you can name your family members to take on and carry on the legacy of your foundation. And so it's a neat structure. The assets that sit inside there that grow tax-deferred, so you're not paying income tax or capital gains tax on those assets inside the foundation. And you can set up a board. So yeah, there's just a ton of advantages. I think you said that you have to give it away at least 5%.
00:34:56
Speaker
There's some exceptions to that one time type situations like if you're doing a large capital investment for the foundation and you need to take a year off. There's some minor exceptions to that but yeah on the norm you got to give away 5% of the money.
00:35:13
Speaker
So this is how we like to work with our clients, right? We like to take them where they're at and where they're gonna go and try to put different places and different streams of residual income in for them. This is just one of those and we feel like it's a powerful one because it helps us
00:35:31
Speaker
get a little bit creative. I don't know if that's the right word with taxes or, but they all fit together somehow. And so in order to do that, if we would love to help you, if you'd like to, I got one more thing to say. What? Yeah, he does. The turntable just screeched a little bit there.
00:35:52
Speaker
I think the other thing for me and just what we see with a lot of our clients is we all have hobbies and passions and it seems like a lot of times people are spending money on their hobby and it's actually what they want to do with their time.
00:36:07
Speaker
but they just don't know how to monetize or like take that next step. And so I think trying to formulate a business plan around a hobby is like one of our favorite things to do. And so I think this is an aside of if you wanna, if you want help from us, we can help you in this regard and you know, find us on uncommonwealth.com.
00:36:29
Speaker
We really like to work and help people galvanize these ideas and these hobbies and passions and then transform those into a legitimate business operation. I'm not saying you got to be making a couple hundred grand, but even if you were to make an extra $10,000 or $20,000 a year on top of what you're doing now, that changes a lot of families' lives.
00:36:49
Speaker
And again, I mean, you guys can obviously see our passion about business and how we help people and our own passion for our own business. And so we just think it's something that we wouldn't trade for the world. And if there's something that feels like a roadblock to you and paving down this path, please reach out to us.
00:37:07
Speaker
For sure. So you've been listening to the Uncommon Life Project. This is your host, Philip Ramsey. And I'm Brian Dewhurst. And we are with the Uncommon Wealth Partners. Please reach out to us. Our phone number is 515-650-3009. We'd love to hear from you. We love the feedback we've been getting from the show. Thank you for listening. And any questions, guys, please feel free to reach out to us. We would love to help you from where you're at and where you want to go. Definitely. Thanks, everybody. Goodbye.
00:37:36
Speaker
That's all for this episode of the Uncommon Life Project, brought to you by Uncommon Wealth Partners. Be sure to visit uncommonwealth.com to learn more about our services. Don't miss an episode as we introduce you to inspiring people who are actively pursuing an uncommon life.