Focus On This When You’re Starting Your Business
Hey again, good morning.
I just got done listening to the Tom Woods show. He's a libertarian talk show host and he's got a Ph.D. in History.
It's very fun to listen to even if you don't agree with everything he says.
He's talking about tax rates, marginal tax rates, and how some people just elected to Congress want to raise the highest marginal rate on people who are making a bunch of money.
And it never works. It always causes things to happen that they wish didn't.
Whatever you believe about taxes isn't really the topic here. I just wanted to talk about how when I first started in the business, I used to think that was a big deal.
Oh, I was so concerned with the amount of taxes I was going to pay and if I'm making X number of dollars, I'm going to have to put so much percentage of it into the tax thing.
I was very, very against any rise in any taxes for anybody.
I spent thousands of dollars structuring my first company and my second company. The first company is now no more if that tells you something.
One of the reasons is because I was too concentrated on the structure of the business. I wanted to lay the proper foundation and get everything going right.
It constantly amazes me the number of so-called gurus out there who will tell you, "Oh, you've got to set yourself up right. Because I was making all this money and all of a sudden I had to pay this huge tax bill. Lucky for me, I pulled a rabbit out of a hat. I sold a bunch of stuff and I made an extra million dollars so I can pay all those taxes."
I don't know if that's all true. It sounds kinda like a fairy tale to me. Honestly. Dude is smart enough to make that much money, but so freaking stupid he doesn't know he's going to have to pay taxes on it?
Well, let's just say that it happened and they're all telling the truth. Here's the thing. Don't worry about it right now.
You can fill out some paperwork and get yourself set up as an LLC or whatever you choose to set yourself up as, but I'm telling you, it's not going to matter.
You can start out as a sole proprietorship and yes, you will be taxed at the highest rate, and you're all connected to all your stuff. Then if your business gets in trouble, they're going to come after you personally and oh my goodness. By the way, they're going to do that anyway. Any good lawyer will try.
The point I'm trying to make is you don't make any money yet. You have nothing to protect. You've got nothing whatsoever to worry about, except for one single thing. That is making as much money as you possibly can, as quickly as you can make it.
That is exactly where your focus should be (and nowhere else) when you first start out.
Everybody loves to talk about a legacy and all that blah, blah, blah, but it is BS on a level that's almost unbelievable.
If someone is talking to you about that crap, what they're doing is they're obviously playing only on your emotions, getting you to think totally about the future when you're not even bringing in dollar one.
So here's the thing. First, last, and always. Earning money, making money, making sales. You're building your business, increasing profits and reducing costs. It's Number One, and never goes away - bringing in money.
So if you spend $5,000 or whatever it is on setting up your corporate entity, that is $5,000 you do not have to advertise and test things and keep your business afloat until you're making a consistent income.
You see, what happens is, you can spend all your money on stuff that doesn't matter. Meanwhile, you're not making any sales. And even though you have this beautiful structure for your company, it doesn't matter, cause you're bankrupt.
So keep that in mind whenever you're thinking about taxes. You should concentrate on making as much money as possible, as quickly as possible.
I guarantee you, when you start making 5, 10, $15,000 a month, you'll remember to make sure that you set up your taxes correctly at that point. And you'll be fine.
That's all I got for today. I'll talk to you tomorrow. I'm out.