End of Year Strategies

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Submitted by greekfire on December 22, 2006 - 8:57pm

I am looking for some financial advice as 2006 comes to a close. Specifically, I would like to know of some good investment and tax saving strategies. I am a small business owner and have been fortunate enough to earn some good profits this past year. I have sunk about $100k of those profits into a business money market account. I figured this would be a good way to get some stable growth (with check writing ability) while I figure out where else to invest. When all is said and done, I should have about $250k to invest in "something" in about 6 months.

I am thinking about eventually investing in such things as real estate, another business venture such as a restaurant, or expanding my own business. I would also like to use a portion of the profits to invest in stocks, although I am a bit wary of the volatility and risk.

I know that making more money is a great way to increase earnings. However, finding legal tax savings is also another strategy. I have looked into forming a SEP IRA or other like vehicle, but there's just so much crap out there it is difficult to decide.

I know this is very open-ended request. But if there's anyone that can help, it would be greatly appreciated. Rich, I know this is up your alley, so please let me know how I may contact you directly.

Submitted by technovelist on December 22, 2006 - 11:26pm.

Is your business incorporated? If so, you can probably save a lot of taxes by setting up a corporate profit-sharing plan for yourself. If not, you can incorporate pretty easily and then set up the profit sharing plan. You can even roll IRA and 401-K money into such a plan, and invest in almost any investment.

Of course, you should consult a tax professional for detailed information on this possibility.

Submitted by surveyor on December 23, 2006 - 11:37am.

Tax Deductions

In terms of tax breaks, there are few that are bigger and better than the ones found in real estate. It is probably too late for you to do at this point of the year, but if you are thinking about investing in real estate, I recommend going to Lisa Vander's workshop and reading her book. Go to www.pacblueinvestments.com.

I do not know what your business is, but if you can somehow classify or qualify as a real estate professional, you can offset a nearly unlimited amount of taxes using real estate.

Good luck.

Submitted by SD Realtor on December 23, 2006 - 3:23pm.

Profit sharing, 401ks, are great. Defined benefits plans are even better but can be tricky because of the committment you must make to them. In either case, these are all excellent ways to keep money out of the hands of the taxman.

Also one thing you may want to do is if you advertise, structure your advertising costs so that perhaps you can pay up front for next years contract. My wife does that and she even got a 3% discount on the contract because of the up front payment. Also talk to other vendors you deal with like your accountant, perhaps even paying some of your lease costs up front if you can. Talk to anyone and everyone you pay for the operating costs of your business.

Submitted by bubble_contagion on December 23, 2006 - 4:53pm.

Sorry I posted by mistake in the wrong thread.

Submitted by brooke on December 23, 2006 - 9:25pm.

This is Brooke (Rich's spouse and occasional webmistress). Thanks to misguided NASD regulations, Rich can't easily post comment responses. But feel free to email him at rtoscano@pcasd.com .

-b

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