Happy Sunday!

Here are 3 ideas, 2 quotes, and 1 question to consider this week!

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3 Ideas From Me

1. “There is a genius way to Cut Your Self-employment taxes. Here’s how it works:

If you are self-employed, you have to pay both the employer and the employee portion of self-employment taxes, equating to a flat tax of 15.3%.

As an example, you’d pay over $15,000 in self-employment taxes on $100,000 in net income.

So, use this strategy to cut your self-employment taxes:

— S-Corporations do not have to pay any self-employment taxes, because technically, you are not self-employed. Your corporation would then be a separate entity that employs you

— Only a legal entity can elect S Corp status (LLCs, C-Corp, etc.)

— File form 2253 with the IRS to elect S-Corp status

— Once accepted, file form 1120-S when you file your tax return

— Pay yourself a reasonable salary for the work you do

You will now only pay self-employment taxes on your salary. The distributions you receive will are not subject to any self-employment taxes.

Two things you must consider with this strategy:

1. You must make at least 50k in net income for the cost of maintaining the S-corp to offset the tax savings.

2. You must pay yourself a reasonable salary. In general, reasonable compensation to shareholders is at least ⅓ of the business profits. But there are other considerations.”

2. “Never put real estate into a corporation (including S-corporations). Why? Because you cannot take it out without triggering capital gains tax.”

3. “Your best skill isn't the one you have. It's the one you master.

Making more money than you have AND keeping more money than you spend is a skill most never master.”

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2 Quotes From Others

1. Oliver Burkeman, the author of Four Thousand Weeks on the point of being rich:

"It turns out that when people make enough money to meet their needs, they just find new things to need and new lifestyles to aspire to; they never quite manage to keep up with the Joneses, because whenever they’re in danger of getting close, they nominate new and better Joneses with whom to try to keep up. As a result, they work harder and harder, and soon busyness becomes an emblem of prestige. Which is clearly completely absurd: for almost the whole of history, the entire point of being rich was not having to work so much.”

2. A passage from Lessons from Warren Buffett & Charlie Munger at the Annual Shareholders Meeting:

“Again, knowing your limitations and the limitations of your information seems to be the key. Or as Keynes said, “I would rather be vaguely right than precisely wrong.”

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1 Question To Consider

"In what ways have my short-term wants prolonged my need for long-term financial freedom?"

By consciously aligning our short-term desires with our long-term financial goals, we can enhance our journey toward lasting financial freedom. It involves making mindful choices that serve both our immediate satisfaction and our future prosperity.

Until next week,

- Keran Smith