first blogs info

Asset protection works best when you start before you have a significant number of assets that need protection. You need to fix the roof before the rains pour in. The earlier a trust is created, the greater the benefits.

The time you usually worry about your assets – when facing a divorce, lawsuit, creditor demands, or a tax lien – is when you can kiss your stuff goodbye. If you have not protected it by then, it’s not your property. It belongs to whoever the judge says it does.

Trusts used to be the last thing a middle-class taxpayer had to worry about. Estate taxes were the problem of the rich. A trust, along with appropriate use of corporations and limited liability companies, means never having to give your property to the ex-anyone again.

As it stands now, with modest homes in many parts of the U.S. fetching over $1 million, trusts are the most powerful asset preservation device available. In addition, all gifts and bequests should be made and kept in trust instead of being given outright.

What we call a BCT (Beneficiary Controlled Trust) goes by a more accurate description of “Crummey Defective Grantor Spendthrift Trust”.

Crummey is the name of an individual who challenged the IRS and won, not a depiction of the quality of the trust. For that alone he deserves your respect and admiration.

In our Beneficiary Controlled Trust, the beneficiary also serves as trustee, hence the control. Crummey powers are handled by the second trustee, known as the Distribution Trustee, but all control and decisions remain with the beneficiary/trustee.

The BCT is designed to:

1. Give the beneficiary beneficial use and control of trust property without having ownership which can be reached by creditors or distributed by a judge in a divorce case. You can’t lose property in a divorce settlement if you don’t own it.

2. Have no negative gift or estate tax for the beneficiary or the person creating the trust (Grantor).

3. Own businesses in the form of corporations or LLCs to provide protection from personal liability from debts of or judgments against the business entities.

4. Pass income earned by the trust to the beneficiary to be taxed at lower individual tax rates.

5. Provide a way for parents to use their annual gift tax exemption to transfer wealth to children or grandchildren without estate tax issues for either the grantors or beneficiaries.

6. Restrict income and principal distributions only for HEMS (health, education, support, and maintenance). Distributions are discretionary, not mandated. HEMS conforms with IRS standards to make sure the assets are not included in your estate, and cannot be reached by creditors.

7. Gives you the right to replace the Distribution Trustee (2nd trustee) at any time. While this might not seem important at first, this is one of the few irrevocable trusts that can be “rewritten”. The trust can continue for the beneficiary’s lifetime and for successive generations. The only caveat is that the beneficiary/trustee may not rewrite in such a way as to increase his own benefits.

8. Our BCT has special testamentary powers of appointment which allows you to direct who receives the trust property upon your death. To prevent assets from becoming a part of your estate, the BCT will prohibit you from giving any property to creditors, your estate, or estate creditors. You can now pass the trust assets on to your family or charities or anyone you choose.

9. For parents who want to help their children start a new business, funds given outright to the individual child are exposed to claims of creditors or ex-spouses. Seed money contributions to the trust can be used to form a corporation or to organize a new limited liability company. An LLC owned 98% by the BCT, and 1% owned each by two natural persons such as the parents, is the structure we have found to provide superior asset protection. The LLC can then acquire assets 98% owned by the trust. An alternative is to use a no-asset corporation as manager of the LLC, and have the trust own 99%.

10. The beneficiary has no enforceable right to demand income or principal from the trust, so creditors cannot step into the shoes of the beneficiary and force a distribution. In bankruptcy, the beneficiary cannot voluntarily or involuntarily assign his interest in the trust for the benefit of creditors.

If you have full ownership of property, creditors, spouses, and the IRS can come gunning for you. Failure to exploit trusts to their maximum advantage puts a bull’s-eye on your chest.

When distributions are subject to the absolute discretion of the independent Distribution Trustee, even though the beneficiary can replace that independent trustee, you now have unequalable divorce and creditor protection.

Charles Lamm is a retired attorney and owner of Trustee and RA Services, Inc., in Coral Springs, Florida. His asset protection articles appear on his blog at: http://www.corp-llc-bct.com To learn more about how to combine a corporation, LLC, and Beneficiary Controlled Trust for maximum asset protection and tax benefits, please email him at: asset-protection@corp-llc-bct.com

The process of online income tax filing can be much easier than traditional means and much less expensive than paying for an accountant to assist you. In addition, many online tax filing services offer eFiling, which when combined with direct deposit can result in getting your refund in as little as 1 – 2 weeks.

However, that does not mean that you will not have questions about how to prepare your return or what a certain 1099 means or how to enter a receipt. Online income tax filing can still be a complicated process and for that reason, there are plenty of services and individuals who can assist you in getting everything organized and figured out.

Being Organized

The first thing to do for online income tax filing is to have all of your paperwork in order. Even the most experienced professional may have a hard time untangling your tax mess if you do not have the W2s, 1099s, receipts and past returns you need to fill out your current return.

Find everything you will need, organize it all into a nice and neat file and then start the filing process.

The most common documents you will need are:

• 1099s
• W2s from every employer
• Receipts from all charities
• Property tax receipts
• Records of the purchase price of all stock and mutual funds sold during the year
• Receipts for medical expenses
• K-1s (if you are a partner in a partnership, or member of an LLC)
• If you own a business as a sole proprietor or single member LLC, your complete business books and records of all income and expenses

The above documents are just for starters. As you go through the process online, you will likely be asked for additional documents. Don’t be concerned–most online filing services permit you to save your progress and come back later.

The Filing Process

When you start filing your taxes, you will want to decide which service is best suited for your needs.

For online income tax filing, there are 19 different websites to choose from via the IRS homepage.

Each site offers a different set of features but is considered trustworthy and tested by the IRS. Visit a few of these websites and view their rules and feature sets to decide which one will best meet your needs.

Tax Preparation Help

When you file your taxes online, you will be given a decent selection of resources to help you in the process. Online income tax filing sites usually provide a full annotated copy of the tax code integrated into their help services, allowing you to figure out what each form and line means.

They will also include a frequently asked questions section for you to find the answers to those questions that many other people have. If the site you are considering does not offer these services, look for a different one that does.

However, if the basic information that an online income tax filing website offers is not enough, you have still more options – though these options may cost you a small bit of money. Many of these websites will feature real time tax support from professionals who can answer your questions. These individuals can be reached via instant message from within the software or via a phone call to the company’s call center. You can also look for local tax preparation experts who may be willing to offer you the same advice for a better price. However, it can be confusing to try and take offline advice for an online return.

The process of filing your taxes online can seem daunting at first, but if you take the time and energy to do the research and be fully prepared when it comes time to answer those automated interview questions, everything is much easier and faster.

Simon Maher is a contributor for OnlineTaxFiler.com
Get more deductions and faster refunds by filing your taxes online this year.
Find the right online tax filing program for you with exclusive customer reviews and reports of all the major online tax filing services at OnlineTaxFiler.com.

Copyright 2008 Native Elements, LLC and OnlineTaxFiler.com

Monday we had the huge stock market rally on the heels of the news coming out of Europe over the weekend, which took us into the pre-open announcements in the US on Tuesday, which led into a continuation rally, at least at the open of trading on Tuesday (the open was the high). We are now back to the basics of the market, trading on uncertainty, prospects for a recession of undetermined length that will have a large impact on corporate earnings as well as a slew of economic data being released today and down the road.

At this point, although it is the stock market that tends to get all of the headlines, the performance of the stock markets are secondary to the functioning of the credit markets and the hope for renewed willingness on the part of the banks to lend. Given the magnitude of the injection of liquidity by the central banks around the world in addition to all of the other moves being made, this should happen.

On The Docket For Today

Today we will be seeing the release of retail sales for September, wholesale prices for September, a read on the health of manufacturing activity in October, business inventories for August and the Fed’s Beige Book that gives a read on economic activity. With the backwards looking nature of most of these numbers they are not all that important, but will have some impact.

Health Of The Credit Markets

In a continuing trend of the past couple of days, the LIBOR rate is slowly moving down, set this morning at 4.55%, down about 6bp from yesterday. Still very high, compared to the 2% range prior to the Lehman fallout, but it is definitely moving in the right direction. For those not familiar with LIBOR, it is the London Interbank Offered Rate and is the rate that many loans around the world, such as mortgage loans, are set off of.

We continue to watch and listen. New addition on the blog: current stock and mortgage rate quotes on the right side midway down, brought to us by SaneBull. Let me know if you think this is good to have there.

Michael Haltman, President
Exeter Commercial LLC
Jericho, New York
The Political and Financial Markets Commentator
http://politicsandfinance.blogspot.com

Other websites include:

http://www.easycommercial.com
thecommercialcapitalmortgageseminar.com

Maintaining consistent cash flow is one of the biggest challenges faced by small and medium scale business enterprises today. The cash flow constraints particularly occur in businesses that offer credit facilities. According to cash flow management experts many debtors have a tendency of failing to honor their pledges to clear their debts within a stipulated period of time that may between 30 and 60 days. It is during such circumstances that a business entity may be required to rise to occasion by supplementing its operations through sourcing of funds either internally or externally to boost the cash flow.

One of the convenient ways of sourcing for funds is invoice factoring. Factoring refers to the process of speeding up cash flow in your business by selling the credit worthy invoices for cash. The viability of factoring as one of the most effective debt collection methods has been a blessing to many small and medium scale business enterprises.

This cash flow tool has been around for many years and has effectively evolved into a very important moderator preferred by many small business enterprises for use in competing effectively with larger businesses. Therefore by factoring invoices, small or medium scale business entrepreneurs can offer flexible terms of sale with the confidence that they will have cash for their sales within a short period of time. By so doing, your business will regain ground and your cash flow needs will be resolved without you having to waste time and money calling and seeking for your debtors for payments.

Today, there are several companies that have invented pragmatic, friendly and convenient methods of supplementing cash flow for business without burdening business entrepreneurs with excessive interest rates and time wasting application procedures. I recommend cash flow management experts to both current or prospective business entrepreneurs. This site contains amazing information about financial offers for cash infusion programs that are designed to assist business entrepreneurs overcome cash flow crisis. This particular blog contains direct links a leading international financing company, the MBS Financial LLC. Business entrepreneurs seeking to regain control of cash flow in their business can access the credit application pages for a quick loan at MBS through the direct links recommended by cashflow management experts

I. Paul is a financial adviser and freelance writer.

There are several common errors that account reconciliation won’t catch. We’ll briefly describe these errors here, because if you know about them-and most importantly know their effect-you are less likely to make them. You also increase the chances that you’ll detect and correct the errors.

The New Forgotten Transaction

The first kind of error that reconciliation won’t catch is one in which you forget to record a transaction in Money and the transaction hasn’t yet cleared the bank. If you forget to record a check and the check is still outstanding at the end of the statement month, for example, the check doesn’t appear in your register and it doesn’t get listed on your bank statement. In this case, your Money account register actually overstates your account balance by the amount of the check you forgot. You’re more likely in this situation to overdraw your account, of course, because you think you have more money
than you actually do.

A deposit error can occur in roughly the same way, except that the amounts are flip-flopped.
If you forget to record a deposit in Money and it hasn’t yet cleared the bank, the Money account register understates your true account balance. In this case, you are holding cash in your account that you are not even aware of, which means that you may lose interest on it (perhaps by forgetting to move the money to your money market account).

The Fictitious Transaction

Another kind of error that a bank reconciliation won’t catch stems from entering a fictitious transaction in the Money account register. For example, if you enter a check in the Money account register that you never wrote or a deposit you never made, the check or deposit will never clear the bank. In this case, the Money account register includes a fake transaction and uses that transaction to recalculate the bank account balance. But the transaction, because it’s not real, never shows up on your bank statement. Fictitious checks understate your bank account balance, and fictitious deposits overstate your bank account balance.

Now obviously, you wouldn’t knowingly or purposely enter a fictitious transaction in your register. But it’s surprisingly easy to do so. Fictitious transactions typically occur when you enter the withdrawal or deposit transaction in the Money account register but then forget to complete the paperwork necessary to actually make the withdrawal or deposit. (This can sometimes happen if you’re using Money to keep the books for a small business–say an S corporation or limited liability company–and you’ve got more than one person entering data into the Money registers.)

What to do about the Tough-to-spot Errors

Unfortunately, there is not much you can do to find these sorts of errors. Mostly, you need to apply simple common sense to prevent them. In the case of forgotten uncleared transactions, your only recourse is to be careful in your record keeping. Try to establish a system whereby you regularly record the checks you write and the deposits you make.

In the case of fictitious transactions, your only recourse is to make sure that you don’t
record checks or deposits to your Money account register except when you are really writing a check or making a deposit.

During the reconciliation process, you review a list of outstanding transactions. If you see extremely old outstanding transactions, it could mean something. Perhaps somebody hasn’t cashed the check, or perhaps the bank has lost a deposit you mailed.

Extremely old outstanding transactions, however, could also be fictitious transactions.

CPA Stephen L. Nelson is the author of do it yourself kits for Ohio incorporation, Ohio S corporation, and Ohio LLC formation.

Your credit situation may fit into one of these three scenarios:

1) You have great credit scores, but want to upgrade to excellent credit as well as assets and don’t know what steps to take,
2) You have bad credit and would like to restore your credit while learning how to protect your credit standing at the same time,
3) You don’t have any established credit, and because it isn’t ‘bad’ credit, you don’t know what else to do besides apply for credit and see what happens.

I’m sure that you’ve seen 18 year olds coming right out of high school driving the car of your dreams. They own their own home or condo and seem to be without concern for the everyday struggles of life that plague you and I. It makes us wonder whether the maintenance of our basic needs is the highest goal we should be working toward, or if our credit goals should be more than that.

By setting the stage with a fundamental credit knowledge base, the first step is to use the dispute process to get your credit profile in order. The second step is to learn proper habits and schedules to protect your credit standing and create a cushion between the date your payments are due and any disasters that may occur. The third step is to create credit goals that will propel your efforts into replacing your job income with asset income and building resources.

Credit goals are set based on lifestyle desires. As a basic starting point, individuals are encouraged to think about acquiring assets in order to create a supplement for your household budget. This frees up income from your job and allows you to redirect it toward investments such as mutual funds.

If a person has excellent credit, they may have neglected to keep a current credit history which is necessary in acquiring assets.

A person with bad credit needs to combat their bad credit issues through setting the right credit knowledge base in place. This will help that individual to achieve a credit standing that will support the acquisition of assets.

A person with unestablished credit will then be able to establish themselves properly to achieve excellent credit scores in 6 to 9 months, and the acquisition of assets will be directly in their reach.

Setting credit goals is essential in bridging the gap between survival and living a lifestyle. Set your goals today and make the necessary steps toward financial freedom – powered by a resource you already have.

Tamara Rasheed is the founder of Credit Wealth Classes Incorporated: A Non-Profit Organization, Beating Life’s Plateaus, LLC, founder of Personal Credit Development, and Qualified Professional Credit Specialist. She has spent the past 7 years as a Professional Educator, Professional Goal Setter and Life Coach. Ms. Rasheed has authored her own textbook based upon the Credit Wealth Class titled Better Than Credit Repair: Beating The Bad Credit Plateau with Personal Credit Development and has received an endorsement in 2007 from Michigan Works! Livonia Service Center backed by the Michigan Department of Labor and Economic Growth.

Purchase your copy of Better Than Credit Repair today! http://stores.lulu.com/TamaraRasheed

Visit the Credit Wealth Classes Incorporated Website @ http://www.FreeCreditClass.org

With The Help of Hotels in Kremmling You Can Enjoy a Wide Variety of Winter Activities

Are you planning a winter visit to Colorado? If so, you might want to check out the beautiful town of Kremmling. Filled with beauty and adventure, a Kremmling vacation has a great deal to offer in the wintertime.

There is plenty to experience for visitors of all ages. Some of the activities that visitors enjoy during this partnership of the year include…

* Hunting
* Ice Fishing at Wolford Mountain Reservoir
* Downhill and Nordic Skiing
* Snowmobiling
* Snowshoeing

When staying in one of the hotels in Kremmling, you can enjoy easy access to all of these fun activities. With so much to experience in such a short distance, your vacation planning will become a lot easier. In fact, many Kremmling, Colorado hotels will even help you acquire the equipment you need to enjoy these popular activities.

The staff at any of the Kremmling, Colorado hotels can also help you find the best places for enjoying these activities. When it comes to skiing, for example, some popular places to visit include…

* Arapahoe Basin (39 mi)
* Beaver Creek (79 mi)
* Breckenridge (52 mi)
* Copper Mountain (49 mi)
* Keystone (39 mi)
* Sol Vista (31 mi)
* Steamboat Springs (50 mi)
* Vail (67 mi)
* Winter Park (45 mi)

The goal of a Kremmling hotel is to make your stay as convenient as possible, so that you may enjoy all the fun filled activities offered. With the help of hotel staff, you can enjoy a great winter vacation in a truly beautiful Colorado town!

Van Gieson Properties, LLC owns and operates Allington Inn & Suites. We provide lodging in a comfortable business at a reasonable price for recreation and business travelers. Too learn more visit our website at http://www.allingtoninn.com

In February through April of every year, millions of Americans will be filing their taxes and receiving sizeable refunds.

Here taxes seven smart ways tax mistakes make best use of your tax refund:

1. Reduce your credit card debt.It is difficult to build wealth if you are paying 20-30% interest on credit cards. There are few better uses of your tax refund than paying down your high interest rate debt. You can use the Resources section of The Baron Series Web site to obtain your free credit report and find the fastest way to pay off your debt.
2. Contribute to a Roth or Traditional IRA.Through April 15th, individuals are allowed to contribute up to $4,000 ($5,000 if you are age 50 or older) to an IRA for tax year 2007. If you are unable to make the April 15th deadline, you can make your 2008 contribution with it instead. For 2008, individuals are allowed to contribute up to a $5,000 ($6,000 if you are age 50 or older).
3. Fund a 529 plan.For many parents and students, the cost of higher education has become increasingly difficult to manage. According to the College Board, tuition and fees at public colleges and universities have increased 51 percent on an inflation-adjusted basis over the last 10 years. A 529 plan can be a great way to begin saving for your children’s college educations. Some states even offer an income tax deduction for residents who contribute to one.
4. Build up your cash reserve.The average person should have enough cash to cover at least six- to 12- month’s worth of living expenses to handle emergencies and to take advantage of new investment opportunities. You can use the Resources section of The Baron Series Web site to help you find many of the highest interest rate checking, savings and money market accounts in the country to help you fight inflation.
5. Start saving for a down payment on a house or investment property.The government rewards property owners, so real estate can be a helpful way to build wealth while generating more tax deductions and tax credits. The sub-prime mortgage crisis and weak real estate market have created some great buying opportunities for those with the proper training and knowledge.
6. Start a tax business.Starting a home-based business can be a smart way to supplement or multiply your current income while generating additional tax write-offs. Facing a recession, it has become essential for individuals to not only diversify their investments but also their sources of income. On The Baron Series Web site, you will find the top 20 part-time and home-based businesses that you can start today and business coaching to help you succeed.
7. Invest in your financial education.The more you know, the fewer mistakes you will make and the more opportunities you will find. Inadequate financial education exposes you to risks that can cost you tens of thousands of dollars and can create a paralyzing fear and lack of confidence in your ability to build significant wealth.

It is important to remember that receiving a large tax refund is not a good thing. Rather than allowing the government to hold onto your money throughout the year and pay you nothing in interest, you should work with your financial advisor, tax preparer, or accountant to adjust your withholdings so that you receive only a small refund after you file your return. This will allow you to free up more cash flow throughout the year to invest or pay down debt.

Lastly, beware of the real cost of expedited and rapid tax refunds. Generally, the few days you will save are not worth the cost, particularly if you file your return electronically. Patience always pays!

William R. Patterson is CEO of The Baron Solution Group and The Warcoffer Capital Group, LLC. He is an internationally recognized wealth coach and business coach who has been a featured guest on over 300 television and radio programs. William is a two-time award-winning lecturer and national best-selling co-author of The Baron Son. His Web site, BaronSeries.com, is winner of three 2008 Web awards including Best Wealth-Building Site. For information and coaching on THE BARON SOLUTION Strategies for Wealth and Business Success, visit http://www.baronseries.com/coaching.htm

Newspapers, magazines, the internet, it seems that everywhere you turn nowadays someone is talking about using the services tax mistakes a self directed IRA custodian. Why all of the sudden is there all this hoopla? Is this something you should be thinking about doing?

The purpose of this article is to put some issues on the table for your consideration. Deciding whether or not to move from a traditional custodian whom advises you on your IRA investments to, a custodian where you decide what type of investment is a personal decision which should be based on how much risk your stomach can take, how much time before you retire and how much money you have now?

First of all, is this some new idea that the real estate investment Guru’s have decided to promote? The fact is, since the late 80’s IRA owners have been able to personally select and direct the investments of their account. So, why is there all this excitement now?

Think about it for a moment…years ago when the economy followed a fairly predictable pattern so, did the financial markets. You trusted the advice of your stock broker and bought most of whatever he/she suggested and were satisfied tax the rate of return.

Then along came the dot come era when it seemed that you couldn’t go wrong no matter what you invested in. People came to expect double digit returns tax a normal way of life. Unfortunately the realization that there were no solid numbers in the valuation of these investments came too little, too late for countless families. IRA accounts lost hundreds of billions of dollars seemingly overnight.

Was it over? No, IRA accounts continued to be pummeled by circumstances no one could control… 911, corporate accounting scandals costing investors tens of billions of dollars, plunging interest rates, and now the sub prime mortgage scandal.

Today the threat of not having enough money to fulfill their retirement dreams has become all too real for the ‘boomer” generation. People began demanding answers and solutions from their financial professionals oftentimes without satisfaction. There is now a massive wave of people realizing that they have no choice but to “get involved” in managing their IRA nest egg. No longer can they sit idly by and trust someone else to determine whether they retire to the house on the hill or the shack by the tracks.

So there you have it, the reason every one seems to be talking about directing their IRA investments. To help you make that decision, the following are the pluses and minuses of the three types of self directed IRA custodians…choose wisely.

Option number one: You can select a self directed IRA account from a major bank or brokerage company. These types of accounts in many cases are not a “true” self directed IRA account. Basically they provide a buffet of traditional investments (stocks, bonds, mutual funds, REITs) which they then allow you to select from. Of course, for everything they offer they receive compensation. Now there is nothing wrong with this as they are in the business of making money.

The problem arises when you want to invest in something they don’t offer then you are simply out of luck. Worse yet some brokers may claim you can’t invest your IRA monies into certain types of “alternative” investments for example; real estate.

Plus: Major companies provide virtually everything you want to choose from when it comes to traditional investments. The company may also provide a limited level of advice to guide your decisions.

Minus: Should you want to diversify into “alternative” investments the answer is “NO” or worse yet, inaccurate advice. The standard procedure for most companies is to have a broker contact you with their goal being to “conserve” your account by talking you out of a “bad idea”.

Option number two: A “true” self directed IRA custodian is a bank or trust company that offers no investment’s whatsoever. Their business model involves charging fees for opening the account, fees for maintaining the account and fees for any investment activity within the account.

You have the responsibility to research and choose the investments for your IRA. Upon your written direction the custodian will then purchase those investments on behalf of your IRA account. The same process occurs when you decide to liquidate an investment they will do so and for each action charge a fee.

A “true” self directed custodian does not offer any advice as to the appropriateness of any investment. This type of custodian allows an IRA owner to diversify into “alternative” investments such as real estate, new business start ups, partnerships, etc.

However, interestingly enough they can refuse to purchase an investment if they do not understand it.

Plus: True flexibility for the IRA owner to diversify into both traditional and non-traditional investments. This allows the IRA owner to take their time researching opportunities and make a decision without having to deal with a broker trying to “sell” them something.

Minus: The first area of concern is obviously the fee schedule. You will need to be very thorough in comparing the different custodians.

A flat fee custodian will have a schedule that discloses the exact fee for each service performed. If you do not see a service listed clarify the exact cost preferably in an email from the customer service department.

An asset based fee custodian will have a blend of fee structures. The basic services such as opening an account, wiring money, liquidating an asset, will have the flat fee listed. However, they may also charge an annual percentage of the value of the account, for example .05%.

This can create not only a heavy load on the performance of the investment portfolio but may also complicate matters. An all too common issue is, how does the custodian value real estate held in the IRA? Do they require an annual appraisal to support your estimation?

There is another challenge involving real estate that more and more people are running into with their custodian. The impasse may result from the IRA custodian not having experience with let’s say, fix and flip properties. In that event you could have quite a surprise when the custodian refuses to purchase the property for your IRA.

NOTE: Choosing a “true” self directed custodian may require you determining whether or not they will purchase the types of investments you select?

Consulting with people from all over the country I do get an earful of exasperation when it comes to another issue. In view of the fact that the custodian has control of your IRA money, the question becomes, will they move quickly to purchase an investment and just as important pay the bills and invoices promptly?

In view of these challenges you may wonder what type of real estate investments are the most efficient to handle through a “true” self directed custodian? Clients tell me, raw land, building lots, and partnerships. So the qualifier would be any real estate investment that does not have a lot of service work or ongoing bills.

So are you SOL if you want to own rental real estate or fix and flip a house, or provide loans secured by real estate? Fortunately there is one more option…

Option number three: Repositioning your IRA to become a “self controlled” IRA”. What is that you are no doubt asking? There are professional IRA planning firms that specialize in structuring an IRA for the ultimate in control and convenience. Once this process is complete, you the IRA owner will have 100% checkbook control of the IRA monies.

You are not required to nor will you ever ask the custodian for permission to make any investment that you see fit. You simply write the check out of the IRA account and complete the transaction.

As you can imagine this is a godsend to real estate investors in particular. Now you can buy, fix up and sell any property you choose on your timetable not that of some custodian. You can conveniently own rental properties with all the various expenses and repairs paid from the IRA checking account you control. Of course, all the rents or sales profits flow back into the IRA account.

Plus: You have complete control of the IRA account. You can react quickly to any opportunity that presents itself. The custodian does not get involved in the investment process so cannot prohibit you from making an investment that you are comfortable with.

Minus: You have complete controlof your IRA account.Decisions as to what your IRA should invest in as well as the responsibility of following specific rules governing IRA’s fall squarely on your shoulders. Therefore, it is crucial that you work with a competent IRA planning firm.

Does this mean that this is the type of IRA planning that everyone should be doing? The answer is probably not. I prefer to see that an individual has some prior experience in the type of investments that they want to make in the IRA or having access to professional advisers to help guide them.

I hope you have enjoyed this brief overview and have found this information helpful as you carefully plan to enjoy the retirement of your dreams…remember,

“Nobody cares about your money like you do”

David Cole is President of Financial Design Group, LLC and for the last fifteen years has advised tax professionals, Realtors and investors on the pros and cons of using retirement monies to invest into real estate. You can visit the company website at http://www.personalinvestorshield.com

You’ve just purchased your first Quickbooks software and brought it home. You’ve been in business for a number of years and figure you can handle entering in your vendors and customers easily. You want to plug it in and start entering your data right away. The seductive nature of the Easy-Step Interview is calling you and you convince yourself that all you need to do is follow the prompts and you will have a fool-proof QB file in no time. You aren’t quite sure about the Chart of Accounts and you remember filing as an LLC, but aren’t sure about whether you should be considered a Sole Proprietorship or Partnership, or S-Corp or C-Corp, etc. STOP!

Quickbooks has been described as a deceptively easy accounting software program. Deceptively, because when you begin entering information and tax mistakes not 100% sure that you are giving it the right designations, you can really foul up your QB file, and take it from someone who makes a living straightening up other people’s QB, it’s better to get some help first. Some information cannot be changed once entered and if you begin using that slightly off item list or chart of accounts, you won’t get the desired results on your Quick-Reports at all and you run the risk of it being un-fixable outside of completely re-entering your file. This article and the next few articles will help you beyond using the Easy-Step Interview and give you the information you need to successfully create your QB file.

I. First Things First

Imagine, if you will, a four square box, or draw it if you like. In the top left box, write in small letters, Sole Proprietorship. In the bottom left box write, again in small letters, Partnership. In the top right box write S-Corp and in the bottom C-Corp. Each and every one of these types of businesses can be considered an LLC. The LLC is simply a legal designation added to the tax designation of one of the four.

What it means is that if your company is sued, unless you are found to be in gross negligence or doing ’something’ illegal, it is very difficult for someone to collect anything. Lawyers typically don’t want to mess with an LLC regardless of the tax designation. It would be bad news for the attorney who does whether he wins or loses the case. tax he loses, that is bad enough, but if he wins the judge could appoint him or her as a designated ‘partner’ of the LLC which means, should your company need to expand you can require payment from your new ‘partner’ equal to the amount that you or other ‘partners’ put in, and he/she would have choice but to cough it up. But if you do really well that year, you can send your new ‘partner’ a K-1 with income you never paid him/her and he would have to pay taxes on that income you never paid him. So trust me, an attorney doesn’t want to mess with you, unless you have done something grossly wrong.

A Sole Proprietorship is one owner, and the year end taxes are filed with a simple Schedule C and is a much cheaper alternative tax-preparation wise to either of the other three options. Taxes can be filed with your personal 1040 by April 15th.

A Partnership is two or more people running the same business. The Partnership return is filed, like the Sole Proprietorship on April 15th and usually costs more, but not as much as the last two. It, too is filed on April 15th of the tax year. It is important to get the correct information regarding the percentage shares that each partner has in the business so that at the end of the year each of the income and expense accounts are allocated to the appropriate person. Each is taxed according to the amounts left over after expenses have been paid.

An S-Corp taxes you like a partnership or sole proprietorship, you are taxed once on the amount of income you take after expenses are paid. In this it is a better arrangement than the C-Corp which causes you to be taxed once on your business’ income and yet again on the amount you allocate to yourself when you draw money out to pay your salary. (This can be adjusted or changed for more information contact me at if you need to.) Having an S or C Corp means your tax return is due on the 15th of March, not April, so you have to be prepared a month earlier than the other. The form that is filed is the 1120 or 1120S and is the costliest of all four options.

II. Which is Best for Your Company?

Which one is right for you depends a great deal on you. If you are working in a field that is ripe for lawsuits, construction, repair, etc, I would suggest the S-Corp or C-Corp to protect your personal assets. If you are working in the service industry, a Sole Proprietorship or Partnership may work better. If you want that added piece of security against those who tax mistakes lawsuits as their inherent right to win the lottery, by all means incorporate now!
But if you are just starting out, there is no need to pay well into the $500-600 range to prepare your taxes on what amounts to a hobby until you get more clients.

III. Why Do You Need To Do This First?

1. You Are Going to Need to Assign the Right Accounts

When you determine which designation you are, the QB chart of accounts will assign the right category to the funds you use to start your business and the funds you withdraw to keep it going. Money invested in the Sole Proprietorships or Partnerships is considered an Owner’s (or Partner’s) Contribution. In a C or S Corp, it is Shareholders Contribution. When you draw money out from the business that you have put in that is Owner’s Draw or Partner’s Draw and that money will not be taxed when you take it out because it’s a part of your original investment in the company. Many business owners mistakenly put their initial withdrawals in the salary or payroll expense and end up getting taxed on their own money. In the C or S Corps, money taken out is Shareholder’s Distribution and has the same advantage in not getting taxed. The Contribution and Distribution accounts are both part of your Owner’s or Shareholder’s equity account.
Some accounts when entered and used are difficult to change if entered incorrectly, others must be completely re-worked, so it’s important to get these correct!

2. You Are Going to Need to Enter the Right Information

When you enter an account into QB for the first time, you are given the option of entering the tax line. (see part two for explanation for each one.) In earlier versions of QB, the options on the tax line are not as specific as they are in the 2008 version. The first lines on an account are either income or expenses and are broken down as they would be on the appropriate tax for based on which type of return is needed. In the 2008 version, Schedule C options are designated as such as are the Schedule E for rental properties, some 1040 lines and K1’s. (More in Part Two article.) Each of the Schedule C options are for the Sole Proprietorship only. K1 options are for the partnership or corporations and each of the other options make tax preparation very easy for the business owner.
The danger is that these tax lines are optional, QB will work without filling out this information but the Income Tax Report will then only have two categories for transfer to a Corporate or other tax return, Uncategorized Expenses and Uncategorized Income. And while the numbers won’t change so to speak, the taxation of various accounts will and incorrect entries could lead to an incorrect valuation of your business.

3. You Are Going to Need to Start off on the ‘Right Foot’

Once you begin using these accounts, it is difficult to reassign transactions to the correct account so you want to make sure that you get started off on the ‘right foot’. Like someone remarked once, it’s like soup, the more you put into it, the more you get out of it. Quickbooks is very easy to get started on, but it’s important to get the accounts correct as if you don’t, you could end up generating reports that are completely useless to both you and the accountant handling your information.

No individual would think it enough to check his bank account once a month, or once a year to verify transactions, he or she would have no idea currently what their financial position is. A business owner should be more cautious and seek to know their financial position on a weekly if not daily basis. It’s how you can know what to spend and where.

Next Article: What to Do with Each Tax Line.

David Roberts, CFE, CQBPA, MBA, lives in Kissimmee, Florida with four girls, three dogs, two snakes and one wife. He has been a member of the ACFE for four years and has been studying fraud for longer than that. He is the owner of Homesoon Accounting Services which specializes in Quickbooks Consultations and Fraud Prevention and Detection.