Transcripts

Diane Kennedy, CPA:
The biggest loophole is simply how you make your money. The fact is, is you can start a small business or invest in real estate or even better do both, you can now take advantage of a lot of the loopholes the rich do.

CPA, Diane Kennedy, author of the book, Loopholes Of The Rich…

A loophole is a government incentive to promote public policy. And business owners employ people, invest in capital expenditures, they stimulate the economy and that's why there's the loopholes. But having a business could be simply just cleaning out your garage tonight and selling it all on Ebay and now you have a small Ebay business.

Of course it has to be a legitimate business.

Basically it boils down to you're in a business with someday you're going to make money. Meanwhile though you could have a loss in that business that can go to off set your other income. And that loss can come about cause now you have a home office. You're paying your child instead of an allowance your child is actually working in your business, helping you with shipping or doing emails, any of those kinds of things.

When you form your business, Diane says, you want to form it as a corporation or a partnership or a limited liability company, not a sole proprietorship. Because if you're a sole proprietor…

You're going to pay more tax plus you have a one in twelve chance of being audited by the IRS. You form one of the other business structures you've got a much lower chance of being audited.

You can link to Diane's website from ours; somethingyoushouldknow.net I'm Mike Carruthers and that's Something You Should Know.