Tax Advice for Real Estate Investors and Entrepreneurs #9

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Business and BBQ

Business


Listeners are in for a treat on this episode of the Business and Barbecue podcast as Tim talks with his friend Michael Plaks, the “black belt” in real estate taxation. Michael is an accountant who has been working exclusively with real estate investors for 20+ years, so he has seen it all and can talk with investors in their own vernacular. Michael and his team offer their clients an annual advisory program which includes annual tax preparation, bookkeeping, quarterly advisory meetings, and strategies in addition to assistance in fighting Uncle Sam if the need arises.Over the years, Michael has developed several prevailing opinions in the real estate investing realm:1.      People confuse income and wealth. An investor owns property long-term, while everyone else involved in real estate is simply working a job. The key question to ask to find out which boat you are in is: “What happens if I stop what I am doing in 3 months?” If your income stream will continue, you are investor gaining wealth. If your income stream would cease, you have a job.2.      People shouldn’t buy real estate for the tax benefits. You should be primarily concerned with cash flow and appreciation, followed by tax benefits, not the other way around. There are really only 3 ways to reap tax benefits from real estate, but even those are not guaranteed. Your ultimate strategy should be to purchase a property, do a 1031 exchange for a bigger property, and so on and so forth until you have drastically increased your wealth.3.      People should focus first on starting something, and then how to structure it. Michael says that the best idea is to consult with an attorney about what you should do, but from the tax perspective it is best to start earning money before worrying about the structure. He provides listeners with his 3-step process for getting started:a.      Set up a separate personal checking account for your business and use it for all business transactionsb.      Stop using cash – pay electronically or with a checkc.      Use apps to track your expenses and mileageMichael and Tim talk through when it is best for a sole proprietor to make his business official and conclude by talking about accurate bookkeeping leading to having a better handle on your business’ financial position.Links:Audible trial promotional link: https://audibletrial.com/th HubSpot promotional link: https://www.hubspot.com/th Connect with Michael: http://reitaxfirm.com/(713) 721-3321Connect with Tim:https://timherriage.com/https://www.linkedin.com/in/herriagehttps://twitter.com/timherriage https://www.facebook.com/timherriage/ https://www.facebook.com/groups/timherriage/?source_id=734272966682056https://www.instagram.com/timherriage/https://www.youtube.com/c/TimHerriageWith business questions: ask@timherriage.comWith BBQ questions: bbq@timherriage.com