Tax as a Cost of Doing Business - Posted by Frank Chin
Posted by Frank Chin on July 17, 2003 at 10:06:02:
You have to think along the lines of an entreprenuer as opposed thinking as a wage slave.
An entrepreneur establishes a target “net after taxes for himself”, and goes about building the business up to the level required. For intance, if he targets a net of 100K a year, then target 150K a year before taxes. If you plan to net 25K per flip or rehab, then plan to do six of them.
Just think of taxes as a necessary cost, like RE commissions, costs of contractors, etc. that you have to shell out.
Thinking as a businessman, you’ll set up a system for others to do as much of the work as possible. In this way, doing six rehabs shouldn’t be much more work than doing four rehabs.
One rehabber, Ron(MD) who posts here mentioned that he wanted to ramp up his rehabs from 15 a year to 25 a year by hiring an assistant, and using several contracting crews to do the work.
I’m a landlord and business owner. My tenants think that I do nothing all day, pocket the rent, and it scks. My workers think I sit around all day, take all the money, pay them very little, and it scks.
Now that’s partly true. My job as an entrepreneur is to do deals, run businesses, and leave the work to others. So why shouldn’t I pay for the privilege of sitting around all day WIN at the game of making money. Pay taxes?? That’s part of the game.
Thinking as an entrepreneur, I say to myself “Thank God I’m making all this money and be able to pay all these taxes, and if I need some more money, I just put my thinking cap on to make a few dollars more.”
Keep in mind that after you reach a certain level, making the money is just a game, and the dollars you make are just points in keeping score. Taxes are just another nuisance for your CPA to handle.
Hope this helps.