Tom's Blog

It's Monday morning and I'm in the elevator on my way up to my office from the parking garage. Another person gets on the elevator at the same time. Trying to be polite and friendly, I ask him how he is doing. His response is, "Ugh, it's Monday."

Is this you? Do you dread Monday's? Do you live for the weekend? If so, I truly feel sorry for you. Wouldn't you rather get up on Monday morning and be able to say to yourself, "Hooray, another Monday and another week of doing what I love to do?"

This is our real mission at ProVision. To teach people how they can change an "Ugh, it's Monday" into a "Hooray, it's Monday!" The secret? Doing during the week what you love to do. And here's another secret. If you do what you love to do, you will make more money!!!

So how do you figure out what you love to do and how to make money from it? That's the secret we share with all of our Strategic Wealth Coaching clients. We show them how to discover what type of investments they would enjoy doing and then work with them to get them doing it successfully. Whether it's a business, real estate or the stock market, there is a type of investing that is right for you.

So hang in there, all of you "Ugh, it's Monday"'s. There's hope for you. I'll write more on this subject in articles that can be found in our Wealth Strategy U section of our website at http://www.ProVisionWealth.com. The articles are all free and full of useful ideas to help you become wealthy and happy.

Warmest regards,

Tom

People frequently ask what is the number one tax question I get? Inevitably, whenever I speak at a seminar or to any group, the requested topic is "How do I structure my business and/or investments?" Not only is this the most common question, but it is also the most important for any business owner or investor. Why? Because it is the foundation of any good tax strategy.

The other evening, I was speaking at an AZREIA seminar for people who fix and flip real estate. AZREIA is a terrific organization that provides a wealth of education for Arizona real estate investors. Go to http://www.azreia.org. I began the presentation by asking what topics they would like to discuss. As usual, the first response was about how to structure their investments.

So, here is the answer. IT DEPENDS. I know it sounds like a bit of a cop out, but it's true. Every investor has different objectives and needs an entity structure that is specific to their needs and goals. Of course, there are three primary types of tax entities - Sole Proprietorships (which really are not entities at all and should only be used in extremely limited situations due to the usually negative tax consequences), Partnerships (both general and limited), and corporations (both S corporations and C corporations). As I explained at AZREIA, there is no such thing as an LLC, or limited liability company, in the Internal Revenue Code. Instead, taxpayers are allowed to elect the tax treatment of an LLC. (I'm constantly amazed at how many tax professionals and attorneys do not understand this rule.)

My advice? See your Tax Coach to determine the right entities for you based on your personal income tax strategy. No Tax Coach? Call us at 480.467.4400 or contact us at http://www.ProVisionWealth.com and we will get you to the right tax professional.

Warmest regards,

Tom

In our cd, "What Your Financial Planner Will Never Tell You," my partner, Ann Mathis, and I discuss the idea of the velocity of money. The example we use is real estate. The natural question that I am frequently asked is whether you can create velocity in business.

The answer is a resounding YES!!! In fact, it is much easier to create velocity in a business than in real estate and money can move much quicker. Let me give you the example I shared with the folks at Buck Rizvi's Supplement Millions seminar last month.

Suppose you use your money to buy or create a business. You likely will leverage your investment either through a loan from the bank or family members or with a carryback from the seller of the business. Let's say that you are successful building that business in the first couple of years and now you have some good cash flow from it. What do you do with your cash flow?

This is where velocity comes into play for the business owner. You can either let the money sit in the bank, spend the money on a fancy sports car, or reinvest the money. One way to create velocity is to reinvest the money in the business by opening another location. Another way is to reinvest the money into the business either to build the business or to create additional intellectual property. Any of these investments can create velocity in your business.

So don't start spending all of the money you earn from the business once you start creating good cash flow. Reinvest it either in the business, in real estate or in paper assets. By doing so, you can create amazing velocity and seriously add to your wealth.

By the way, there are also tax benefits to reinvesting your money in your business. For more about business tax benefits, visit http://www.ProVisionWealth/wealthu

Warmest regards,

Tom

Last night we held our first coaching call with our School of Tax Strategy participants. Thanks to everyone who joined in. There were many excellent questions and terrific discussion regarding Entity Fundamentals, this month's topic.

Gerald from Phoenix followed up with a question that I want to address:

Q: Thank You for answering all the questions this evening, I have learned plenty. I have one question that came at the end of the session. can I have my limited family partnership be a member of an LLC? I just did seven of these and I'm planning to fund them early next week. advise me if I'm making a mistake.

A: Yes, your family limited partnership, or FLP, can be a member of your LLC, so long as you have not elected to tax the LLC as an S corporation. There are no real restrictions in the Internal Revenue Code for who can be a member of a partnership (remember that we discussed that an LLC with multiple members is automatically a partnership for tax purposes if we don't elect to tax it as a corporation). Similarly, there are no real restrictions on ownership of a single-member LLC (as we discussed - treated as a disregarded, or invisible, entity by the IRS) or of a regular, C corporation. Only S corporations have restrictions on ownership.

Let me also follow up a bit on the concept of "nexus." As we discussed, nexus the amount of connection you must have with a state in order for the state to have the right to tax you. If your entity was formed in a state or has commercial domicile in the state, the state automatically has jurisdiction and can require you to file an income tax return. However, as I mentioned, there have been several states over the past few years that have taken the position that if you direct meaningful economic activity (e.g., advertising) into the state, then you have sufficient connection or nexus with the state to allow them to impose an income tax.

The controversy stems from a Supreme Court case by the name of Quill v. North Dakota. In Quill, the Court ruled that at least for sales tax purposes, a company must have some physical presence in order to have nexus and be subject to the taxing jurisdiction of the state. The Court specifically mentioned that it was not deciding the question of nexus for other tax purposes (read income tax). Some state Supreme Courts have interpreted this to mean that income tax does not require physical presence. Personally, I believe this is patently incorrect and not only goes contrary to Quill, but also goes contrary to Quill's predecessor, National Bellas Hess, which was not overuled by Quill, but rather confirmed by Quill.

In the meantime, be aware that states are becoming rather aggressive. If you are doing business in multiple states, I STRONGLY recommend that you work with a multi-state tax expert to help you decide in which states you need to file.

Remember that next month we will be talking about "Building Your Perfect Foundation." In this topic, we talk more about entities and how you can use them specifically in your Tax Strategy. Don't forget to do your homework and keep those questions coming.

Warmest regards,

Tom

I have been coaching business owners for many, many years. One of the first items on the agenda for any coaching client is to create a clear, comprehensive business strategy. There are five areas of a business that require a clear strategy: Marketing, Sales, Production, Fulfillment, and Administration.

Most business owners have a pretty clear idea on their Production and Fulfillment strategies. However, business does not work like that famous line from the movie, Field of Dreams, "If you build it, they will come." It's not enough to have a terrific product or service. I know. ProVision has amazing services, but unless we get the word out, we cannot perform these services for even a fraction of the people who need them. (And virtually no business owner has even given a thought to a strategy for the administrative side of the business. More on that in a later entry.)

All businesses need a clear marketing and sales strategy. There are 4 key team members you need to leverage your marketing and sales. First is someone to help you with your branding. Second is a marketing professional. Third is a public relations professional. And fourth is a sales professional.

A little while back I met a terrific PR professional. Her name is Jill Lublin. She is a published author and PR coach. You can find her at http://www.jilllublin.com. In fact, she is doing a free teleseminar today that I would encourage all to join. You can sign up at http://www.promisingpromotion.com/teleconference.html.

Taking time to learn about this powerful area of marketing can have a huge impact on your business. Anyway, I wanted to pass this along to you as I have found most PR professionals to be extremely expensive for the results. Jill's focus is much more in line with ProVision's as she teaches you how to do PR and she is very affordable.

Warmest regards,

Tom

It's October 16th, the day after the final due date for 2006 tax returns. Yesterday, the ProVision office was scurrying about getting many tax returns to the IRS for our clients who waited until the last minute to give us their tax return information.

So I started wondering - Why do so many people wait until the last minute to get their tax return information to their preparers? We experience the same frantic rush twice a year, in April and in October. How could we reduce the stress we feel each year when we scramble to get our tax return info together for our CPA's?

The key is DOCUMENTATION. The problem is that most people do not have a good system for maintaining the documentation for their tax returns. It's bad enough that we have to deal with taxes, but add in bookkeeping and logs and receipts and it's no wonder so many people put off doing their taxes.

So, here are a few hints to simple documentation and making life easier for tax time. First, HIRE A BOOKKEEPER!!! This is some of the best leverage available. If you need a referral, please feel free to call our office at 866.467.5809.

Second, buy a bunch of manilla folders. Then, go to http://www.irs.gov and pull a copy of Schedule C from their 1040 forms file. At the top of each folder, write one of the expense categories from the Schedule C. Then, as you have receipts for deductible items, put them in the appropriate manilla folder. Then, when tax time comes, simple add up all of the receipts in each category and give the totals to your CPA (they don't really need the receipts and it will save you considerable professional fees if you do the addition yourself).

Third, set a date when you will get all of your tax information to your CPA. Even if you want to extend your tax return, get your information in early and then simply as your CPA to file an extension.

Fourth, meet with your CPA/Tax Coach in November to figure out what you might owe in April and what might need to be done to ensure a lower tax bill the following year. Your Tax Coach can give you additional ideas for documentation.

Don't let tax return time stress you out. Get your documentation done early and get it to your Tax Coach early so you can get your return done in plenty of time for the deadlines.

Warmest regards,

Tom

Scott, one of our School of Tax Strategy participants, recently asked me the following question: Tom, in your Tax Strategy CD/DVD example of real estate investments, you used sale prices of $200,000. I live in S. Calif. This wealth building example doesn't quite come close to home prices here. In fact, I can't really think of anywhere. Can you please speak to this. Thanks.

Let's begin by examining some of the principles of real estate investing. Robert Kiyosaki has pointed out to me several times in our discussions about real estate that there are four ways to make money for a real estate investor.

First, there is the appreciation from the real estate. This is more available than ever right now with the high number of foreclosures. Second are the tax benefits from real estate. For more about this, please visit our tax section of Wealth Strategy U at http://ProVisionWealth.com/wealthu. Third, there is the principal paydown on the loan. This is an area that is frequently ignored by the speculators who like to use negative amortization loans. And fourth, there is the cash flow from the real estate.

This last one is almost always ignored by the speculators who have been promoting real estate that only makes money if it goes up in value. These people are the ones currently losing their properties to foreclosure. They forgot these 4 basic Rich Dad principles for real estate investing. But, where do you find properties that positively cash flow? Essentially, this is at the heart of Scott's question. It's not a matter of finding a $200,000 property, but rather a matter of finding a property that cash flows.

There are many parts of the country where you can find a single family home that produces positive cash flow. Many areas in the midwest, the south and the rust belt have properties that positively cash flow. Recently, though, I have been buying properties in Utah. My team of real estate finders, Spectrum Investment Group at http://spectruminvestmentsolutions.com/ has been terrific at finding homes that can be purchased below value and that positively cash flow.

Check out this wonderful resource. These guys can find the properties you are looking for. They have been finding them for me for years. You can call them at 800.914.5040.

Warmest regards,

Tom

The answer, of course, is a resounding YES! Everyone can improve their sales. The question is not whether, but how? There are many books providing a vast array of techniques for improving sales. But my experience is that improving sales has much more to do with our mindset than it has to do with technique.

You may be wondering why a CPA is talking about sales. Believe it or not, even CPA's need to learn how to sell. I started ProVision out of a home office 12 years ago. I had two clients when I started. The only way you go from two clients to thousands of clients is to learn how to sell. I quickly learned that while I needed some good sales techniques, what I really needed was a change in mindset about sales.

For most of us, sales is a bad word. The very image conjures up sleazy used-car salesmen. Or we think of that pushy neighbor who tried to sell us life insurance. Or we may simply have a tremendous fear of rejection. Or, we may have been told by our parents that it is improper or impolite to talk about money. All of these thoughts amount to a lot of head trash.

So, what to do about that head trash? We need to reprogram ourselves if we are going to be successful in business. Because the number one skill of any entrepreneur is SALES!

The person who does the best job at reprogramming people about sales that I know is my good friend and client, Blair Singer. Many of you know Blair because of his close affiliation with Rich Dad. Blair has a 2-day seminar coming up in November http://www.salesdogs.com/authentic/provision.html that I have attended (and spoken at) several times. It is an excellent opportunity for any of our readers to learn how to improve their mindset about sales.

On Monday, October 22nd, Blair and I are giving a free teleseminar that is a preview of this excellent seminar. You can register at http://www.provisionwealth.com/seminars/Details.asp?Seminar_ID=8
Join Blair and me for an excellent discussion about improving your personal sales abilities and those of your sales team.

Warmest regards,

Tom

What do you do when you have an emergency in your business? How do your people react? Will they pull together or fall apart? Will they support the business or do they care more about themselves? These questions were all answered at ProVision this year in a most positive manner.

At 5:00p.m. on February 1st of this year, my partner who was running our Irvine office and all of the employees of that office decided to leave the firm. We were caught totally unawares by this action. Of course, we had to move quickly. We needed to assure our clients that we could take care of them from our Arizona office.

Since most of our clients are not local, taking care of the Irvine clients from Arizona did not really present a difficult challenge. What did present a challenge was introducing the clients to their new CPA and tax coach and reassuring them that nothing would be lost in the transition. To complicate matters, we were in the middle of tax season, our busiest time of the year.

I was curious as to how our professionals and staff would react when I informed them of the previous evening's activity in Irvine. We would be asking them to call our clients and to take on additional responsibility in the middle of busy season.

To my great delight, they responded with enthusiasm to take on this challenge. They were totally willing to work the extra hours and give the extra effort to make sure our Irvine clients were well taken care of. This really shouldn't have surprised me at all. We have a terrific staff and they care so much about our clients. Still, as a business owner and creator of ProVision, I was moved by their care for the business and for our clients.

My Arizona partners and I decided we needed to do something for our employees to reward them for their efforts. We told them we would set aside the profits from the Irvine clients for the following few months and use it for a team activity. Then, we let them choose the activity. There was enough money to take everyone on a cruise, including some spending money for them. Last weekend, we took the cruise. Look for my blog tomorrow to learn about the cruise and its impact on our team.

Warmest regards,

Tom

Yesterday, I told you about how our team at ProVision pulled together when my Irvine partner decided to leave the firm. Our team pulled together so well, that we decided to send everyone on a cruise. That cruise happened last weekend. Today, I want to tell you about the cruise and the effect on our team.

It wasn't a big cruise; just a short, 3-day cruise from Los Angeles to Mexico and back. All but a few of our staff were able to join us on the cruise. Some brought their spouses, but most did not. I wondered how the team would react to spending 3 days together on a boat. This proved to be somewhat of a litmus test for our team and how well they would get along.

The result was truly amazing. During the three days, the group spent almost all of its time together. Everyone spent a little time on their own, I'm sure, but for the most part they spent time with each other. Whether it was at a show, at Bingo or in the casino, they wanted to be with each other. Even at port, people stayed together and went into town together in groups of 4-10 people.

While we were rarely all together at the same time (with the exception of dinner and one specific team building event), the groups formed and changed and everyone was included. In three days, I never heard a single complaint from anyone about anybody else. There were no harsh words and many kind words. I saw a lot of caring and concern for each other and a lot of comraderie.

What I didn't expect was how good this would be for the team. I had heard that the producers of the hit show, Friends, had sent the actors all to Las Vegas before they began filming the first show in order to get them to know each other and be able to work together. I didn't realize how successful it could be for a group of business associates.

This wasn't the typical gathering of employees where everyone is polite and barely wants to speak to each other. It was the complete opposite. Everyone made a significant effort to make sure all were included and all were having a good time. A lot of friendships were made or solidified on this trip.

I have been asked by some of my co-workers since the cruise if I would go on another cruise. To be honest, the cruise itself was nothing special. But the people were special and I would go anywhere with any or all of them. They were great and I feel it a great privilege to be part of this ProVision team.

Thank you again, ProVision team members, for all you do for the business, for our clients, for each other and for me. I have never before worked with a group of people like this. Thank You! Thank You! Thank You!

I hope you can generate the spirit in your business that we have here at ProVision. It makes life so much more enjoyable when you have a great team.

Warmest regards,

Tom

One of the questions I get a lot from seminar participants and prospective clients is when they should get their entities set up and in proper order? Should they do it prior to beginning their business/investment activities? Should they simply form a limited liability company (LLC) and then wait until they are in business for awhile before getting with a tax advisor? Or, should they operate as a sole proprietor (i.e., no entity) until they are profitable?

These are good questions not to be ignored. As you would expect, my preference is to get your entities set up properly prior to starting your business. I can think of three good reasons for this.

First, by setting up your entity foundation prior to beginning business, you can be sure that you are protecting yourself and your business right from the get go. A lot of potential liability occurs during the start up phase of a business, as many people are unfamiliar with laws and easily make mistakes.

Second, setting up your tax structure early on allows you to maximize your tax deductions. There are several elections that you have to make on your first tax return for the business. It's best if you are in the entity that is best for you when you make these elections.

Third, you have a lot of expenses during the evaluation and start up phase that you would eventually like to deduct. Setting the business entity up correctly from the start will allow you to track all of those expenses and make the necessary elections to eventually deduct them.

For certain types of entities, e.g., S corporations and LLC's taxed as corporations, the election to be treated as that type of company needs to be made early on in an entity's existence. Call this a fourth, or "bonus" reason for setting up your structure prior to beginning business.

The good news is that even for those of you who have not set up your business structure to the best benefit, you can make changes to it and obtain the tax and asset protection benefits for the future. In some cases, you can even make retroactive elections. The IRS has several published procedures for late elections that your tax coach and discuss with you.

In any case, don't wait any longer. The sooner you act and create your perfect foundation for you business and investments, the sooner you can take advantage of all of the tax benefits that are available for the prudent and informed business owner and investor.

Stay tuned for more on entity structures in upcoming blogs.

Warmest regards,

Tom

Yesterday I had the opportunity to volunteer at Deseret Industries in Mesa, Arizona. Deseret Industries, or DI as it is frequently called, is similar to Goodwill Industries and is a despository for used clothing, furniture, appliances and other household goods. All of the employees at DI are disadvantaged and most are handicapped. One of the missions of DI is to provide gainful employment for difficult to employ people.

My assignment was to work with Scott loading the compacting bin. Scott is a full-time employee who is simply down on his luck, recently divorced and trying to get back on his feet. He is taking classes on the Internet for a degree in Business Management. He probably should be in sales, as he is a very warm and genuine person who loves to communicate.

Our job was to sort clothes. Jeans and men's clothing (both very popular to store customers) were set aside. The remainder of the clothes were tossed into a bin that compacted them into large rectangles (similar, I suppose, to baling hay). The compacted clothes are then sent to needy people throughout the world. All in all, a wonderful organization that serves the community and the world in many ways.

While Scott and I were talking, he asked me whether I thought everyone has the potential to be successful. I answered with a very quick and very clear "YES." So long as they are motivated, I believe that everyone can be successful.

When I speak to a prospect for our Strategic Wealth Coaching program, the one question I always have to get a clear answer to is the extent of the person's motivation to become wealthy. I sincerely believe that ANYONE, regardless of resources, can become wealthy applying the principles of leverage, velocity and tax planning. The three keys to wealth are KNOWLEDGE, WISDOM and PROTECTION. You have to learn how to become wealthy, learn how to apply your knowledge (i.e., wisdom) and learn how to protect the wealth you accumulate.

I can also guarantee that anyone without a clear and firm commitment to becoming wealthy WILL NEVER BECOME WEALTHY. They may come into money, either through inheritance, gambling or otherwise, but they will never be able to retain the money and build it into lasting wealth.

My money is on Scott and others like him who are dedicated to their personal success and are willing to put in the time and effort to become financially free. Just imagine Scott, who is single, has three children from his previous marriage to support, is working full time and is taking classes on line. As long as he stays the course, Scott will find the success he is seeking. And so will you.

If you want help with your financial knowledge, wisdom and protection, contact us at cs@ProVisionWealth.com or visit us at http://ProVisionWealth.com.

Warmest regards,

Tom