One of our current School of Tax Strategy students recently sent this note to me:

"I need to start my legitimate business to be able to write off my leisure (golf, travel). I now am better educated than my tax preparer....scary."

Is this really possible? Unfortunately, the answer is yes!!! Too often I speak to prospective clients who really do know more than their tax preparer. The reason may be that their tax preparer really has very little education or it may be that the client has received a lot of education, such as anyone who is a member of our monthly School of Tax Strategy, receives.

Whatever the reason, when you know more than your tax preparer, it's time to get a new tax preparer. How do you choose? The best way is to interview and few of them and listen closely to the questions they ask you. Remember that the key to a good advisor is always found in the questions they ask you. You have the facts and the answer depends largely on the facts. So what questions should they ask you?

First, a good advisor will ask you about you, your goals, your business and investments and your family. Next, they will ask how you feel about taxes and how aggressive in the law you would like to be. Third, they will ask you about your specific concerns and where you want to concentrate the efforts of the advisor. Last but not least, they will ask how you prefer to work with your advisors. Is it once a year, once a month or once a week?

It's pretty easy to tell how much an advisor cares about your situation by the questions they ask. And at the same time, it will be pretty evident how much they know.

So I put this question out to you readers - Do you feel like you know more about taxes than your tax preparer? Let me know what you think.

Warmest regards,

Tom

Kevin, one of our School of Tax Strategy members, asks the following question:

Q: We have a real estate business with an associated Tax ID # for the LLC. We are also starting an E-Commerce business. Can we use the same Tax ID # for both?

A: The short answer and the answer you would receive from most tax advisors is "yes." Of course, you can use the same EIN if you put both the real estate business and the E-commerce business in the same LLC. The EIN is for the LLC, not for the specific business.

The challenge with this question, though, is that it's the wrong question. Just like my pickle story (I'll put this in my blog tomorrow), the key to a good advisor is not giving correct answers - it's asking the right questions. So what is the right question for Kevin? Here you go:

Q: Should I put my real estate business and my E-Commerce business into the same LLC?

A: Absolutely not! I can think of at least two reasons not to do this. The first is asset protection. Do you want to put your real estate business at risk for potential liability from your E-commerce business or put your E-commerce business at risk for potential liability from your real estate business? Of course not.

The second reason is a tax reason and requires an additional question. What is your real estate business? Is it real estate investment (i.e., buy, rent and hold)? Or, is it real estate development (buy, improve and sell)? If the former, you don't want to mix it with your E-Commerce business because you will eventually want your E-commerce business owned in an S corporation while you will want your real estate owned in an LLC taxed either as a partnership or as a sole proprietorship. See our courses on Building Your Perfect Foundation and Getting the Most out of Your Real Estate at http://www.provisionwealth.com/products.

If your real estate is development, you have opportunities for some of the income to be capital gain taxed at better rates and will want to have a complete tax strategy set up for this. Actually, no matter what your real estate business is, you need a tax strategy. A tax strategy will answer all of these questions and we will ask you many more that will need answering. Please join us on our School of Tax Strategy call tonight and we can discuss the components of a good tax strategy. We will also be discussing the Alternative Minimum Tax and how to avoid or reduce it as part of your tax strategy.

If you are not yet a member of the School of Tax Strategy, go to http://www.provisionwealth.com/products and join today.

Remember that the quickest way to increase your cash flow, build your wealth and reach your dreams is to reduce your taxes. This is why "your financial freedom is closer than you think."

Warmest regards,

Tom

Here is a comment that came in a while back from Brian, one of our School of Tax Strategy students:

"I need to start my legitimate business to be able to write off my leisure (golf, travel). I now am better educated than my tax preparer....scary."

This is something Brian learned by participating in School of Tax Strategy (http://www.provisionwealth.com/products).Brian learned well. The Internal Revenue Code provides hundreds of tax benefits for business owners.

The comment that Brian now knows more than his tax preparer is not uncommon from our students. This comment signifies that Brian has outgrown his accountant and it's time for a new one. That's a good thing. More knowledge brings more success. Now, Brian has sufficient knowledge to work with a sophisticated tax advisor, such as one of my partners at ProVision.

You see, with knowledge comes opportunity. Now Brian can look at developing a strong tax strategy that will yield permanent tax savings for the rest of his life. Congratualtions, Brian!!!

If you think you may have outgrown your tax preparer, give us at call at 866.467.5809. When you permanently reduce your taxes, your dream gets that much closer. That's why at ProVision we say, "Your financial freedom is closer than you think."

Warmest regards,

Tom

One of the most common questions I am asked is how to find the various advisors, coaches and other team members for your Wealth Team. The next question I get is, once you have been refered to a potential team member, what questions do you ask to be sure they know what they are talking about?

The best way for me to answer this is to tell you about pickles. That's right, cucumbers with a hangover. Now, a lot of people like pickles. I few of us (including yours truly) don't like them at all. In fact, we can't stand them. And what makes it worse is that pickles are very sociable. When someone puts a pickle on a plate with a sandwich and fries, the pickle doesn't stay to itself. It leaks all over the rest of the plate. I have always presumed that for pickle lovers, this is a good thing. You like the flavor of the pickle in the sandwich and fries.

For those of us who don't like pickles, this is a disaster. It means that the entire meal is ruined. I realize that right now two things are going through your mind. First, I have lost my mind. Second, what in the world do pickles have to do with choosing good members for your Wealth Team. I can't help you with the first thing. For you pickle lovers out there, I realize that you may have a tough time understanding why this is such a big deal to those of us who don't care for the slimy little green vegetables (they are vegetables, right?). However, I can well explain the second point by sharing a personal pickle experience (PPE for the uninitiated). It happend like this.

My colleague and I just sat down to lunch at a neighborhood cafe near our office. The server comes over and asks what we would like to order. I order a turkey sandwich with fries. Now, when I was reading the menu, I noticed that the menu indicated that all sandwiches came with a pickle. So I knew I had better do something to keep that pickle off my plate.

So when I gave my order to the server, I asked her if it would be okay if they left the pickle off my plate as I really don't care for them. She responded kindly that of course they could do this. Then she went off to get our drinks. When she returned, I thought I maybe ought to be sure she got the pickle thing straight so I asked her again if she could be sure I didn't get a pickle on my plate? To which she kindly responded "yes" she would make sure there was no pickle with my sandwich.

Nervously, I waited for my sandwich and fries, wondering if there would be a pickle infecting my sandwich and fries. Ten minutes I sat wondering if the server would really make sure there wasn't a pickle on my plate. Finally, the server comes out with our orders. I look and sure enough, there is a pickle on my plate. My colleague and I start talking about how I could have possible ended up with a pickle on my plate. Could it be that the server was not really listening to me? Perhaps she didn't like me? Or maybe the cook didn't read her note (maybe she didn't write down the note to "hold the pickle")?

So after two conversations with the server and ten minutes of worry, I still had a pickle on my plate. My friend and I continued our conversation about the pickle. What could we learn from this? After an extensive conversation it came down to this - What would have been the best outcome from this situation?

The obvious answer, of course, is that I didn't get a pickle on my plate. Still, I thought, there is an even better outcome. Getting a pickle on my plate was only part of my problem. I also had to sit there for ten minutes worrying about whether there would be a pickle on my plate. So we came to the conclusion that the best outcome would have been for the server to ask me if I wanted a pickle with my sandwich.

Why is this the best answer? Because then I wouldn't have worried about it. I would have known that the server was interested in what I wanted. She would have been the one actively inquiring about whether I wanted a pickle. It would have been on her mind to make sure I got what I really wanted and nothing else.

Now do you see what pickles have to do with selecting the right advisors and other Wealth Team members? You want people on your team who have your interests at heart. And how can you tell if they have your interests at heart? Easy - they ask you about your interests. They find out what you really want. They sincerely search for how they can best help you. And THEY ASK YOU THE RIGHT QUESTIONS!!!

You see, the server did not ask me the right question. Oh, she asked me what I wanted to eat. Only she wasn't specific about it. When I told her I wanted a sandwich, she didn't go further to ask if I wanted the pickle that normally came with the sandwich. If she had, I am confident that I would not have had a pickle on my sandwich.

So, when you are interviewing advisors and other members for your Wealth Team, observe closely what questions they ask. How deep do they go into finding out what you want? How much time to they spending talking about your wants before they start telling you about themselves?

Only when we have team members truly interested in us will we be most successful in our wealth building. When we have team members like this, we can be confident that they will be thinking of our wants when they perform tasks on our behalf. We can be sure they are most interested in our success because they understand what success means to us (they asked the questions).

Financial freedom comes with great teams of people who are truly interested in our success. When we have a great team, financial freedom gets closer and closer and closer. So go out and find your Wealth Team today. Find those individuals who ask you the right questions and are clearly interested first in your success.

Yours for financial freedom now,

Tom