How you set up your corporation and how you set up your payment systems can actually limit your income.In this video, I’ll teach you how to setup your payment systems and whether you should be a sole proprietor or start a corporation.
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I know a lot of people in the services sector who don’t like to take credit cards. I’ll tell you my story. I remember we were doing eBay and Amazon. A lady comes into the flea market. We had a snazzy ass unit. I wish I had taken a picture of it. This lady comes in. She says, “Oh my God, I’ve got to have it. The amount was like $1800. She said she didn’t have the cash, but she could use a credit card. So, I said, let me run home. This was how unsophisticated things were back then. I told her I’d send her a PayPal invoice. I told her to pay me and I’d deliver it. She hugged me so tight, my nipples got hard.Then I applied for a merchant account. If you had bad credit back then, you couldn’t get one. It took 2 to 4 days before you got your money.
We saw our business grow.
The truth of the matter is people spend more money and buy faster if you take credit or debit cards. Let’s deal with the boogyman in the room with credit cards. You will get chargebacks. It’s not a matter of if, but when. It’s going to happen. It’s part of business.My opinion is; it’s well worth the risk and hassle. Because 99% of people, if you send them what they want, then you’re good. There are people, you give them exactly what they want and you’re still going to get a chargeback. It’s a very small percentage. That’s just the way it is.Now, when you are setting up your business, it’s a bad, bad idea to set up as a sole proprietorship. I’m going to give you the circles of risk. You go ahead and incorporate. You setup your merchant account in the name of the corporation. They’re going to check your personal credit. That’s part of the deal. They may make you sign a personal guarantee, which will invalidate the protection of the corporation. You never know unless you try. 2008 fucked up a lot of people.
Now, if you haven’t watched the video about how to set up your corporate accounts, go back and watch it. It will teach you how to set up your accounts in case you get a chargeback, so you don’t get this chain of overage and fees because you’re running too tight. Now, this is where it gets snazzy. Really, really snazzy. You set up a holding company and that’s going to be an S corporation or an LLC.Since holding companies only collect money and it doesn’t do business with anybody, it can’t get sued. A lot of people don’t want to do it. They think it is too much money. If you want to be an owner, this is the way you do it. If you set this up, nobody can get your money.I’m going to give you a scenario. You don’t pay any taxes unless you make a profit. You set up a S Corp. – which you file like a C Corp, but a company can’t own a LLC.
You put yourself on like an employee. You give yourself a reasonable salary. You’re going to have to pay taxes on that. Give yourself the smallest salary possible.
Let’s say your company is doing $5 million per year with profits of 50%. You’re getting hammered on 550K. Your other money, you get as dividends each quarter and only pay capital gains on it. If the money comes in and you spend on retirement plans or company improvements, at the end of the year, you could pay no taxes or as little as 5 to 10%.The longer you put off incorporating, the longer you put off getting rich. Now, how you get paid, is how you get paid. This is time tested stuff that works. You don’t want to make a lot of money. Take all of the money and put it into retirement or other investments. This is the thing. How you get paid, is how you get paid. When you take money out of the company and put it into a shelter like real estate, once the company shuts down, that sheltered money is still working for you.
What you can do with your business right now if you run a business and make 150K is 50K can go into your SEP, which reduces your income. Then with expenses, you could reduce your income even more. Don’t be afraid to play the game.
Get yourself two or three merchant accounts and play them against each other. There are so many ways to do this! Currently, I am not accepting anymore long term clients. However, if you want to attend a boot camp, be part of a live stream get on this Hustler Kung Fu Live email special offers and much much more!