There has been a lot of hype and media play pertaining to the tax reform law that was recently passed by congress, and signed into law by the president.
Leading up to that law being passed, there was a lot of hypotheticals, and a lot of misinformation propagated throughout the space.
Even after the law was passed, there has still been a lot of hyperbole.
People are going crazy and wondering … what should I do now?
They are asking if they should accelerate expenses, defer income, or even form a C corporation.
The truth is that corporate tax rates are now down to 21%, and that is flat across the board.
And, there are still several months until the IRS signs all the guidelines and clarifications for this law into place.
When a law has been passed, there are still a lot of interpretations to be ironed out.
There is also so much guesswork and unknowns pertaining to the law, until all the guidelines have been set into place by the IRS.
Now, this does not mean that you should not do anything at all, as there are still things to be done.
A good tax adviser or CPA is a good thing to have, and they can help you with this situation.
But remember: don’t let the tax tail wag the dog.
Taxes are such an emotional thing.
No one likes to pay taxes.
We know that we are obligated to pay our fair share of taxes.
We know that it is our legal right, and perhaps even our moral duty, not to pay more taxes than we have to.But, where do we draw the line?
A lot of people go overboard with this situation.
The thought process of some people is, how can I pay the least amount of taxes?
But this is not the right thought process to have as an entrepreneur or small business owner.
That is not how it works.
If you are a small business owner or entrepreneur, your number one goal is to create the most profitable business possible, with the least amount of effort on your part.
Growing bigger and having more revenue is great – if it serves a purpose.
Which means that how much tax you pay is not the most important thing to focus on.
There is a cost involved in focusing primarily on how much tax you are paying.
It’s similar to getting tripped up over your own axle.
For many visionaries and entrepreneurs, it’s not good to focus too much on how to pay the least amount of taxes, as it becomes too convoluted.
I personally take the prudent steps, and I don’t focus all my attention on how to pay the least amount of taxes.
I have realized that if I focus on being profitable, and being efficient in my business and with my time, that is the most important thing.
If you are worried about paying too much in taxes, then in my opinion, you are not making enough money.
You can hire good people to help you with your tax plan, but don’t get tripped up over it, and don’t overdo it.
By doing nothing at all, your tax bracket just went down several points because of this reform.
And, your minimum tax savings will probably now be 3-7%.
I caution you, don’t let the tax tail wag the dog.
To learn more about moving from high income to high net worth, grab three free chapters of my book: https://www.freedomfounders.com/free-book-chapters
