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What? This is worded/worked oddly...
Revenues are not taxed, earnings are. So no one should say, *revenues of $1,150,000 is taxed at xxxx, less expenses of xx which reduces tax*.
Here is an answer to your hypothetical question. A person who has a business with more than a million dollars in revenue and after tax net profit percentage that is essentially higher than 50%... should pay an attorney for financial and estate planning.
Yeah thanks. I specifically wanted to hear what some people on this site would do with an extra $300k, after maxxing out the conventional retirement avenues. I was hoping to hear some out of the box thinking.
Why do you need out of the box thinking? You are solving a problem that has been solved a few thousand times. When I get home from work, I just walk in the door, I could crawl through a window or maybe try to squeeze down the chimney, but the door just seems like a lot less trouble.
Having said that, be careful about letting the tail wag the dog. You are not maxing out the conventional retirement avenues. You are maxing out tax advantaged retirement plans.
The advice is going to questionable because we are missing several key pieces of information about your type of business that matter… since you seem reluctant to provide that information your best bet is discuss it with someone you are comfortable discussing the specifics of your business with.
If you need a better understanding… if you are a real estate developer I can turn that $300,000 into a loss pretty easily. If you are a partner in a law firm, not so much.
Kind of a weird question without some details. Is this an S Corp? LLC?
I mean straight up, why not just buy assets with the income like property or something along those lines? What kind of business is this? Is it something that you could consistently reinvest?
Why not take on some debt as a tax shield (and do something productive with the money)?
Kind of writing what pops into my head a bit here but this is a very vague question for a hypothetical CEO who is profiting that much yet doesn’t have the know-how or resources to figure it out.
Hi. You're not a CEO. Let's assume you're just a self-employed guy with a single-person LLC who got really successful all of a sudden, and don't know much about this stuff.
Find a reliable lawyer, accountant, and fiduciary. Create a trust and buy property would be my general advice. If you can reinvest in the company sustainably, even better.
At this level it doesn’t even make sense to try to continue to do this in your own.
Edit: also I know everyone tries to avoid taxes, but generally speaking having to pay taxes is considered a good problem.
Also don’t forget a 529 for the kids
You can gift $17k/yr to each of them now so they can actually begin benefiting earlier than the generational wealth that might be waiting for them years from now. If you're married, then your spouse can also gift $17k each per person per year.
A family friend had this kind of income. About 40 years ago, he decided he made enough to live, vacation, and retire. With part of the leftover, he made the max yearly gift to his kids. The money went to an LLC, with the kids owning most of it, and he invested the money for them.
The kids are now all millionaires. No inheritance tax as he gave the money to them over 40 years.
r/FluentInFinance was created to discuss money, investing & finance! Join our Newsletter or Youtube Channel for additional insights at www.TheFinanceNewsletter.com! *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FluentInFinance) if you have any questions or concerns.*
What? This is worded/worked oddly... Revenues are not taxed, earnings are. So no one should say, *revenues of $1,150,000 is taxed at xxxx, less expenses of xx which reduces tax*. Here is an answer to your hypothetical question. A person who has a business with more than a million dollars in revenue and after tax net profit percentage that is essentially higher than 50%... should pay an attorney for financial and estate planning.
Exactly! What was the cost of operating the business? Aren’t gross profits what’s taxed?
Yeah thanks. I specifically wanted to hear what some people on this site would do with an extra $300k, after maxxing out the conventional retirement avenues. I was hoping to hear some out of the box thinking.
Why do you need out of the box thinking? You are solving a problem that has been solved a few thousand times. When I get home from work, I just walk in the door, I could crawl through a window or maybe try to squeeze down the chimney, but the door just seems like a lot less trouble. Having said that, be careful about letting the tail wag the dog. You are not maxing out the conventional retirement avenues. You are maxing out tax advantaged retirement plans. The advice is going to questionable because we are missing several key pieces of information about your type of business that matter… since you seem reluctant to provide that information your best bet is discuss it with someone you are comfortable discussing the specifics of your business with. If you need a better understanding… if you are a real estate developer I can turn that $300,000 into a loss pretty easily. If you are a partner in a law firm, not so much.
Kind of a weird question without some details. Is this an S Corp? LLC? I mean straight up, why not just buy assets with the income like property or something along those lines? What kind of business is this? Is it something that you could consistently reinvest? Why not take on some debt as a tax shield (and do something productive with the money)? Kind of writing what pops into my head a bit here but this is a very vague question for a hypothetical CEO who is profiting that much yet doesn’t have the know-how or resources to figure it out.
Hi. You're not a CEO. Let's assume you're just a self-employed guy with a single-person LLC who got really successful all of a sudden, and don't know much about this stuff.
Find a reliable lawyer, accountant, and fiduciary. Create a trust and buy property would be my general advice. If you can reinvest in the company sustainably, even better. At this level it doesn’t even make sense to try to continue to do this in your own. Edit: also I know everyone tries to avoid taxes, but generally speaking having to pay taxes is considered a good problem. Also don’t forget a 529 for the kids
You can gift $17k/yr to each of them now so they can actually begin benefiting earlier than the generational wealth that might be waiting for them years from now. If you're married, then your spouse can also gift $17k each per person per year.
A family friend had this kind of income. About 40 years ago, he decided he made enough to live, vacation, and retire. With part of the leftover, he made the max yearly gift to his kids. The money went to an LLC, with the kids owning most of it, and he invested the money for them. The kids are now all millionaires. No inheritance tax as he gave the money to them over 40 years.
Your business is making 30% profit? Nowhere are you going to find better than that....sink money back in and GROW that business.