The Business Owner's Guide to Financial Freedom , livre ebook

Testimonials from Small-Business Owners Like You
Mark has a gift for sharing tax and legal information. Not only does he clearly explain strategies for lowering taxes and protecting assets, but also, he makes it fun along the way. I strongly recommend The Business Owner s Guide to Financial Freedom to all business owners.
-D ANIEL T URKEWITZ , JL A G ROUP , I NC.
This book is for entrepreneurs who want to be successful. I attended Mark s workshop in Philadelphia with my son, and Mark s legal and tax expertise gave me the knowledge to help me launch my real estate business with confidence!
-F ARAH P IERRE , D EVELOP S ELF
Since I met Mark and started implementing his strategies, my gross income has grown over 1,000 percent. Mark s strategies have worked flawlessly, and his advice saved my wife and me tens of thousands of dollars and huge amounts of stress. Mark is the real deal . . . Get reading!
-G REG G ALLAGHER , R EAL E STATE I NVESTOR , A DVISOR , B ROKER, AND C OACH
I love reading Mark Kohler s books! Mark gives you a real-life perspective on tax and legal strategies that you can implement without having to spend a lot of money. I m able to use his strategies to stay on track with my business and save thousands of dollars in taxes.
-J EIMY R AMIREZ , F IGUEROA P ROFESSIONAL S ERVICES
Mark Kohler has a gift for making normally dry information interesting and entertaining so it is better absorbed and retained. I have four or five of his books and cannot recommend him highly enough. Read, watch, and listen to all you can by this man. His information doesn t cost-it pays.
-J OE D ORNER , S ENIOR A DVISOR , A NCHOR A DVISOR A SSOCIATES
Mark Kohler is AMAZING! He makes the boring business of taxes and legal strategies fun to learn. I am very grateful to have someone with such vast knowledge lead me through the complicated world of contracts and law and government forms. He is the most important person to have on my team to create financial freedom.
-S HELLEY S IMS , T HRIVE , I NC.
My life and business will forever be changed for the better because of Mark Kohler. His books contain pure gold when it comes to understanding the way business, taxes, and asset protection works. I highly recommend The Business Owner s Guide to Financial Freedom .
-K YLE P ARKS , O WNER , S OUND H ARBOR E NTERPRISES , LLC
Do you have a coordinated tax, legal, and financial plan? If not, you should read Mark s book The Business Owner s Guide to Financial Freedom . Your professional and personal life is about to get a whole lot better.
-C HRISTIAN H ESTER , M.D., L ITTLE R OCK E YE C LINIC
Ever since What Your CPA Isn t Telling You , I have been following Mark s work. I have saved my clients thousands of dollars by implementing his recommended strategies. Any business owner is missing out on opportunities to save if they are not learning from Mark s newsletters, podcasts, and books.
-A NGIE T ONEY , CPA, A NGEL F INANCIAL S ERVICES LLC

Entrepreneur Press, Publisher
Cover Design: Andrew Welyczko
Production and Composition: Eliot House Productions
2017 by Entrepreneur Media, Inc.
All rights reserved.
Reproduction or translation of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without permission of the copyright owner is unlawful. Requests for permission or further information should be addressed to the Business Products Division, Entrepreneur Media Inc.
This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.
ebook ISBN: 978-1-61308-375-8
This book is dedicated to our amazing spouses, Jennifer and Sandi. They have supported both of us time and time again, including during this huge undertaking to write about such an important topic.
CONTENTS
ACKNOWLEDGMENTS
INTRODUCTION

THE DIFFERENCE BETWEEN WALL STREET AND MAIN STREET
PART I
PERSPECTIVE
CHAPTER 1

THE ENTREPRENEUR MINDSET

Good and Bad Personality Traits of Entrepreneurs

Freedom Versus Flexibility

A Better Entrepreneurial Mindset
CHAPTER 2

A REALITY CHECK-THE TRUE VALUE OF YOUR BUSINESS

What Is the Dollar Value of Your Business?

Building Value

Changing Markets, Industries, and Trends

Creating Value Outside of Your Business
CHAPTER 3

THE TRUTH ABOUT YOUR FINANCIAL ADVISOR

An Independent Advisor

Suitability Versus Fiduciary Duty
CHAPTER 4

WHAT WALL STREET ISN T TELLING YOU

It s the FEES!

Problem 1: Annual Fund Operating Expenses (aka Fund Fees)

Problem 2: Administrative Fees (aka Plan Fees)

Three Strategies Your Advisor Won t Talk About
PART II
FORGE A BETTER, SMARTER, AND SAFER WAY
CHAPTER 5

THE LIFETIME PARADIGM AND THE 4 4 FINANCIAL INDEPENDENCE PLAN

Four Sequential Steps

The Four Essential Elements

A Lifetime Paradigm-A New Perspective on Retirement
CHAPTER 6

STEP 1: OPTIMIZE WHAT YOU ALREADY HAVE

Creating Your Strategic Plan

Building a Wealth Management Team

Wealth Management Team Circle

Team Captain

Board of Directors or Advisors

Meet Your Team Members

Meeting with Your Management Team Regularly
CHAPTER 7

STEP 2: DEALING WITH DEBT AS AN ENTREPRENEUR

Good Debt Versus Bad Debt

Why Entrepreneurs Get into Debt

Getting Out of Bad or Reductive Debt

Staying Out of Debt
CHAPTER 8

STEP 3: MAINTAINING PROPER CASH RESERVES

Cash Reserves Means CASH Reserves

Significant Versus Liquid

The Three-Bucket Cash-Reserve System

Personal Living Expenses and Lifestyle Expenses

Adjusting Your Monthly Transfer
CHAPTER 9

STEP 4: INVESTING YOUR PROFITS AND BUILDING BUCKETS

Phases of Investing

The Perfect Investment
PART III
DEPLOYING YOUR ASSETS STRATEGICALLY
CHAPTER 10

UNDERSTANDING THE LIMITATIONS AND POTENTIAL POWER OF SOCIAL SECURITY

The Concept and Reality of Social Security

Optimize Your Contributions Now

What About My Spouse and His or Her Payroll Planning?

When You Are Ready to Claim Social Security
CHAPTER 11

THE ROLE OF YOUR PERSONAL RESIDENCE

Do I Rent or Buy?

Should I Have a Mortgage in the First Place?

Should I Refinance My Mortgage?

Do I Pay Off My Mortgage Early?
CHAPTER 12

HEALTH CARE-THE HIDDEN TIME BOMB

Health Care 101 and the Heart of the Solution

HSAs, HRAs, and the 401(h)

The Cost of Health Care During Your Retirement and the Role of Long-Term Care Insurance

Asset-Based Long-Term Care Insurance
CHAPTER 13

SELF-DIRECTING AND STRATEGIC USE OF THE IRA, SEP, AND 401(K)

Self-Directed Retirement Account Basics

Avoiding Prohibited Transactions

The Special Purpose LLC Structure

Possible Tax Bite: UDFI and UBIT Taxes

Avoid the Naysayers

Additional Resources
CHAPTER 14

WHY RENTAL REAL ESTATE, AND HOW TO DO IT RIGHT

The Art of Buying Real Estate

Is Real Estate for Everyone?

Four Benefits of Owning Rental Property

How to Avoid the Common Pitfalls of Real Estate Investing

Protecting Yourself from Your Rental
CHAPTER 15

VACATION PROPERTY AND TIMESHARES: STRATEGIES AND PITFALLS

For Those in The Market

Options for Those Already with a Vacation Home

Vacation Rental Strategy

Timeshares-Not a Bad Idea
CHAPTER 16

THE PROPER ROLE OF INSURANCE IN YOUR PLAN

Insurance Is Not a Waste of Money, It s Leverage

Two Types of Life Insurance

Living Benefits

Income, Savings Protection, and Tax Diversification-Bank on Yourself

Super-Charge Your 401(k): The Role of Life Insurance Inside and/or Alongside Traditional Retirement Plans
CHAPTER 17

WHAT YOU SHOULD BE BUYING FROM WALL STREET

Understanding the Risks of Wall Street Investing

Understanding Risk within Specific Investments

What Should You Do About Investing with Wall Street?
PART IV
EXIT STRATEGIES FOR YOUR BUSINESS
CHAPTER 18

PREPARING TO SELL YOUR BUSINESS

The Appraiser

The Disclosure

Understanding EBITDA
CHAPTER 19

PRICING YOUR BUSINESS AND INCREASING ITS VALUE

1. Multiple of Cash Flow Method

2. Balance Sheet Method

3. Cost to Create Method

4. Capitalized Earnings Approach Method

5. Discounted Cash Flow Method

6. Comparable Sales Method

Increasing the Value of Your Business

The Unexpected Side Benefit
CHAPTER 20

HELPING YOUR PARTNERS OR EMPLOYEES BUY THE BUSINESS

Partners

Employees

Take Your Time with Employees
CHAPTER 21

HOW TO FIND AND SELL TO A THIRD-PARTY BUYER

Preparation

Finding a Buyer and Valuation

Disclosure and Due Diligence

Negotiation

Document Prep and Review

Closing and Asset Transfer

Tail Terms
CHAPTER 22

SELLING TO YOUR FAMILY

Assess Yourself and the Company

Pros and Cons of a Family Member Buyer

The Process

Potential Pitfalls
PART V
PROTECTING YOUR HARD-EARNED