Strategies to potentially increase your cash flow Many people are frustrated today with high taxes, upside down real estate, underperforming businesses, and less cash flow in their pockets then desired. Hidden treasures are those nuggets of potential new found money which occurs during the implementation of a financial strategy. As financial strategists, people always ask us how a person can increase cash flow and decrease taxes. With the current state of the economy, pension debate, and the uncertainty with the future of Social Security it’s more urgent than ever to ensure that you have a long term plan in place. According to AARP, 85% of retirees will have to retire to a part-time or another job to supplement income.
What can you do to avoid this and potentially create more cash flow now? Look at your expenses & find ways to deduct them as business expenses. Those newly discovered deductions could mean less tax due and more cash in your pocket. One of our core areas of comprehensive planning is a business strategy. There are many opportunities to uncover hidden treasures in your business. For example, if you are taking a salary of $150,000 a year from your S-corporation business, it is possible to reduce your salary to $50,000 and make the $100,000 from the business profits. By doing this, you can potentially eliminate or reduce your self-employment tax. Please understand that every situation is unique and you should consult with your tax advisor to see if this strategy will work for you. Another approach is looking at your business’s benefits. You want to look for benefits that can provide for the employees while providing a tax deduction for the company. This approach is available in various pension plans, disability, or health plans. You may find ways to repurpose old inventory and use it as a loss leader or bonus. You can also find marketing partners interested in your favorite clients (who do not sell a competitive product) and ask them to do some cross-marketing with you. You market to their list, and they market to your list. Who hasn’t been walloped in real estate over the past few years?
Through comprehensive strategy, there are ways to turn your upside down real estate around potentially, so they are once again creating cash flow. One approach again is repurposing. Repurposing is where you turn the house into college housing, a senior living facility, or a sober living home. By doing this, you rent the room or bed and not the house. Another strategy is a chattel appraisal, and no we are not talking about cows! A chattel evaluation is a way to accelerate depreciation on a rental property.
At Conaway & Conaway we are always in appreciation of reduction. Newfound treasure in your real estate could also be allowing rents to be offset by depreciation or other expenses potentially. These expenses could include a home office, travel, or management. It is essential to keep in mind that a comprehensive plan consists of all members of your power team. Many of the strategies mentioned include the collaboration of your tax and financial advisors. Other power team members could consist of an attorney or real estate professional. Let us help you find your potential hidden treasure today.
Call our office and schedule your FREE power hour today.James and Lorraine Conaway
Wealth Strategist at Conaway & Conaway
Securities offered through J.P. Turner & Company, LLC (Member SIPC). Financial planning and investment advisory services provided through J.P. Turner & Company Capital Management, LLC (a registered investment advisor). J.P. Turner & Company, LLC and J.P Turner & Company Capital Management, LLC are not affiliated with Conaway and Conaway and Complete Controller. 151 Yorba Street Suite 200, Tustin, CA 92780: JPT051414-871