My 6-figure tax blunder

Yes, taxes are confusing and boring. But ignoring them won't make them go away, and I learned that the hard way... [MOBE DAILY](41475b/ct0_0/1?sid=TV2%3AgMLKsWIeA) [] [START YOUR BUSINESS](41475b/ct1_0/1?sid=TV2%3AgMLKsWIeA) [] [SCALE YOUR BUSINESS](41475b/ct2_0/1?sid=TV2%3AgMLKsWIeA) [] [GROW YOUR WEALTH](41475b/ct3_0/1?sid=TV2%3AgMLKsWIeA) [] MOBE Daily #180 "You must pay taxes. But there’s no law that says you gotta leave a tip." ~ Morgan Stanley advertisement Hey, One of the most common questions I get from students is about how to structure their business to protect their wealth and legally minimize their taxes. First of all, I'm not an accountant or qualified advisor. But I can share with you a lesson I learned the hard way. When I first got started in business in 2008, I was set up as a sole proprietorship in Australia. This means I was being taxed as an individual, the same as if I had a job. The way it worked in Australia back then, was that for every dollar an individual earned in excess of $180,000, they would be taxed at 45%. Of course, when I started, I was earning nothing, so I had no tax to worry about. Then in late 2011, I suddenly started doing really well. Despite making very little for the first half of the year, the last few months of the year went so well I actually cleared over 75k. Throughout 2012, nearly every month was over $50,000 in revenue, many of them were a lot more, and I ended up clearing over 1 million in revenue. It was a crazy (in a good way) time for me - I'd never expected to see that kind of growth in such a short amount of time. But doing bookkeeping was the very last thing on my mind - I was just struggling to keep up with all the fast moving parts of the business, like sales, fulfillment, customer service, Sometime in 2013, I realized I couldn't keep putting the taxes in the back of my mind and pretending I could just do it all later. If I didn't start getting my books in order and pay whatever taxes were due, I'd soon have trouble. So I went online to a site similar to Craigslist called 'Gumtree' and hired the first book keepers I could find who'd work for cheapest. This was a big mistake - after 6 months they'd still not got my books in order and I had to find someone else who could get the job done. They were almost twice the costs, but worked fast and had a better tax accounting background. When they'd gone through all my books and calculated the amount of tax payable, I was shocked at how high the figure was. It was in the several hundreds of thousands of dollars! My bookkeeper explained to me had I set myself up as a company from the start, I would have been paying closer to 30%, and could have about a 100k. That's serious money - in my case, it was my 'ignorance tax.' In hindsight, I should have set myself up as a company from the very start. It would have cost only about $1,000 to do it, and would have been a great investment. Of course, every country has a different taxation system. That's why I tell you to go and find a good accountant and let them advise you on the best structure for your circumstances. Find someone you're comfortable with. Don't settle for someone who can't explain things to you in a way you can understand, or, who you don't feel comfortable with. If you have to go through a few accountants to find a good one, so be it. As for finding a good one, here's my advice; Instead of looking on google or the phone book, go find someone with a high net worth, who operates in the same jurisdiction as you and in a similar industry. Pay them for their time if you need to, and ask them if they'd mind sharing who they use to do their accounting and taxes. Most people who've got serious wealth have figured out the value of getting extremely good financial advice for protecting their assets and legally minimizing taxes. Rather than you finding this person through trial and error, do it this way instead. Even if you paid $1,000 for an hour of consulting to this person just to get some of their connections, it would be money well spent. Many years ago, I was at an event in Las Vegas, and a friend texted me and said, "Hey, come downstairs. There's someone I want you to meet." Downstairs in the restaurant, my friend (who's a millionaire) told me about the accountant and lawyer (same person) who she used to set up all her company's. I get his details off her, and a few weeks later had a quote from him to do something similar for me. Long story short, it was one of the best decisions I'd made. The point is, I got that connection through a referral of a wealthy colleague. You can do the same. [] [] [MOBE Daily#180-1](41475b/ct4_0/1?sid=TV2%3AgMLKsWIeA) [] Don't Be Afraid to Fail and Make Mistakes We've all experienced extreme failure before. We've also heard horror stories of failures that other people have experienced. We've heard about the business owner who started a business with high hopes, only to watch it fail and become homeless. Hearing stories like that can put you off and make you afraid to even try, for fear of what might happen. But you can't be afraid, because failing is the only way you'll ever learn. In [this video](41475b/ct4_1/1?sid=TV2%3AgMLKsWIeA), filmed at the [Titanium Mastermind](41475b/ct5_0/1?sid=TV2%3AgMLKsWIeA) in the Dominican Republic, Stephen Michael Miller explains why you can't be afraid to fail. [] [] [MOBE Daily#180-2](41475b/ct6_0/1?sid=TV2%3AgMLKsWIeA) [] How to Build a Customer Acquisition Process W. Edwards Deming, the management guru, said, "If you can't describe what you are doing as a process, you don't know what you're doing." Can you describe your process for acquiring new customers into your business? Is it even a process at all, or are you just making it up as you go along? It's OK in the early stages of your business to make it up as you go along, because you don't yet know what works. Over time, though, you want to create some order out of the chaos and do things according to a predictable and repeatable process. In [this video](41475b/ct6_1/1?sid=TV2%3AgMLKsWIeA), I talk about how to turn your customer acquisition into a process. [] [] [MOBE Daily#180-3](41475b/ct7_0/1?sid=TV2%3AgMLKsWIeA) [] Going "Full Throttle" with Email Marketing The marketers who get the best results are those who go "full throttle," instead of doing things in half measures. When it comes to email marketing, this means that they email their list every day, or at least 5 or 6 times a week. Not just once a week or once a month. Most marketers are afraid to send this many emails, because they worry that their list will get sick of them. But long as you do it in the right way, daily email marketing can be effective. In [this video](41475b/ct7_1/1?sid=TV2%3AgMLKsWIeA), filmed at the [Super Charge Summit](41475b/ct8_0/1?sid=TV2%3AgMLKsWIeA) in London, Nick Pratt explains how to go "full throttle" with your email marketing. [] Talk soon! Matt Lloyd [] [Matt Lloyd](41475b/ct9_0/1?sid=TV2%3AgMLKsWIeA) [] [] [Matt Lloyd] [] Are you reading the Inner Circle each Month? 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