How I Setup My Business To Pay Crazy Low Taxes & Have Higher Protection


– What’s going on guys? So today I’m gonna talk to you about how I structure my different businesses, and my kind of whole set up with that. So I one, pay less taxes, two I have more protection
for my businesses, and my personal assets, and just kind of the easiest way, and the smartest way to do this. Now I am by no means an expert at this. This is not advice. This is what I’m doing. So consult a professional, and I’m not new to this, but I’m definitely not super
advanced with this either. So I am currently… Have this set up, but there’s different changes to do it, and different ways of going about it. So my information might
not be 100% accurate, but it’s the best of my understanding, that I’m going to give
you guys his information. So what I’m talking about is, if you have multiple businesses, or even one, the whole thing I’m
gonna be talking about, is starting a holding company. Now what is a holding company? A holding company is just
a corporation, or LLC, or whatever you want it to be, that owns all your other businesses, or the majority of them, and the only operation of
that said holding company, is to hold the money, the
assets, and invest them. Now when you’re setting
up your normal businesses, let’s just say you’re doing LLC’s, there’s a couple things I want to mention, and you can Google this, and find it pretty easily, but there’s different ways of setting up LLC’s different types. So if you have a single member LLC, which means there’s one person in it, it’s a pass-through entity, which means you’re gonna be
taxed as personal income, even if you leave that
money in the business. If you have partners, it depends. If you choose C-Corp, or S-Corp, that’s just the way you’re taxed, but the way I set my LLC’s up is, I have a trust which I own 100% of, and that is a member as well on my LLC, as well as myself. So then it becomes not
a pass-through entity, of an LLC which gives me a little bit
more protection personally, and the tax benefits of doing a C-Corp, if I want to, or S-Corp, or one of those. Now with a holding company, like I said before, it owns all the LLC’s. So I want to give you guys an example. Why is a holding company
good for protection, and for taxes? So this little chart I have up here, let’s say this is me here. Now these are all make up numbers. Let’s say I have a million
dollars in my bank account. I have $500,000 in cars, and my house is worth this much. Let’s just say that’s
how much cash I have, and these are my assets. If I give those all to my holding company, and someone personally sues me, not to do with any of these businesses, and my holding company owns all of those, then I have a lot more
protection here myself. Now same goes kind of with the LLC’s. So since you’re a holding company, the only thing it’s actually doing, is holding the money and investing it. It has a way lower chance of being sued, and losing those assets. So that’s why, let’s just say we have three LLC’s. So we have LLC one LLC two and LLC three. They’re all different businesses, and let’s say this one
makes $400,000 a year, and has $100,000 car as an asset. This one makes $400,000 as well, and this one makes $400,000. Now normally these would all
be pass through entities, since I’m the only
person that owned these. It’s a single member LLC, which is a pass-through entity, which means this $400,000 here. So 1.2 million this year, would be paid to me, and would be personal income tax, which for me, it would be a little
bit lower at this rate, but for me, this year it was 49%, which was about 2.8 million dollars. So I would pay $588,000 in taxes. If I just had my LLC set up like this, LLC obviously is limited
liability company, and it’s made to separate
me and my personal assets, from the business. So with this, obviously it
will depend how you set it up, how much protection you have with it, if you have insurance and other factors, but let’s say I have this much money just sitting in the
bank account of my LLC. If I get sued, the person can sue, and
get this much money, and then I’d have to go
bankrupt with that LLC, and close it. However if I have $2,000 in this LLC, and the rest was already paid to this, and someone sues this LLC, they can only get that $2,000, and I close the LLC. I bankrupt it, and just restart another one, and they can’t go through
to the holding company, and they can’t go through to me. Again they might be able to, if you don’t have the right protection, and your bank accounts, and how you’re transferring
money stuff isn’t set up right, but if you do it the right way, they cannot go through this LLC to collect more money
into your holding company, because this holding company
manages this LLC technically, since it owns portions of it, or most of it, but they can’t come through and get money, because they are not responsible
for any of the actions, or operations of the LLC. So pretty much it’s laid out. All the operations done, are done by the LLC, but all the money goes
to the holding company. AKA you’re way less liable, and it’s harder to sue through that. Now that’s also the reason
this holding company is holding all the assets as well. Now on top of that. Again it’s going to depend on
your taxes, how you set it up, but the corporate tax rate, I believe it was around
32% or 36% previously, it just lowered to 21% for 2018, which is a huge jump. Now what does that mean? If we have the money, we keep it in the holding company, and we set up our tax structure right? This is gonna be the part where you guys have to go do research. I can’t really give you
advice or tell you on this. If you keep the money in
your holding company… Now there are different ways
of paying the holding company. You don’t just say here’s your cash. You can do it as dividends, which you can write off some on taxes, which it gets confusing. I don’t want to go into, but let’s just pretend for simple simple. Keep it really simple. Did I say simple enough? It’s simple. Let’s just say all the money in assets, from all our LLC’s, go to our holding company. So our holding company now
holds this car as an asset, just because if we get sued, and I have to close this LLC, we don’t want to have to
give them the car as well. Let’s say so we made
$400,000, $400,000, $400,000. So 1.2 million and the corporate tax rate, which is for this, is over here with our holding company. So off the 1.2 million, we’re only paying 21% in taxes, which is $250,000. Now a holding can invest in stocks, in real estate, in assets, a couple different things. There are some restrictions, and whatnot but let’s say I was planning this year to invest, let’s just say I was planning
to give myself 200,000, and invest a million. Now if I do that over
here and paid myself, okay let’s just take off the $200,000. I gave that to myself. So we paid $588,000 in taxes. So let’s just say we only
have $600,000 left to invest, but if we did the same thing here, and let’s just say we
paid our self $200,000. So this is based off one million, and we pay 20% in taxes. We pay $210,000 in taxes, and we have $790,000 left to invest. So that’s a 30% difference. So imagine, I’ll use bigger numbers just
to show you guys the example. Let’s say we can get a 10%
return on our investments. We’re going to invest in stocks let’s say, and we think we can get
a 10% return per year. We’re gonna invest $800,000
over here if we do it this way, but if we do it this way, we’re gonna invest 600,000. So you can see the difference. The difference is $200,000, which comes out to about a
$20,000 a year difference, from that single investment, and obviously you can see the big chunk. We paid $252,000 in taxes over here, and then for $588,000 over here. Now when you do pay yourself, if you have the holding
company or the LLC, and you pay yourself personally, you will have to pay this tax, but if it’s money that’s
gonna be sitting in your bank, and you plan on investing it, and it’s in the holding company, it’s more safe, and you’re gonna pay lower taxes on it. So this is kind of the
current setup I have, with my LLC’s, and the holding company, and again I’m still learning this. I want to share with you guys what I know. By no means an expert on this, and there’s a couple factors in here, that I probably didn’t mention, that you need to research, and talk to a professional on, but this is the general
idea I get from this, and kind of how it works. Again how you pay them, and things like this will vary, and there’s dividends. A couple other little things in there, but in general this is
technically how it works, and the benefits of it. Now let’s say you paid
the holding company, and you’re like, well I need money for
my LLC’s or for myself, but I don’t want to pay myself and get this personal income tax, this holding company can loan you money, at the current interest rate, and that’s one of the
operations of the business. So you can lend your self some money, if you need to or your businesses. So it’s a pretty cool structure. I’ll tell you guys to
go look more into it. Maybe talk to a professional
if you have one or two LLC’s, or even if you’re making
a little bit of money, it might be beneficial
to start doing this, or talk to someone who
does this for a profession. So I hope that was kind of
informative for you guys. I get a lot of questions about how I set up my LLC’s and whatnot. So the basic structure is, I have a trust, and myself both own the LLC. I own 100% of the trust. No one else can touch it, and that makes it not a single-member LLC. So it’s not a straight
pass through entity, meaning I can have other
kind of C-Corp, S-Corp, and just for less liability of saying, well this person it’s a single-member LLC. It’s an LLC but the bank
accounts are commingled. They’re acting as one. So technically they might
be able to sue through that. So it’s all about protecting yourself, just adding layers, which this holding company does as well, and you can have your personal assets, like a house, a car and whatnot, owned by this holding company. So hope you guys enjoyed that, and I will see you guys
tomorrow in the next video.

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88 thoughts on “How I Setup My Business To Pay Crazy Low Taxes & Have Higher Protection

  1. this is great content! you know i been thinking about allocating 50% of my wealth to btc. becuase no govt can touch it in case i get sued or something crazy happens.

  2. Maaan… Tanner… I can see that you really care about your subscribers and make an effort to give them what they want when it makes sense. I remember watching a video/livestream of yours in the past saying you hate when people ask you about taxes and how you have yours done and people only continued to ask. And now finally – despite being somewhat irritated by the question – you've gone ahead and made a whole video about it which I know will satisfy many of your subs. Good on you man. Even though I wasn't ever one to ask about how you set your businesses up for tax purposes quite simply because I don't yet make enough money to worry about it, I've learned quite a bit from this informative video of yours and it gives me a basic foundation to go do my own further research on it in an effort to protect myself as need be when the time comes for worrying about that type of stuff. Thanks for sharing… much appreciated!!!

  3. Great video as usual! This stuff can be really confusing at first but it's worth understanding. I'm speaking with a tax attorney here in a few weeks to figure my stuff out for my business

  4. Tanner I have my llc set up for amazon but I'm looking to add another social media type of business under it. Does it have to be a DBA or can it actually be an llc with name protection? Thanks!

  5. Exclusive tips for when you start making so much money and you have no idea what the hell to do with it LOL!!!!! Love ya vids bro!!!!!

  6. Hmm I wonder why people in Denmark say we pay a lot in taxes when it seems like you are almost paying the same in personal income tax.

  7. Hey Tanner, I'm planing to buy your affiliate course but I'm on a budget. How long will it take me approximately to make $1000 a month with doing every thing in your course and $500 for ads and other things ?

  8. What order do you set this up in? I setup a single member LLC last month, can the holding company be setup second and take ownership of the already existing LLC? Great inspirational videos BTW! Thanks.

  9. Forgot that Wyoming loop hole. Where you can register your “online” business in Wyoming and pay no state tax legally. Wyoming pays no state tax and on online business is virtual so can be registered anywhere even if you don’t live there.

  10. This is awesome, definitely what I was wondering. Is the holding company a Corporation? Also, is this knowledge an estate or trust attorney would know or is it better to use a CPA or do we need both and what do you estimate typical cost is to have professionals set up this structure? Thanks!

  11. I was watching another CPA video where they said you can be one person as S-Corp. I am confused now, Tenner can you please clarify

  12. Are you sure that transfering money from LLC to Holding Company isn’t an action to detriment of the LLC (which is illegal)?

  13. Crazy valuable content is an understatement! You rock Tanner. Another one. Is a requirement to having a holding company is you 'must' invest the money you have within the holding company?

  14. tell me how you figure 49%?? I pay 26% BEFORE the 20% deduction…so in 2018, ill be paying around 6% in taxes. interesting set up you have though, looks like a solid structure.

  15. Thank you for explaining this well! It also explains why people who have businesses that go bankrupt can keep on trucking and still have shit!!! And the tax comparison is wow…night and day. Will definitely get a holding company set up!

  16. So wouldn’t you be double taxed by pushing the cash through the holding company? Whereas in the beginning you would pay 49% but now you pay 21%first and then 49% after you pay yourself?

  17. Awesome video thank you for taking the time to share this info this is extremely helpful. Question for a set up like your example would you have separate business checking accounts for the different LLc's or would the holding company account hold all the funds? and I know its not professional financial advise etc..

  18. Tanner, do you own that holding company and do you have to do the investing yourself? like find a stock or something in real estate to invest it in? or is this auto pilot?

  19. Thanks for the good introductory video. I'm a Canadian looking to setup a brewery and distribution network in the US, I wish I had more specifics on this and how to setup a holding company. Taxation up here in Socialist Canada is horrible, such a buzzkill. I love many of the states and their local tax breaks. Much of the US still doesn't like to hurt job providers unlike up here.

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