Welcome back! Today, we’re diving into how you can slash your tax bill and build wealth through a semi-absentee franchise. Now, I’m not a CPA or a tax attorney, so please consult with your CPA for personalized advice. But let’s explore why many high-paid W2 employees are turning to franchises.
Why High-Earning W2 Employees Seek Franchise Ownership
Many candidates looking into franchises are high-earning W2 employees. They want to diversify their portfolios and add investments. Some may own real estate but are searching for additional cash flow and tax strategies. Small business ownership, in my opinion, is a smart move for anyone—there are just too many advantages!
Tax Benefits: Depreciation and Section 179 Explained
When you’re making a couple of hundred grand a year as a W2 employee, you’re facing hefty taxes—35% to 45% or more, depending on your income. This is where depreciation benefits come into play. We need to look at Section 179 and bonus depreciation to help offset that taxable income.
By owning a small business, you can deduct the full cost of qualifying equipment and software purchases in the year of purchase. For example, if your franchise requires you to buy trucks, Section 179 allows you to accelerate depreciation instead of spreading it over several years.
Advantages of Franchises: Systems, Branding, and Support
One of the best things about franchises is that you’re buying into a proven system with established marketing and brand recognition. You don’t have to reinvent the wheel! If you can follow systems, you can find a business aligned with your skills and lifestyle.
Working with a CPA for Tax Strategies and Business Planning
It’s crucial to work with a good CPA to navigate tax strategies and business planning. You’ll want to know how to structure your entity—should you be a pass-through entity or an S Corp? These questions are vital as you build your financial roadmap.
Creating a Comprehensive Tax and Wealth Strategy
When developing your financial plan, consider how to pay less in taxes while owning a cash-flowing business. This strategy can always evolve, allowing you to take advantage of new equipment that offsets your earned income.
The Semi-Absentee Business Model: Flexibility and Growth
Let’s talk about the semi-absentee business model. It’s not entirely passive; you’ll be working on the business—not in it. In the beginning, you might spend 15 to 25 hours a week developing and hiring. But as you establish your business and hire a general manager, you can reduce your time commitment.
Matching the Right Franchise with Your Financial Goals
Finding the right franchise that fits your financial goals is essential. There are many franchise models that don’t require a brick-and-mortar location. Depending on your strategy, you might even need significant tax write-offs. Everyone has a unique situation, and it’s about creating a tailored plan that suits your needs.
Why Everyone Should Consider Owning a Small Business
Ultimately, I believe everyone should own a small business. It’s not just about how much money you make; it’s about how much you keep. By diversifying your income streams and investing in appreciating assets, you can legally save thousands in taxes.
In closing, don’t shy away from exploring the opportunities that franchise ownership can offer. There are countless paths to financial freedom, and I encourage you to open your mind to the possibilities.
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Thanks for reading, and I hope to see you in the next episode!
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