Thanks President Obama...

Thanks President Obama… Presidential hopeful Barack Obama made one of the most significant statements that any of the candidates has made in regards to the economy during the Democratic Presidential Debates this week. The statement has particular relevance to small business owners and entrepreneurs. The relevant portion of the statement was that “Warren Buffett who earns approximately $46 Million per year pays a lower tax rate than his secretary/administrative assistant”. When I heard the statement I wondered how many of the millions of people watching the debate actually analyzed the importance of the statement beyond its initial shock value. Moreover, I pondered if any of the small business owners, entrepreneurs, and would-be business owners understood how they could operate their business in the economically efficient manner that Buffett has seemingly mastered. The Jobs & Growth Tax Relief Reconciliation Act of 2003 is the legislation and mechanism which allows Buffett to make a huge amount of his tax liability disappear. In brief, the JGTRRA limits the tax liability on corporate dividends to a flat rate of 15%. Contrast that with the 28% that Buffett’s secretary/administrative assistant is paying assuming that his/her salary is in the range of $77,000 to $160,000. The application for you is simple. By operating as a Corporation you could choose to be paid in the form of dividends to lower your tax liability. Likewise, if you are operating as an LLC or LLP choosing an Entity Classification Election may be a step in the right direction to retaining more of your company’s profits. Barack Obama is the self proclaimed “Agent of Change”. As small business owners and entrepreneurs it is essential in this current economic climate that we change our business practices and “do better business”. Doing better business means choosing and operating our businesses in the most efficient business entities. It has been our experience at Contract Specialist Group that most of our clients who are business owners/entrepreneurs have chosen to operate as Sole Proprietors, Corporations, or LLCs without any true knowledge about the personal, business, and tax liabilities associated with each business entity. We challenge each of you to “do better business” in 2008. Change is necessary. However, maybe proven experience guiding change is the winning combination. Ponder That. By: srvp@csgeast.com ©2007 Contract Specialist Group™, LLC. All Rights Reserved. For more information visit us at www.csgeast.com.

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Thanks President Obama...

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