A Personal Finance Checklist for 

Entrepreneurs 

Written By: ​The Builders at Wealth Factory

Welcome back!

In this week’s issue, we introduce you to a ​Personal Finance Checklist for

entrepreneurs​.

If you’ve been getting financial advice from professionals who don’t specialize in
business, or don’t have a comprehensive financial team on your side, then you may be
shocked to see where your finances need help. ​Make sure to look over this checklist
ASAP.

Next up is an introduction to ​The Automatic Wealth Ladder​ — our simple system for
growing wealthier every single month, guaranteed.

And we finish off with ​3 Creative Ways to Start Next Month a Little Bit Richer​.

Build the Life You Love,

The Builders at Wealth Factory

   
WF Lever: Strategically Engineer Wealth 
 
A Personal Finance Checklist for 
Entrepreneurs  
Written By: ​Garrett Gunderson

Most “financial advisors” or retirement planners just doesn’t understand entrepreneurs

or business owners.

They’re used to the W-2 employee who’s happy to just dump money into 401(k)s and
IRAs full of mutual funds.

But for the entrepreneur, there’s much more to personal finance than that.

So here’s a personal finance checklist for entrepreneurs that your typical financial
planner probably won’t know to help you with.

 
#1: Have you built a war chest to take advantage of 
opportunities and get through hard times? 

A financial planner will often encourage you to start taking money out of the business to
put into financial products before you’re financially set.

It’s smart to first build a “war chest” where you store cash in a way that’s immediately
accessible when you need it. We recommend a system called Cash Flow Banking for
this (which we will cover in month 2 of ​BUILD:)​, but even a simple savings account can
do the trick.

Saving money may sound hard — but we don’t recommend cutting back, sacrificing or
delaying happiness to do it.
Instead, you can fund your Cash Flow Bank or savings account by freeing up extra cash
flow. We gave you 9 strategies to free up cash flow last week, 3 more today, and will
continue to deliver in future issues of ​BUILD:

All that money is then used to build your war chest.

Having this liquidity in your back pocket can either reward you greatly or save your
business in the future.

For example, if the right business opportunity comes along, but it requires capital
investment, you can pounce. Or if the business hits hard times, you won’t have to
finance payroll on your American Express at 18% interest.

These rewards are likely to be much greater than what you’ll get taking money out of
your business to invest in the markets.

 
#2: Do you have all the insurance business owners need? 

As a business owner, you face far more risk than the average person.

If you’re injured or become sick and can’t work, your business and livelihood is in
danger. If someone gets hurt at your physical location, you could be liable. If an
employee is running an errand and gets in an accident, you’re responsible.

Thankfully, with the added risk, you also have more opportunities to protect yourself.
You can acquire overhead-expense insurance to pay the business’ bills while you’re
unable to work, or even a comprehensive Business Owner Policy to provide property,
liability, crime and medical coverage all-in-one package.

 
#3: Are you using the 5,300+ pages of tax code written 
specifically for you? 
The IRS tax code is more than 5,700 pages long by some counts (and the documents
that explain it reach 75,000+ pages). The first 400 pages are written mostly for the
typical tax return — a W-2 employee who contributes to retirement plans.

But the next 5,300 pages are mostly strategies for businesses to lower their taxes — it’s
all about which deductions you can take and which strategies you can implement.

Do you know if you’re taking all of your legally allowed tax savings from these 5,300+
pages?

It’s unfortunate, but probably not. In our experience, 93% of business owners are paying
more tax than they legally owe. Whether it’s forgetting to deduct the interest from
business loans, not cost segregating the office they operate out of, paying business
items on their personal credit card, not recording self-employed health insurance
properly, or forgetting to write off business transportation taxes, missed deductions can
add up fast.

 
#4: Is your business structure sufficiently protecting you from 
liability and taxes? 

Many financial planners work for a company and have never started a business, so they
don’t know about the different business structures you can use to protect yourself from
liability and taxes.

For example, the most basic business entity that’s been around the longest is the
sole-proprietorship. But it doesn’t provide any protection from liability or taxes.

We’ve helped hundreds of business owners switch their business entity to save tens of
thousands of dollars on taxes each year, and improve their liability protection — yet
their financial planner, and sometimes even their CPA, never told them about the
savings.
 
#5: Do you know the 3 C’s to borrowing money under the best 
terms? 

To borrow money under the best terms possible, you need to know the 3 C’s: credit,
cash flow and collateral.

Having good credit is about more than just paying your bills on time. It’s also about
having different types of credit, such as a mortgage, an installment loan (i.e. car loan)
and credit cards. It’s also important to use less than 30% of your credit card limit. Just
following these simple rules will help you maintain a high credit score.

Cash flow is important as well. As a business owner, you may have found it difficult to
get a mortgage for a home in your price range. You have an incentive to minimize your
taxable income, but banks look at your taxable income to see if you qualify for a loan.
The lower the taxable income, the less you’ll be able to borrow.

Collateral is the third C, and it’s the reason why auto loans charge 2-5% interest when
credit cards are charging 10-30% interest. If you default on an auto loan, the car acts as
collateral. But if you default on a credit card, there’s nothing for the bank to repossess.

So putting up an asset as collateral is sometimes a great way to get a lower interest

rate. You can use your house, your car, your life insurance or even your business as
collateral to get better interest rates.

 
#6: Are you able to get a business loan or line of credit if 
needed? 

Your typical financial planner will tell you to avoid paying interest, so they may not even
think to help make sure you have access to a business loan or line of credit. But having
access to money really makes a difference if it will help you in a pinch or simply give
you peace of mind that it’s there if needed.
On that note...

 
#7: Are you regularly monitoring your business credit score? 

Just like you personally have a credit score, your business can have a score that
impacts access to money as well. And if you want to get a business loan, a line of credit
or qualify for lower interest rates, then it’s critical that you monitor or build your
business’ Dun and Bradstreet score to make sure it’s accurate.

It’s been reported that as many as 83% of personal credit reports have errors on them.
And a quarter of those errors may be significant enough to deny you for a loan, even
though you did nothing wrong. There’s no reason to believe business credit reports are
any more accurate.

To check your personal credit reports, there are 3 main bureaus: Equifax, Experian and
TransUnion.

There are 3 bureaus for business credit reports as well. But what your typical financial
planner may not know is that it’s not the same three. The 3 bureaus for business credit
reports are Equifax, Experian and as mentioned above Dun & Bradstreet.

 
#8: Do you have an estate plan in order? 

It’s not pleasant to think about, but what happens if you’re not around anymore? Do you
have a succession plan for your business?

An estate attorney can help you create a succession plan to direct the business after
you’re gone and help you create buy-sell or cross-purchase agreements to sell your
share of the business (if in a partnership) in case of your passing.
 
#9: Do you have a retirement plan fit for an entrepreneur? 

For most entrepreneurs, the best place to build wealth is inside their business. Bill
Gates built his wealth inside Microsoft. Warren Buffett built his wealth inside Berkshire
Hathaway. And it’s the same with Facebook’s Mark Zuckerberg and a string of other
billionaires and millionaires.

Businesses are where wealth is built, not in 401(k)s or IRAs. So for many entrepreneurs
it’s best to keep money inside of your business. This helps you build business equity if
you ever want to sell for a large payday. Or you can use the money to hire more people
to take over your day-to-day roles so you can retire in your business, rather than from
your business.

 
#10: Have you built a wealth team of specialists? 

Most people, if they hire anyone at all to help with their finances, stick with a tax
accountant or CPA. But lately I get just as much or more tax savings advice from my tax
attorney as I do my CPA. Adding financial specialists to your wealth team is critical to
success as your business grows.

On your wealth team, you may end up with a bookkeeper, a CPA, a tax attorney, a
business attorney, an insurance specialist, a banker, a Registered Investment Advisor
and more.

It took me 15+ years to build my wealth team, called The Accredited Network, which is
modeled after the Family Offices where the Rockefeller fortune is managed. Each
member of The Accredited Network is an expert in their field — and they all work
together to create a custom financial blueprint for each client.

As you can see, personal finance for entrepreneurs is a whole different animal. It
demands a tailored financial blueprint that the typical retirement planner is not prepared
to deliver simply because they’re not business owners.
And you deserve a financial plan fit for an entrepreneur. And that’s what you’ll continue
to get in each issue of ​BUILD:

   
WF Lever: Strategically Engineer Wealth 
 
Introducing the Automatic Wealth Ladder 

Written By: ​Garrett Gunderson

For too many entrepreneurs, money is easy-come, easy-go.

At first the money is flowing in, and then before you know it the tide flows out. The
money is gone and you don’t even know where it went.

That’s why we created the Automatic Wealth Ladder.

With this system, you can grow wealthier each and every month, grow your savings at
an ever-increasing pace while living wealthy at the same time… and even get as high
as 4-6% guaranteed returns that will never go down — not even in a stock market
crash.

You can do this without budgeting, cutting back, sacrificing your lifestyle or delaying
happiness.

And — unlike an IRA or 401(k) — the money is always available to invest in your
business.

The best part? Once you set it up, it’s completely hands-off. That’s why we call it the
Automatic Wealth Ladder.

 
The First Rung: Your Wealth Capture Account 

It works like this: the first step on the ladder is to create a “Sweep Account” with your
main checking or savings account — wherever your income is deposited each month.
Then set up an automatic transfer to sweep 15% of your income, on the day it is
deposited, into a savings account that we’ll call your Wealth Capture Account.

For example, if you know that $5,000 will be deposited on the 1st and 15th of every
month, then you can set up an automatic 15% transfer into your Wealth Capture
Account on the 1st and 15th of each month. (Or on the 2nd and 16th of each month to
make sure the deposit makes it first.)

With this example, you’d have $1,500 transferred into your Wealth Capture Account
after the first month, $4,500 after the third month and $18,000 after one year — all
automatically.

That’s the first rung of the Automated Wealth Ladder.

Note​: If 15% of your income seems too high to save at first, you can choose a lower
percentage. But remember, you will free up a lot of cash flow with Wealth Factory’s
cash flow optimization strategies — the average business owner frees up
$2,483/month. So you may be able to afford more than you think.

 
The Second Rung: Your Living Wealthy Account 

Next, set up a second automatic transfer on the same dates to sweep 3% into a
separate savings account that we’ll call your Living Wealthy Account. This account is for
setting money aside to let you enjoy life along the way without feeling guilty. It’s to save
up for those European vacations, or luxury cars or courtside tickets — whatever brings
you value.

Now that you have these automatic transfer set up, 18% of your income is spoken for
every month — it’s going towards capturing wealth and living wealthy — and it’s in a
separate account, so you can’t slip up and spend it by mistake.

With the other 82% of your income sitting in your sweep account you can pay bills and
cover day-to-day expenses — anything besides reaching into your Wealth Capture
Account to help cover costs.
Do this even when times are financially tough. In fact, it’s more important to capture
18% of your income when times are tight because it forces you to be resourceful and
bounce back.

With this system, you will grow wealthier every month. And because it’s based on a
percentage of your income, rather than a set amount, as your income increases, so
does the velocity of your Wealth Capture.

For example, we showed how putting 15% of two monthly $5,000 deposits into your
Wealth Capture Account will leave you with $18,000 at the end of the year. But let’s say
your income is increasing 10% per year. The second year, you’d sweep $19,800 into
your capture account. By the fifth year, you’d be sweeping $26,354 into your capture
account, for a five-year total of $109,892.

The faster your income grows, the faster and greater your Wealth Capture Account
grows.

 
The Third Rung: Your Wealth Creation Account 

The third rung of the ladder is your Wealth Creation Account — a safe, reliable place for
your money to grow where it can also be utilized for investments or accelerating
business growth. We’ve found that the best vehicle for a Wealth Creation Account is our
Cash Flow Banking system.

The Cash Flow Banking system allows you to earn a consistent, guaranteed
tax-deferred return no matter what the stock market does — historically around 4-5%
annually. In most states, the money in your account is untouchable to creditors. And it
also allows you to become your own “bank” and quickly borrow cash for anything you
want without the hassle of a loan application and no annoying credit checks.

It’s the perfect wealth creation tool for entrepreneurs. Your money isn’t locked up away
in the stock market until you’re 59 ½, like with 401(k)s and IRAs — instead it’s always
available to borrow from to accelerate your business growth.
We’ve also had members pay for their kids’ education, finance their own homes, or
even pay off loans with this system.

(We’ll cover Cash Flow Banking in detail in month 2 of BUILD:)

After your Wealth Capture Account (the first rung of the ladder) has reached a level that
gives you peace of mind about your savings, it’s time to start funding this Wealth
Creation Account.

You can divert the entire 15% of your income into your Wealth Creation Account, or split
it up: 7.5% to Wealth Capture and 7.5% to Wealth Creation.

It all depends on your unique circumstances, which is why we usually have a Cash Flow
Specialist help our members decide.

Once you have all three of your accounts set up and supporting you — your Wealth
Capture Account, Living Wealthy Account and Wealth Creation Account — then you’ve
climbed the Wealth Ladder. As an entrepreneur, you are flying head and shoulders
above other entrepreneurs who don’t have their finances in order, are putting off living
wealthy and living paycheck to paycheck instead. I highly recommend it.

   
WF Lever: Recover Cash Flow 
 
3 Creative Ways to Start Next Month a 
Little Bit Richer 

Written By: ​Garrett Gunderson

For entrepreneurs, there’s usually only one way to measure success: what’s your
bottom line? The bottom line of your financial statement is where your net income
appears.

After working with hundreds of entrepreneurs to strengthen their finances, I know that
most attempt to improve their bottom line by growing the business. That makes sense
— more profits means more net income.

But the truth is, it’s often easier to improve your bottom line by getting efficient with your
finances. Instead of just trying to make more money, increase your net income by
keeping more of what you make.

So here are 3 quick ways to grow a little bit richer with greater financial
efficiency:

 
#1: Do You Have Any Underperforming Investments? 

Over and over again I see business owners with investment accounts that are either
losing or earning a small return, and at the same time, they’re paying down credit cards
at 15-18% interest.

It’s been drilled into our collective consciousness that we need to stick money away and
let it grow without touching it — especially with 401k and IRA accounts that penalize
early withdrawals — but this scenario doesn’t make financial sense.
Why hold on to an investment that’s averaging a few percentage points per year — or
even 10% per year — when you’re making payments on a balance that’s growing at
18% per year?

So don’t be afraid to cash out an investment to pay down expensive loans. You’ll save
on interest and improve your bottom line.

Also, it can even make sense to cash out of an investment to invest in your business —
where double-digit returns are more common — if you can be reasonably sure that the
investment will pay off.

As I mentioned in ​Killing Sacred Cows​, my friend, Philip Tirone, dipped into his
investments to access $500,000 to fund his business, ​7 Steps to a 720 Credit Score​,
and it’s paid off several times over. The key is to make sure you’re investing in what you
know, and not gambling on a business “opportunity” that has never seen success.

 
#2: Do Your Insurance Policies Make Financial Sense? 

Insurance policies are about as exciting as watching paint dry — until you need them, of
course. And that’s why you ultimately buy insurance. But how much time do you actually
spend making sure that you’re not paying for duplicate coverages, coverage that you
won’t use or coverage that’s unnecessarily expensive? That’s why it can be a good idea
to meet with an insurance professional to look over your policies.

One of the first things we do when working with a business owner is get all of their
insurance policies out and look for ways to save. If you have several different policies,
but with different insurance companies, you can usually get a multi-policy discount by
consolidating into one company.

Or, if your deductibles are so low that it doesn’t make sense to make a claim — like a
$250 deductible for car insurance where it’d be smarter to just pay out of pocket — you
can save by raising the deductible on the policy.
And sometimes you can save big by reducing the coverage for your auto and
homeowner insurance policies, but then getting an umbrella insurance policy to
increase the coverage of both policies.

One of our members implemented just these 3 tactics and saved $1,038 per year.

 
#3: Do You Meet With Your Tax Accountant Before Tax-Season? 

Most people don’t think to meet with their accountant until January or February. But
that’s when your accountant is the busiest — you can’t expect to get the best
tax-savings ideas when your accountant has no time to be creative. So set up a time to
meet with your accountant now to find some creative ways to save on tax.

For me, I discovered that when I host clients or employees at my personal home, I can
actually rent the house to my business and I don’t have to pay taxes on the income. And
I can do that up to 14 days per year without ever triggering any taxes.

I also discovered that I can hire and pay each of my two sons up to $6,300 per year,
and it’s tax-free income for them and a tax write-off for me. I would never have learned
about either of these tax strategies if I only met with my CPA during his busiest months.

There are many more ways to get efficient with your finances. I could go on for hours
(and even days), but just these three tips will go a long way towards improving your
bottom line — and you can start the next month a little richer.

   
In Closing... 

Written By: ​The Builders at Wealth Factory

You see? Personal finance for entrepreneurs isn’t about budgeting and retirement plans.

Instead it’s about setting up a proper Wealth Architecture now — and getting a wealth team in
place — to help you live wealthy today and in the future.

A proper wealth team will help you accomplish everything on the entrepreneur's personal
finance checklist. They’ll help you free up cash flow to fund your Automatic Wealth Ladder.
They’ll help you make sure you’re properly protected from financial predators and lawsuits.

And they’ll make sure you have an estate plan in place to leave a lasting family legacy.

Until next week...

Build the Life You Love,

The Builders at Wealth Factory