What is the difference between the truly rich and everyone else? It’s all in the mindset. While the average worker spends their life struggling to pay back debt and save for retirement, the elites use debt to build even more wealth and reduce their taxes. To help you understand how they do this, Alpha Accounting Services, Inc. in McDonough, GA, reveals the habits that set their truly wealthy clients apart.
3 Tips for Taking Advantage of Debt & Taxes
Understand the Difference Between Good & Bad Debt
Suppose a wealthy person invests in an apartment building. The building appreciates by one million dollars after a year or two of the initial purchase. Instead of sitting on that equity increase, a smart entrepreneur might take out an equity line of credit and use it to buy another income-producing property, thereby adding to their net worth. They use risk and debt to their advantage. This differs from the practices of most spenders, who take on bad debt, such as a car loan or other asset. This debt costs the borrower money instead of adding to their net worth.
Build Wealth By Keeping It
While a doctor’s income in middle America lands them in the highest tax bracket, they still won’t come close to the millions a real estate investor makes across the country. They will, however, pay more in taxes. This is because the real estate investor understands the tax code and will use it to their advantage by taking deductions that could reduce tax liability to zero.
Look Forward to Your Audits
Many people put off their annual tax return preparation as long as possible, but smart entrepreneurs look to this meeting as an opportunity to see where they can improve their business and increase their wealth. They learn by asking their accountant questions about missed opportunities that they can improve upon the next time around. When you look at meeting with your accountant as a pathway toward wealth, you’re thinking like the rich.
Are you ready to take the next steps to great wealth? The certified accountants and business tax specialists at Alpha Accounting Services, Inc. can help you save on your taxes and protect your assets. You can reach them at (305) 299-2952, and visit their website for more on their services.