Tax Reduction Podcast

Episode 8: MUST Have Family Management Company

• Boris Musheyev • Episode 8

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Interested in Tax Strategy for your Business? Send us a message with your email address and we’ll help you get started!

Are you a business owner looking to optimize your tax strategy? Dive into the benefits of setting up a Family Management Company! 🏡✍️

In this episode, I cover:
1️⃣ The fundamental principles behind a family management company and how it can be a game-changer for you.

2️⃣ Why hiring children can provide both tax write-offs and invaluable life experiences.

3️⃣ How to seamlessly integrate real estate investments within your family management framework.

4️⃣ The perks of incorporating as an s-corporation - all broken down for easy understanding.

5️⃣ Insider tips from top tax advisors on maximizing your tax benefits.


I've put together this FREE resource for you:

7 Write-Offs Every S-Corporation Business Owner MUST Know
🆓 Download FREE PDF here: https://7taxwriteoffs.com/

Ready to start saving money on your taxes?
☎️ Schedule your FREE Tax Advisory Session: https://taxplanningcall.com/

🤩 If you are looking for easy-to-use payroll software, I personally use and recommend to my clients Gusto Payroll Software - https://gusto.com/r/boris466

P.S. When you sign up for Gusto, you get a $100 Visa gift card

*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this reason, ...

Speaker 1:

If you ever thought about having a family management company to save money and taxes, well, your idea is not wrong, or was not wrong. I will show you how to use a family management company to save money and taxes. Do you really need it, do you not need it? And exactly how it works. You will know, if you need a family management company, what to do, how to use it and attack strategy behind it. Ready, let's go.

Speaker 2:

Welcome to the tax reduction podcast for money making entrepreneurs with Boris Mousheev. Boris has helped entrepreneurs across the United States collectively save millions of dollars in taxes with the power of tax planning and advisory. The only way you, the business owner, can save money on taxes is by using proactive tax strategies, and this podcast is all about saving you money on taxes. Boris will share with you in depth and easy to understand tax reduction strategies that you can implement in your business within 30 days or less. Let's jump into today's episode.

Speaker 1:

So I broke it down for you in three simple steps. We're going to talk about what is really FMC, a family management company, how it works and what is a tax strategy behind this. So definitely make sure you stay till the end so you'll be able to utilize this tax strategy. Now, what is a family management company? What is the purpose of it and why is it even Does it even exist? Okay, now, a family management company is just another company that you own. Okay, it's a separate from your main operating business. Your main operating business could be an S corporation. Or if you own a bunch of rental properties and you want to set up a family management company to manage those properties, this would actually be a good idea, because the properties can pay you a management fee and you can take advantage of all the deductions and the benefits from that management company. So, really, family management company is just another entity that you own and the family management company provides services to your other companies that you own. Like I said, that could be your S corporation. That could even be your C corporation or your LLC, whatever that may be. Or if you own real estate properties, it would actually be a great idea to have a family management company to take advantage of some owner compensation strategies, healthcare strategies, retirement strategies, additional write offs and so forth. So we'll definitely talk about that. Make sure to stay till the end.

Speaker 1:

Now, a family management company a lot of times I get asked the question how should this entity be set up? So it really depends. There is no one answer that fits the solution for your question. It depends on your financial situation and what you will use the family management company for. Really, the family management company could be a single member LLC just owned by you, a multi member LLC owned by you and your spouse. It could be an S corporation. This would actually super helpful when you own other properties, a lot of properties, and you have a family management company that manages those properties. Think of it as a property management company and a C corporation.

Speaker 1:

A great way also is to have family management company restructured as a C corporation, because C corporation pays a lower tax and a family management company can be used to basically shift income from your other entities. So really, it depends on your tax situation. There is no one answer fits all the solution. So, yeah, this video helps you about what that's. Why make sure you please speak to your tax advisor about this. Do not implement any of this stuff on your own, without a tax advisor. I'm just here to kind of educate you about this. Now let's talk about how it works right after this break.

Speaker 2:

If you have a tax preparer and you do not have a tax advisor, the only way you can save money on taxes is by using proactive tax planning strategies that only a tax advisor can give you. Boris put together a free PDF for you, the business owner Seven tax write-offs every S Corporation business owner must know. In this PDF you can find seven tax strategies that you can start using in your business to instantly start saving money on taxes. Click on the link in the description below for a free download.

Speaker 1:

All right, welcome back. Let's talk about how this tax strategy works. So I've broken down to you in these two little graphs, ok, so follow me through on this. I'll try not to speak quick so that you, the business owner, can understand this and be able to implement this tax strategy right away. So let's start with this section right here, ok, the second section right here is when you own real estate properties. I will talk about that, but let's talk about when you have a business and now you want to set up a family management company.

Speaker 1:

One thing I want to mention is that family management company it's just a general term. It could really be a property management company, just a management company that manages your properties or your other businesses. It's just referred to as a family management company. Some people ask hey, do I need a management company or do I need a family management company? Really, it's all in the same, ok. So now that we got that terminology, let's kind of continue over here. So this is you, right? You as an individual this could be you and your spouse and you own.

Speaker 1:

I put a question mark over here. The reason I put a question mark is that, depending how you structure your entities you definitely want to make sure you speak to your tax advisor about it. In most cases, individuals have a holding company over here. This holding company could be in the States such as Nevada, delaware or Wyoming. I put a question mark over here. Everybody operates different. Everybody has their different structures. Every tax advisor has a different strategy based on your situation. So I put that little question mark over here.

Speaker 1:

So, from the holding company, you can own your business or your family management company. Now, if you don't have a holding company, don't worry, it's no big deal, you can do it later. Just because you don't have it right now, you can always do it later. Don't think that you're missing out on a tax strategy. So now you have a business and you've got a family management company.

Speaker 1:

Let's use an example of a family management company that employs your children to provide services to your business. Ok, so you've got a business. Your business pays management fee to your Family Management Company. Your Family Management Company, in return, provides services to your main business. And if that is that your kids work for you from the Family Management Company for your business, then that's what the services are. It's staffing agency services. Don't run around now. Start forming Family Management Companies hiring your kids without speaking to your tax advisor.

Speaker 1:

There has to be an executable tax strategy. It has to be documented and all the paperwork has to be ready before it can be executed. Do not do this without a tax advisor. If you're working with a tax preparer, oh my God, you overpaying in tax. I guarantee you what you need is a tax advisor to be able to save money and taxes.

Speaker 1:

So one thing is important to note Family Management Company it's not a holding company. Now I've seen some stuff out there from other accountants or even some advisors that they say hey, your holding company is your management company. I personally do not follow that strategy because a holding company should be a holding company. That means it needs to hold your assets and to protect you. It gives you that extra layer of protection, so it doesn't necessarily need to be a management company. A management company should be a separate entity. That's why I put a question mark over here. Some advisors out there might be saying, no, this right here is your management company and your holding company. I don't follow that practice. I like to keep everything clean, organized and with that extra layer of security and legal protection, now we've got a business that pays a Family Management Company.

Speaker 1:

Family Management Company is not a holding company and it could be any entity type. For example, when you're employing children in your business and you're doing it through a Family Management Company, it's best to have this Family Management Company file taxes as a sole proprietor or single member LLC, if this was, for example, at the type of a management company. In some cases you can actually use set up a Family Management Company to take advantage of health insurance benefits. That's right. This usually works when you are the only employee of your business, you have really high deductible, you have really high medical expenses and you set up what's called an HRA 105, reimbursement arrangement, a medical reimbursement arrangement. That means you would set up a Family Management Company that is now a C corporation. Again, it really depends on your situation, but Family Management Companies are a great way to save money and taxes. But it's gotta be documented properly, legitimately, and half legitimacy to it. So definitely make sure you speak to your tax advisor about it. So this is one part of the equation of having a Family Management Company Awesome.

Speaker 1:

Now the second section over here that I've outlined for you is a different type of a Family Management Company set up, and that is if you own real estate property. So again, the idea is kind of the same. Right, you as an individual could have a holding company. That's why I have a question mark here. So I don't know what your situation is like If you don't have a holding company. That's okay right now. You can always create it later.

Speaker 1:

Now you can still set up a Family Management Company that can be owned by you. And then, let's say, you also own rental real estate. So the triangle right here represents an LLC. Okay, so LLC one with one rental property, llc two with the second rental property, llc 3 with the third rental property All of these rental properties can pay a management fee to your family management company.

Speaker 1:

Now, why would you wanna do that? Why would you wanna set up a family management company Also, aka also known as as property management company? The reason is is because when you collect management fees over here, you can now take a lot of right-offs against it. Now, true, you could have right-offs against your rental properties, but it becomes cumbersome Keeping track. Hey, I traveled to this property, so I have to deduct it under this LLC. I traveled to another property. After deducted under this LLC, you've got one car, three properties. Complicates things, okay, complicates things. So you wanna have a family management company or a property management company where you can keep all the deductions there.

Speaker 1:

Now you can also use tax strategies as either having it maybe in a C corporation that depends. I'm not saying open a C corporation, but definitely discuss it with your tax advisor, because C corporation is in a lower tax bracket. Could that help you? Or you can buy a car, a company car under this, have an owner-salary compensation tax strategy, or take retirement tax strategies from this or some other fringe benefits. So that's why you would wanna set it up. Again, two different scenarios this is where you have one business and family management company provide services. In this case you've got a property management company that is your family management company, but you've got rental properties paying you family management fees. Now let's talk about a tax strategy. We kinda discussed most of it, but really let's talk about hey, does having a family management company reduces taxes? Do you need it or not? And we'll be back right after this break.

Speaker 2:

If all your accountant does is taxes, you may be overpaying in taxes by thousands of dollars every year. Every week, boris releases a tax strategy on his podcast so that you, the business owner, can pay less in taxes every single year. Be sure to subscribe to our podcast to be notified when a new tax strategy is released. If you're ready to work with a tax advisor on your tax strategy and planning, be sure to schedule your call by heading over to wwwtaxplanningcallcom. Again, that's wwwtaxplanningcallcom.

Speaker 1:

Now does family management company reduces your taxes? The answer is, in most times, yes it does, but you've gotta speak to your tax advisor. Without a proper tax strategy, documentation and an intent that you have an intent for the family management company, the proper intent, knowing what you're gonna use it for, how and what tax entity will it be in, you may not be able to save money in taxes. So definitely, does it reduce taxes? Yes, it does, but you've gotta work with a tax advisor to make that strategy happen for you, to map it out, see what deductions you can take, what fringe benefits and what entities it could be on. Is it complicated to set up a family management company? Honestly, most cases no. If you wanna set it up. For this scenario right here, where you've got a business and you wanna set up a family management company and it's going to be providing services, awesome, great, not that complicated At first it takes a little bit of time to set up, but then it's totally okay. So it's not that complicated when you set it up the first time and then really becomes an autopilot. The third is it really necessary? In most cases, it may not be even necessary. I've come across some business owners. They own one property and they open a property management company. No, you don't need to do that Now. You're complicated things.

Speaker 1:

Definitely speak to your tax advisor. Do you need a family management company? Can it act as a property management company or can this family management company provide services to your other businesses? You've gotta speak to your tax advisor. In some cases, having a family management company may not be necessary. It could cost you extra fees, extra compliance, extra taxes and filings. In most cases, it's a great tax strategy, but you've gotta speak to your tax advisor in order to see if you really need this.

Speaker 1:

Ladies and gentlemen, I always say if you've got a profitable business, I can guarantee you right now, if you're not working with a tax advisor, you are overpaying in taxes. You see, tax code was designed in a way to help you, the business owner, save money on taxes. Most business owners, combined with their estate, pay 40% tax. Now, I'm not saying don't pay any tax, but it is your duty and obligation and responsibility to be able to use the tax code to your advantage, because the tax code was written in a way where you can save money on taxes. Don't believe me. Go ask other tax advisors and find out that what you've been doing so far is nothing. You have been overpaying in taxes. Ladies and gentlemen, thank you and until the next time.

Speaker 2:

That's it for today's episode. Be sure to check out the description below for some free tax reduction resources that Boris put together for you. If you're ready to work with a tax advisor on your tax planning, be sure to schedule your call by heading over to wwwtaxplanningcallcom. That's wwwtaxplanningcallcom. And be sure to subscribe to our podcast to be notified when the next strategy is released.