Josh Bauerle from The Prestige Journal joins us on this week's Agency Journey episode to share his entrepreneurial story and tips for building a tax-efficient, tax-compliant agency.
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Choosing the Correct Corporate Structure
At our agency, GuavaBox, we learned the hard way that generating sizable profits comes with a steep tax price if you don't have the correct corporate structure.
In most locations, once your firm begins generating a decent amount of profit (starting around 30-50K), electing S Corp status for your business will be more efficient from a tax perspective.
Keep in mind that changing your corporate structure also may change your compliance requirements (payroll, annual meetings, etc).
Running a Profit-First Agency
At The Prestige Journal (TPJ), Josh and his team prefer to get their clients using the Profit-First method.
Investing Your Profits
Once you hit a point where your agency is throwing off a decent amount of cash, Josh recommends that most agency owners begin allocating that capital with a retirement account - often either a 401K or SEP.
Personally, Josh has also chosen to invest in real estate and has accumulated 41 units over the past 2.5 years. While real estate gets a lot of hype, keep in mind that this is a much less passive income stream than buying an index fund. It's a good fit for Josh, but if you're not willing to deal with the hassle or pay a property manager, a REIT or additional investment opportunity may be a better choice.