Book Summary – Loop Holes of the Rich – Written by Diane Kennedy and Robert Kiyosaki

This book will help you save more money. As you start generating cash, you must protect and guard it legally. Statistics show that 34 cents of every dollar goes to interest and 30 cents of every dollar to taxes. These are hefty bonuses to pay for success. It does not have to be this way.

Why is this important to me? This book is a great resource if you have decided to start a business yourself. You need to understand that there are risks that are EASILY mitigated if you take the time and set things up correctly. Taxes can cost you up to 50% of your money. As you all know, our government agencies are efficient machines and they spend our money wisely, NO! One thing the government is smart about is setting incentives for companies. They do this because companies create value and jobs. The key here is to go from “Earn-Tax-Spend” to “Earn-Spend-Tax.” This subtle difference makes a big difference over time.

Lawsuits are a nightmare. Rich people sometimes get a bad rap, but it’s the bottom-feeders who really need to be punished. It takes years to build a reputation and ANYONE can sue and destroy it even if they are lying. There are more lawyers in law school than there are lawyers. These people need to make money in some way and that is why we are the most litigious country in the world.

This book is packed with a lot of information. For the sake of time, I will highlight some of the things that have helped me in my entrepreneurial career. Diane has worked with Robert Kiyosaki in the past as a rich dad advisor. You will see that this book is included in the team and legal areas of the BI triangle.

1. Team – You need to have a good team. When you start making money in business, DO NOT trip over pennies and hire incompetent advisers. Remember you get what you pay for. You need to have a good CPA, attorney, and coach. A bad contract can cost you your business.

2. Business Entity – There are several types of business rights, but the one you DO NOT want is a sole proprietorship. Depending on your circumstances, you can use LLCs for real estate, S Corporations for business, and C Corporations for business. C Corporation is unique in that taxes DO NOT flow to you and you can set them up outside of the year-end. This timing feature is critical to tax planning strategies. As you grow, you can use multiple entities to save money and create protection.

3. Asset protection: “Call Mr. Lawyer today if you stubbed your toe!” You see these commercials all the time. The goal is for you to call. The attorney on the phone will ask you questions and maybe do some really quick searches based on the claim. If they run into obstacles, they will most likely not accept BS’s case. But if your entity structure is not set up correctly, they will continue. Unfortunately, there are people who have a rights mentality and if they can get something for nothing, they will get it. If you are a sole proprietorship and you own your real estate building and your business as well, then you are in trouble. If I slip and fall on your property, then I have a great opportunity to be a new business and real estate owner and you can go to the poor house.

Loop Holes of the Rich is an excellent resource and will help you set up your structures correctly. If you are meeting with counselors, I suggest that you first read this book to inform yourself. The best way to eliminate problems is to ask relevant questions. Diane’s book will help you do it.

I hope this short summary has been helpful to you. The key to any new idea is to incorporate it into your daily routine until it becomes a habit. Habits are formed in just 21 days.

One thing you can take away from this book is that you are not a sole proprietorship. This is a horrible entity and you need to change it if you are serious about business and your financial future.

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