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

This book will help you keep more of your money. As you start to generate cash, you need to legally protect and house it. Statistics show that 34 cents of every dollar goes to interest and 30 cents of every dollar goes to taxes. These are considerable premiums 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 your own business. 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 everyone knows, our government agencies are efficient machines and spend our money wisely – NO! One thing the government is smart about is setting incentives for businesses. They do it because companies create value and jobs. The key here is to go from “earn-spend-taxes” to “earn-spend-taxes.” This subtle difference makes a big difference over time.

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

This book is packed with a ton of information. For the sake of time, I will highlight some of the things that have helped me in my business career. Diane has worked with Robert Kiyosaki in the past as a Rich Dad advisor. She will see that this book falls under 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 stumble over pennies and hire incompetent advisers. Remember that you get what you pay for. You need to have a good CPA, lawyer and trainer. 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 businesses, and C Corporations for businesses. C Corporation is unique in that taxes do NOT flow to you and you can set year ends. This timing feature is critical to tax planning strategies. As you grow, you can use multiple entities to save money and build 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 research based on the claim. If they run into obstacles, they will most likely not accept the BS case. But if your entity structure is not set up correctly, they will proceed. Unfortunately, there are people who have entitlement mindsets and if they can get something for nothing, they will. If you are a sole proprietor and own your real estate building and business, 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 a great resource and will help you set up your structures correctly. If you’re meeting with advisers, I suggest you read this book first to find out. The best way to eliminate problems is to ask relevant questions. Diane’s book will help you do that.

I hope you have found this brief summary useful. The key to any new idea is to work it into your daily routine until it becomes a habit. Habits are formed in as little as 21 days.

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