Comments on: how America loves entrepreneurs

By: TheWealthSquad

TheWealthSquad — Sat, 29 Aug 2009 00:43:45 +0000

How is it gaming the system? Our legal system allows for us to be LLCs with S-Corp for tax purposes. It requires an S Corp to issue salary to the owner. Now you could game the system by issuing incorrect W2 information but that is a Federal offense.

What I suggested is in no way fraud. It is a perfectly legal use of the system as it is designed today. I can register a C corp as well for not much more money and a few extra forms a years. Does that mean that would be unacceptable as well?

Using legal means to navigate the world is why the wealthy get and stay wealthy. The laws are there. Use them to your advantage in a legal and moral manner. I would never suggest that anyone do anything immoral, unethical or illegal just to get a mortgage or for any other reason.

By: TheWealthSquad

TheWealthSquad — Fri, 28 Aug 2009 17:43:45 +0000

By: Broker Survey and Weekend Reading - May 22, 2009 | Financial Freedom

Broker Survey and Weekend Reading - May 22, 2009 | Financial Freedom — Fri, 22 May 2009 11:08:20 +0000

[...] Brip Blap writes about the challenges of being an entrepreneur. [...]

By: Curmudgeon

Curmudgeon — Thu, 14 May 2009 17:31:48 +0000

Okay, in general Steve is right. There are a lot of instutional barriers in the US for self-employment. I've had self employment income for almost two decades, and have found it difficult for banks to recognize that, even as they accept my business checking accounts. And the IRS (Inland Revenue, for those of you in the UK) is predisposed to believe that you are hiding income; I've been audited most years since the early 1990s. In the US, self-employed also have to pay both the employee *and* employer share of Social Security.

I wish it were different, but institutionally it's not nearly as bad as many countries in Europe, where self-employment is actually looked down upon by many of your peers. And despite the barriers, we still get a lot of people who choose this direction, and succeed to at least some extent. I think that if you are comfortable with the costs and risks involved, it has the potential to lead to a compelling lifestyle.

By: MoneyEnergy

MoneyEnergy — Thu, 14 May 2009 04:59:20 +0000

That's pretty weird; what about “national” banks like Bank of America, wouldn't they recognize this couple's credit history, etc.? Amazing that there would be such barriers between states of the same country, especially for citizens. But I guess that's the point of keeping power down at the lowest levels, right? NC gets to make its own financial decisions too…. interesting to hear about.

By: » Financial Sites By Blogging Entrepreneurs

» Financial Sites By Blogging Entrepreneurs — Thu, 14 May 2009 02:06:20 +0000

[...] Brip Blap: How America Loves Entrepreneurs [...]

By: ldk

ldk — Thu, 14 May 2009 02:00:15 +0000

My husband and I are both self-employed Canadians and things are much the same here….in deciding to become entrepreneurs we recognized that we were in essence opting out of many of the social safety nets: as self employed persons we are not eligible for unemployment insurance (incl. maternity leave), or worker's compensation and of course, have no pension plans or other corporate benefits. Dealing with the banks is equally difficult here as well….as I imagine it must be in most countries. Personally we were willing to accept all the risks inherent with self-employment; though I honestly believe that if we had to give up health insurance as well (as Americans do) we would have had to make other choices.

By: Forty2

Forty2 — Thu, 14 May 2009 00:58:29 +0000

So renting commercial space for their business is off the table? Renovations & customizing are expected w/commercial property.

As was already said, sounds they really don't want to make the move and are making an excuse, or aren't willing to make any sacrifices e.g. live in an apartment and rent comm. space.

By: Meg

Meg — Wed, 13 May 2009 16:24:20 +0000

They should not be surprised, much less devestated, that they are being declined for a mortgage. They will have NO INCOME - all they have is a business plan for a new business. It doesn't matter if they had a successful business before- for all intents and purposes they are closing it and moving to an entirely new area to start an entirely new business with all brand new clients.

If it was a stand-alone business that could be run from anywhere, the bank would consider that historical income. But it's not like they own a manufacturing company which is being managed by a third party. After they move they will lose all their clients and will no longer receive any more income from that business. They are starting from scratch. Which happens to be very risky, especially in this economy.

As a banker, there is no way we would give a mortgage to somebody who is about to quit their job and try to find another one - so why would we give one to people who are doing something even MORE risky. It generally takes over a year for businesses to become profitable. Giving mortgages to people doing what your relatives are trying to do is one thing that led to the mess we're in now.

Sorry for the rant, but it's like bankers can't win no matter what.

By: Chad @ Sentient Money

Chad @ Sentient Money — Wed, 13 May 2009 14:53:57 +0000

@ Wealth Squad and Lynn
Gaming the system like this got us in the current mess. I'm not saying that using an LLC/S Corp is as bad as what a lot of people were doing, but it is still a form of fraud.

It's sad the bankers either don't realize this or they just turn a blind eye to the practice. We haven't learned anything.

That being said, I do agree that it is unfair many banks treat the self-employed and the employee differently concerning loans. However, as the old saying goes, "two wrongs don't make a right."