All Forum Posts by: Shawn Root

 Thanks for you comment.  However, I don't think that your argument is internally consistent.  You say that you will hold someone else accountable yet it's your fault. We aren't talking the same thing here.  It is YOUR responsibility to make sure this never happens again.  As I've said many times in my industry (where we always look for the process that broke) sometimes that process that broke down was the hiring process.  Sometimes you have people in positions where they shouldn't be.  If they misrepresented their abilities in a certain area, then your responsibility, while not 0, is not definitely not the majority.  In this case, he didn't hire someone in the sense of hiring an employee, he entered into a contract with another business owner to perform a service.  If you take responsibility for the failures of others all the time, you are going to spend an awful lot of time falling on your sword.  That being said, I understand (I think) the point you are trying to make which is "take responsibility for the success/failure of your project."  I can get behind that and the proper response in this instance was to realize the error in hiring this person and course-correcting by firing them and finding another competent contractor with appropriate experience and references.  That doesn't mean that the OP somehow caused the poor workmanship.   That's what fault means.  Responsibility for the project is something different and I think we agree where that lies.  The comment I was directly responding to was related to the OP being at fault because he didn't go and check the work often enough. I doubt that you were checking the work of your employees employees directly on a regular basis while the work was in-progress.  At least, I know that wouldn't be possible in my industry.  You are right that the ultimate success of the project falls on you as the leader, though.  I can't argue with that and wouldn't want to.

#askbp

How do you organize your business?  This could mean via legal entities....it could mean how do you keep track of who payed what, when, and for what.  What systems, software, and services do you use? etc.

I'm sorry....what? The responsibility for ensuring that the work is performed correctly falls on the contractor.  That's why you hire one.   You always have to make sure you are getting what you paid for, but to put the responsibility of poor workmanship on the customer is just ... well ... confusing to me.  In what other industry would you claim responsibility if someone you hired didn't do a good job? Are you checking the seasoning that the caterer is using?  Are you checking to make sure that the web designer has used the appropriate security protocols?  You hire people to do things that they profess to be competent at.  Of course you have to be happy with the finished product and need to have clearly communicated your requirements, but that doesn't mean that you had a hand in them turning out a crappy tasting cupcake or a website where your customer's information is open for the whole world to see.

@Kevin E. I think that I've decided to set aside the analysis for now and am going to just go with the SD IRA. If nothing else, it will keep me from spending the profits! Also, I have to admit that I actually laughed out loud at the marriage comment. My wife agrees that that is a very important consideration.

I did go talk to my accountant about this.  He told me that my marginal tax rate is 25% so anything that I distribute is going to cost me at least 35%...and likely more. I think that the actual amount you will lose to taxes up front is key to the calculation, as is the difference is tax rates now vs. when you use the money in retirement.  Personally I'd like to be in a higher tax bracket when I retire than I am in now, but....eh....who knows?

For me, right now, I'm engaging with some local real estate agents to begin my search for our first deal rather than continuing with my analysis of the "best" way to proceed.  My action plan is to:

1. provide my criteria to a few agents and start looking at properties

2. figure out which company to use for self-directed ira

3. start talking to property management companies

I'm still not convinced that investing inside an IRA is a good deal (stupid UDFI) but I'd rather start now rather than figure out what sort of business to start to justify a solo 401k...and since I can't figure out the numbers that would lead me to choose definitively disbursement vs. sd-ira, I'm going to just get started with what seems to be the safest choice at this time.

@Mark Nolan Thanks, I had seen that. There's a lot of good general information. I just still haven't seen anybody run the numbers all the way out.  I've just seen generalizations and summaries.  And, honestly, that's fine.  That kind of means that there are soooo many variables that it's really really hard to predict which option is better without perfect foresight and a lot of detailed info about the current situation of a given individual.

So far, from Ben, I have learned not to buy pigs or use the two percent rule. It seems there is no percentage in being a swineherd.

;)

@Dmitriy Fomichenko  Thanks for the list.  I just watched your video also.  I knew a lot of it, but there was some good info there.

Thanks @Justin Windham I was hoping someone might be able to speak to the specific example I was asking about or, perhaps, give some ideas for simple ways that they have generated self-employment income while keeping their day job. I have become somewhat acquainted with the benefits of the 401k over the IRA. That's, in fact, why I was asking about it. I'd certainly like the option of securing non-recourse financing without getting hit with what amounts to a corporate tax.

So, what income qualifies you to be able to form a solo 401k? They sound so much better than a self directed IRA, that I'd like to go this route if possible. If I had a rental property outside of the retirement account could I, for example, form a property management company to manage it? Would that qualify as active income? Or do I have to have something non-real estate related?

@Account Closed LOL.  I guess I wasn't so much concerned with the actual color of the paper.  Since I don't always like to follow the trends of what everyone else is doing, I may decide to use a bright green if I go that route.  My question was more along the lines of: Should this look like a business letter or a personally written note?