Rental Income

One widely used method for building personal wealth is for you to retain any real estate used in your business in your own name. Then, you let the business compensate you not only for your service as an employee, but also for your financial risk as the owner of the property.

You lease the property to your company. This gives you income that can be increased in later years as the business prospers. At the same time it gives your company a deduction. More importantly, down the road, when the property has appreciated significantly, that appreciation will not be double-taxed as it would if your corporation owned it. Real estate is also a good vehicle for family income shifting when the time comes.

Warning The IRS expressly forbids this method in the context of using a home office. If you want to lease part of your own home to yourself, don't try to deduct the rent on your tax return. You must follow the rules for taking a home office deduction.

This method of leasing property to your business is not recommended for equipment. Equipment is generally leased as a financing alternative. Since equipment doesn't usually appreciate — in fact quite the opposite: it almost always depreciates — there is little benefit in owning it personally.