Should you structure your business to deliberately reduce your tax liability?

Question

Rich Dad · Accepted Answer

If you’re paying more tax than legally required, you’re tipping the government for no reason.
Yes — you absolutely structure your business to reduce taxes. Not evade. Reduce. There’s a massive difference. Smart entrepreneurs use corporations, holding companies, trusts, depreciation, retained earnings, and dividend strategies to legally lower their tax bill. Taxes are your biggest expense — bigger than rent, bigger than payroll — so why would you ignore optimizing it?
The wealthy don’t "earn and pay." They structure and allocate. They pay themselves strategically. They reinvest profits. They turn income into assets before it ever becomes taxable cash in their pocket. If you’re operating as a sole proprietor when a corporation would save you 20–30%, you’re playing checkers in a chess game.
Build the machine first. Then decide how money flows through it.

Poor Dad · Answer

Be careful — the taxman always gets his share.
Yes, you should use legal structures to reduce taxes, but don’t get aggressive or complicated unless your income truly justifies it. Setting up corporations, trusts, or complex entities costs money in accounting, compliance, and legal fees. If your profits are modest, the savings may not outweigh the administrative burden.
Focus first on running a stable, profitable business. Keep clean books. Maximize retirement contributions. Use straightforward deductions. And most importantly, stay fully compliant. An audit, penalties, or legal trouble will cost far more than whatever clever structure you thought would save you.
Reduce taxes responsibly — but never gamble your security for cleverness.

Should you structure your business to deliberately reduce your tax liability?

Rich Dad Says

Poor Dad Says

Whose advice would you follow?

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