JZ

running a business with LLMs

2026-03-17T00:00:00+00:00

My hypothesis going into this was that:

With the advent of AI and LLMs many things are changing about how money is made. Administration and clerical work goes away, which means the C-suite should be reshaped, as much of what they do is glorified clerical work from their background in law, MBAs, and finance. I always vote against board members that aren’t relevant to product excellence.

My partner made a more interesting statement:

I don’t believe a company’s board would vote out their peers even though CEOs are obsolete.

I thought https://fortune.com/2026/02/17/ai-productivity-paradox-ceo-study-robert-solow-information-technology-age/ was asking the wrong questions; to scale almost any system you try to do as much work at the edge (of the system) as possible. If C-suite admits there is impact, C-suite could be evaluated out of a job next. I thought https://www.forbes.com/councils/forbesbusinesscouncil/2025/11/07/the-c-suite-is-becoming-obsolete-what-should-replace-it/ was far more relevant.

Arguments for the Position

Clerical Automation: 93% faster processing and 86% cost reduction through AI workflow redesign prove the liability of traditional administrative CEO/CFO roles. https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai
Tech-Innovation Correlation: Technological knowledge in CEOs is the primary driver of product innovation. https://pubsonline.informs.org/doi/10.1287/isre.2021.0553
Board Entrenchment: The social network model facilitates zombie directors and plurality voting, which are leading indicators of business underperformance. https://corpgov.law.harvard.edu/2025/09/09/governance-matters-dont-overlook-board-oversight/, https://www.glasslewis.com/article/how-plurality-voting-allows-directors-to-stay-on-the-board-without-majority-support
Legal Accountability: New fiduciary standards for cognitive adequacy make technical relevance a legal necessity for management. https://blogs.law.ox.ac.uk/oblb/blog-post/2026/01/fiduciary-duties-and-business-judgment-rule-20-ai-act-age

Arguments against the Position

Resource Dependence: Board member social networks provide critical access to information, trust, and capital that product experts may lack. https://www.redalyc.org/journal/3223/322359389007/html/
Risk Mitigation: Legal and financial backgrounds are essential for navigating the evolving liability landscape of AI-generated fraud and geopolitical trade shocks. https://www.klorconsulting.com/blog/ai-accountability-delaware-ruling, https://www.bcg.com/publications/2025/five-dynamics-that-will-test-ceos-in-2025
Crisis Leadership: AI CEOs (and by extension, pure product boards) struggle with bold pivots required during unpredictable market failures. https://financialpost.com/technology/ai-new-boss-replace-ceo-falls-short

How I run my business

Sales workflow: finding interesting contracts, and submitting projects is done by a human
Sales workflow: review whether something is win-able, risk/reward, filling out PDFs for submission, and able to be sourced is completed by an LLM
Fulfillment workflow: sourcing from sales is reviewed, payment done by a human
Back office workflow: audit (Federal Acquisition Regulation), financial (balance sheet risks), and legal review (localized corporate law) completed by LLMs
Network with other small business owner/operators who lean heavily into automation for additional resources

Conclusion

The most efficient business strategy is to vote against Busy directors and those on Zombie boards while retaining a subset of socially connected directors who provide the Resource Dependence network required to navigate tariffs and embargoes. Product excellence should be the board’s focus, but the clerical/legal network remains the firm’s armor in a litigious and volatile global market.

quantifying and mitigating stress to be more powerfully human

2026-03-17T00:00:00+00:00

I took longer, than helpful to my goals, to realize that there is a deep connection between my mind and body. Largely the language the fake/pious of spiritual practices used pissed me off enough to stay away. But you do not need to use their language; power comes through finding your own language. Here, I use the language I needed to hear at that earlier time - that of hate and power.

Phase 1: empty head

I knew that mind and body were integrated when mountain biking forced me empty my head or hit trees. My mind cannot be acting up when I am rolling through a forest at speed. Even semi-conscious uncontrolled thought can kill. I chose to focus on neutral scenes in my head and eventually could clear my mind anytime and stamp down emotions.

Phase 2 & 3: awareness + discipline

To harness something you must understand it. The discipline to make you stronger is following a course like https://courses.tarabrach.com/courses/mindfulness-daily all the way through, every day. At the end you should be able to understand your emotional state, acknowledge all of yourself, and integrate. Power comes through integrating all of you, not silencing a part. You should have a 10 minute core practice you can do anywhere: settle through breathing, refocus as thoughts come up, once settled - watch the thoughts until they settle out or you are comfortable to put them back down.

The phrase which was weird to me in the past, but I understand now: benign gaze. You are observing parts of yourself happen, but not taking sides.

If you prefer moving: do yoga. I asked a yoga teacher some why questions and I got out: yoga is a way to access meditation.

Phase 4: altering stress levels

I swam competitively in high school: they teach you to go fast, not sustainably. Most ex-swimmers I talk to also have a joint loose or a stress injury. Same thing at most jobs: fast, not healthy. Selling is but one of many things I play at, and if I am to enjoy all the rest of life’s play then I cannot overdo.

The practice of sales at most organizations sucks (for health): your agenda for the day is always changing up until 30-60 minutes before. A “quick call” can easily turn into an hour. I could easily hit 135/85 on bad days which on the American Heart Association’s page for understanding readings https://www.heart.org/en/health-topics/high-blood-pressure/understanding-blood-pressure-readings is not good.

What I am doing:

All notifications on my phone except the actual phone, texts, and https://signal.org/ are turned off always - I took away the notification permissions
My phone is set on vibrate during the day and everything is muted 2125 - 0730
Meditating at least every other day

What I have noticed about myself:

Blood pressure readings are averaging 10-20 lower. I take readings on left and right upper arms after my meditation practice in between meals.
I am more often the person I want to be
I do not seem to focus on negatives as much

What I am not doing:

Coming up with easy/fake solutions like quitting my job, isolating, or taking drugs
Giving up on having an interesting and integrated life - money+purpose+mental interest still must align
Giving up on optionality - I want to live somewhere, see certain people, eat certain foods, or pursue being active at certain times

Building in the Colorado mountains

2026-01-06T00:00:00+00:00

In 2021, I REALLY wanted a house which was exactly my own. No, not some mass-produced Lennar house in a subdivision A depressing Front Range view: https://maps.app.goo.gl/BR7qeqY3J43ESAji6 , but a location I enjoyed, sited in a daring way, and the industrial minimalism which matches my values.

Secondarily, I also wanted more cash flow. In 2020 and 2021, rates were effectively zero on stored cash https://fred.stlouisfed.org/series/FEDFUNDS and as usual asset prices were inversely correlated higher (than I believed their valuations should be). In the social confinement of COVID-19 I had gone off the diving board into the deep end of oligarch finance, accredited investing, and drastically changing my world view: from one where the future will be better to actively living my better future. In startup-land we talk about ARR https://corporatefinanceinstitute.com/resources/valuation/annual-recurring-revenue-arr/ quite often; essentially how much cash will you have coming in yearly. Applying the same principle to my life I needed to hit a certain yearly number where JZ the business would be independently profitable from a standard paycheck. A rental property could help me get there.

Search Area

I wanted a location where there are year-round activities (mountain biking, snowboarding, splitboarding, rafting, motorbiking), good food, some cultural events, affordable, and driveable from my (at the time) primary work location around the foothills of Boulder and Golden. The shortlist ended up with: Grand Junction, Gunnison, Hayden, Norwood, Pagosa Springs, Pinedale, Poncha Springs, Sheridan, South Fork, Taos. Further narrowed down to Pagosa Springs and Taos because of the libertarian approach to housing. I could build what I want how and when I wanted to with less paperwork than many other locations. Creede in Mineral county was another interesting spot, but soon you will be required to do some paperwork. Colorado HB23-1240 requires all counties to adopt statewide building codes (2018 or 2021 IBC/IRC) by mid-2026. Previously counties like Mineral, Baca, Sedgwick, Delta, and Montezuma did not have codes, a building department, nor in same cases a certificate of occupancy requirement. https://doh.colorado.gov/jurisdictions-without-building-departments-hud-code-homes I decided on unincorporated Archuleta county (Aspen Springs 3) just West of Pagosa Springs as the ideal combination of proximity to tourist attractions to drive occupancy, good food, many mountain biking options, a mild climate with quick access to a variety of big/snowy mountains, and driveable for a long-weekend. However, you have to deal with a high fire risk and lack of property insurance options. Take a look at https://co-pub.coloradoforestatlas.org/! I could only find commercial coverage through https://www.coloradofairplan.com/ with a 1,600 USD/year premium.

On April 22nd 2021 I closed on an acre on the side of a hill for 12,500 USD through one of my Colorado business entities. The view was fantastic, I had privacy, and there were almost no rules about what I could or could not do with the lot. I knew the area, had looked at satellite imagery, studied topo maps but had purchased sight-unseen … so I hired a drone operator for an aerial survey to figure out where to site the structures. Everything from the red pickup truck to the flat bit on the right side of the image was in play: Fortunately, my neighbor cleaned up their property since this photo.

Finding the House

Over the summer and fall of 2021 I went through the list of manufactured home producers registered to sell their products in the state of Colorado. After many unresponsive sellers proximate to my raw land, I did get a response and reasonable timeline for delivery from Custom Container Living. What I loved about Custom Container Living was the upfront ballbark pricing and online designs I could pick from. For my budget, space needs, and delivery constraints I decided on: https://www.customcontainerliving.com/residential/the-double-duo/.

Planning and Excavation

Alright I had the lot and I had the house vision, now for the exceedingly tedious work: understanding the local regulations - where I could build on the lot and the paperwork I needed to complete. Reading through Archuleta County’s Modular building permit in 2022 wasn’t too painful, even without the meteoric rise of consumer-grade LLMs. The pieces I needed according to the information packet:

Complete Building Permit Application (Sign and date) - easy, just filling out some contact details
11X17 Proposed Site Plan by Colorado Licensed Surveyor - spend a few months and a few grand with an engineering firm
(2) Sets of Plans, see Plans & Specifications and Plan Requirements Packet - they want paper https://theplanprinter.com/
Access Approval & Right of Way Permits
1. Get and fill in the right paperwork https://www.archuletacounty.gov/county-government/public-works/county-engineer/right-of-way-permits/
2. Pay the fee to build a driveway and bring in utilities
3. Do the actual construction - horizontal bore under the road to bring in electrical and form a driveway over a metal culvert
4. Get the final inspection
Sanitation (Archuleta County Water Quality approved permit if applicable)
1. First you need to design the septic system with an engineering firm like Davis Engineering.
2. Get a permit to do the construction with an excavation team like Pagosa Landworks.
3. Once the septic system is electrified with a warning alarm then you can get the final review.
Pagosa Fire Protection District Receipt - pay them at https://www.pagosafire.org/impact-fee-schedule
Proof of Ownership - already have this from closing
Letter of Approval from your Architectural Control Committee, HOA or POA - N/A for Aspen Springs, they only do dirt road upkeep
~~Wetland permit if required~~
~~Aviation easement if required~~
Pay Permit Fee (cash or check only)

Pagosa Landworks took massive quantities of material out of the side of the hill and we did some extremely creative things with Davis Engineering. Engineering designs, permits, excavation, and septic construction bill: 108,471 USD. You could probably half that figure on a flat lot.

Gambling on Water

At this point in the project I became much more adverse to doing novel or creative ways of construction. Previously I had been planning on constructing a rain water collection system with a massive underground cistern. But after some confident words from DAK Drilling and Well Services, I proceeded with the common pattern (in the area) of drilling a well. The San Juan River basin is already overtapped and will continue to recede over the coming years. https://www.usgs.gov/news/state-news-release/groundwater-flow-colorado-river-may-decline-third-over-next-30-years I think I’ll be able to get 5-10 good years out of it and another 5-10 mediocre years out of the well with the very large preassure tank I had put in. This gives me some lead time to put in a proper cistern system in the future. The only legal way I can use the water coming out of this well is for inside domestic use (showering, drinking, washing) before putting it back into the ground through my septic system.

Just to drill the well to ~500ft was 52,050 USD. They make you sign a contract saying they may never hit water. A flat lot would probably take 25-50% off the drilling price.

Total bill to get potable water on the property: 120,078 USD. I still think this was way better than having water delivered like some of the neighbors.

Bring the electricity

By comparison, electricity was far more straightforward than water. The power pole was across the dirt road and we had decided to site the house on the lot as close to the road as possible to minimize the cost of the driveway, the slope of the driveway (there are code maximums), and the cost of bringing in electricity to the lot disconnect.

Alpine Excavation horizontally bored under Echo Ln to the power pole on the opposite side of the dirt road and fed conduit through the hole. This was significantly less costly and complex that cutting into the dirt road. JBX Electric put in the main lot power pedestal disconnect Think something like: https://www.youtube.com/watch?v=0yc7c_axEy8 , did some additional internal wiring fixes once the house was delivered, and setup the electrical lines for the septic and wellhouse.

Total electrification cost: 15,289 USD.

Foundation

This is the most critical part of any building project and the part I outsourced to HYS Cosntruction. There is absolutely no way you can be effective remote and with no general contracting experience. The plans from Custom Container Living were missing some crucial details and most construction workers are wholly unfamiliar with the modular construction style we were attempting. Hiver was absolutely amazing to work with! The traveling crew took a coarsely excavated lot in February 2025:

To a completed foundation with welding embed plates, from my friend Andrew’s shop, in March 2025:

They got the wellhouse on a foundation and a safety retaining wall behind the structure as well. They took care of the remaining electrical, water, and sewer trenching.

The Rental

This is what it looks like finished: Fire resistant metal roof and siding, defensible space with all the shale exposed, and a South facing driveway to keep the snow off. Having a Type II: Noncombustible structure in this area significantly eased the property insurance premium.

I am exceedingly happy with the Southwest decor we found at Camino Real Imports! I always fantasized about a cozy home in the desert Southwest and stumbled into it with the right siting and accents.

Find us on Google Maps: https://maps.app.goo.gl/7JPjsvZTCWi26gxH9

Chronology

March 31, 2021: The “Contract to Buy and Sell Real Estate” for the raw land was executed.
April 22, 2021: This was the scheduled date for both closing and the transfer of possession for the property.
January 5–6, 2022: Submitted the initial “On-site Wastewater Treatment System” (OWTS) permit application and paid the $1,023 fee.
February 14, 2022: Initiated contact with Luke McCauley (Pagosa Landworks) regarding excavation and site preparation.
April 6, 2022: Paid a deposit to Davis Engineering for a “Proposed Site Plan” (PSP), topographic survey, and septic system design.
April 25, 2022: Davis Engineering conducted the topographic survey, which revealed steep slopes (30–40% grade) that required additional geological review.
July 5, 2022: Began detailed discussions with Robert Wagoner at Custom Container Living regarding the “Double Duo” 2-bedroom modular home.
September 21, 2022: Trautner Geotech issued a proposal for the required geotechnical engineering and slope stability study.
December 9, 2022: The final “Limited Geotechnical Engineering Study” was issued, providing the “go-ahead” for construction with specific foundation requirements.
December 22, 2022: La Plata Electric Association (LPEA) issued the construction invoice for new electric service (Work Order #20221126).
May 25, 2023: Davis Engineering completed the preliminary driveway and building pad design.
November 9, 2023: The final driveway and building pad design was completed.
February 14, 2024: LPEA crews completed the installation of the meter pedestal on pole 8985.
February 28, 2024: The Archuleta County Water Quality Department authorized the start of OWTS (septic) construction.
March 25, 2024: Decided to pivot the water source from a cistern to a drilled well.
July 15, 2024: A construction loan agreement for the project was finalized with REDACTED.
Summer-Fall 2024: Lost the rest of the building season due to the inability to find reliable concrete workers in the local area.
February 18, 2025: Signed a statement of work for the final foundation (slab, piers, and footers) and site preparation with Hiver Salley (HYS Construction).
April 1, 2025: A second Electric Facilities Agreement was signed with LPEA for an additional 200A meter socket (Work Order #20250633). They had reallocated the previous one to a different customer.
April 15, 2025: Final coordination and payments were made to DAK Drilling for the well pump and water filtration system.
April 23, 2025: Delivery of the structure by Custom Container Living.
May-July, 2025: Final inspections for right of way required updates to the driveway culvert. Final stamp from the state of Colorado held up due to missing paperwork from Custom Container Living.
July 31, 2025: Certificate of Occupancy received from Archuleta County.
August 8, 2025: Signed a “Vacation Rental Services Agreement” with Vacasa to manage the property.
August-September, 2025: Made several trips to the property to decorate, furnish, and prep to Vacasa’s specifications.

Advice to 25 year old me

2025-12-19T00:00:00+00:00

This past year I have gone through periods of excitement, hope, happiness, frustration, and anger. I feel like I’m getting closer to the integrated life I want: one where my career, lifestyle, and sense of purpose align.

Much of my career involved solving other entities’ problems for the highest margin, maintaining a lifestyle where work remained separate from my personal life, and lacking a clear sense of purpose. I have grown enough to be able to decipher what I want at any given moment, enabling me to chart a path toward particular themes. I tried 5 year plans and failed miserably, I enjoy too many different things to put all my time one place. My advice: be open to experiencing things your own way and Gaia/God/the universe will give you enough nudges over time to figure things out. My self from 10 years ago would hate that advice.

To develop solutions and spot opportunities, I need to deeply experience the problem. For example, my power was shut off from 4 PM Wednesday, December 17, to 2 AM Thursday, December 18. This is due to shifts in the North American jet stream past generations have caused by releasing greenhouse gases, the unwillingness of voters in my municipality to adapt the built environment, and the unprofitability of updating electrical infrastructure. Spending time over the last few years in the problem environment allowed me to point out all these things; I’ve had fascinating conversations with people I would have initially considered my enemies. Others have figured this out, too: consumers will happily pay for svelte whole-home batteries to weather increasingly common grid-destabilizing storms. Natural disasters present a good business opportunity. https://www.stlouisfed.org/publications/regional-economist/april-1994/the-economics-of-natural-disasters https://www.munichre.com/en/insights/natural-disaster-and-climate-change/weather-disasters-in-industrialized-countries.html

Engage with your “enemies”. How’s that for positive?

Every year, in past years, I would lie to myself that affecting change required exponentially greater wealth or notoriety than my current position. To that end the US dollar has lost half its purchasing power over the last 20 years. You need to make at least double what your parents were making! In my own life, this vast difference in income helps explain why my generation’s priorities differ from our parents’ generation. I understand the need to preserve the environment we live in, but why do the very people who preach this live in single-family mansions? I understand the need to have a thriving business environment, but why do the very people who preach these things make tax and zoning codes so difficult to navigate? I understand the need to socialize, but who is paying to go to the golf club? Eh that’s not a good one, but someone with the leisure time to reflect on this post probably is.

This is simultaneously a source of great frustration, but also great excitement for me. I’m not sure many people in earlier generations intuitively understand what it feels like to lose half the US dollar’s purchasing power in the last 20 years. Nor do they understand the feeling that I cannot depend on my electricity. Well, my grandparents did, as they grew up in rural Alberta, Iowa, Kansas, and Montana. There is no safety net for my peers who are laid off. The lack of investment in human capital hinders great feats of entrepreneurship. There will be no nationally sponsored retirement. It feels utterly impossible!

Yet, exciting opportunities exist. I know, because I pursued them this year. I’m now putting the time I previously spent looking at memes for a laugh back into my business. This is not an endorsement of grind culture, quite the opposite. I want a life where I can work hard when I choose, enjoy time with my family and friends when I choose, solve a wide variety of engaging problems, and help my global community while making a profit. Neither my wife nor I will sacrifice our personal growth for growing our family, which is incredibly creatively motivating. Working full-time for another employer probably won’t work in the next stage of my life. I believe tradeoffs usually exist because we have arbitrarily limited the time and creativity space; not that they are inherent. But how am I going to figure this next one out? I will keep trying things.

Going into 2026 I will wholly and holistically pursue my good life. I will dress myself in balance, emotional depth, options, and spiritual interest. Everyone’s definition of a good life looks different. What will yours be?

Protect yourself from data broker leaks

2024-09-12T00:00:00+00:00

Every organization will leak your data eventually. Their profit motive may get in the way of security. They may not pay high enough to ensure quality people are employed. Therefore, your goal should be to only give your data to services which are absolutely necessary. Remember: if the service is free, you and your data are the product being sold.

What about all the organizations you give your data to without even knowing it? A data broker makes money by collecting yours and many others’ data and then selling it. Here is how you keep your data out of their leaky databases.

Prevention - Chrome

Open up Settings
Open the “Privacy and security” tab
Click the first item “Delete browsing data”. Click the “Delete data” button to delete all of the data your browser is storing for various websites, including data brokers. This will log you out of all the websites.
Click the “Third-party cookies” list item. Scroll down and select the “Block third-party cookies” option. Turn off “Allow related sites to see your activity in the group”. Turn on “Send a Do Not Track request”.
“Ad Privacy” turn off all this crap.
Final item “Site settings”, scroll down to “Embedded Content”, and Select “Sites are blocked …”.

Prevention - Firefox

Open up the Firefox settings using the top right settings menu.
Select the “Privacy & Security” tab on the left. Firefox’s standard protections take care of pretty much everything we did in Chrome.
Scroll past the “Standard” Browser Privacy and turn on all of the “Website Privacy Preferences”.

Prevention - Gmail

Open up the Gmail settings by clicking the gear icon in the top right corner and then “See all settings”.
In the “General” tab scroll down and select “Ask before displaying external images”. This will disable any tracking pixels.
Scroll further down and uncheck “Turn on smart features and personalization in other Google products”. This will prevent Google from scraping the contents of your emails to suggest features and products.
Scroll all the way down and click the “Save Changes” button.

Remediation

Search for yourself on https://www.truepeoplesearch.com/ and tell me you are okay with that information being public. That is just the top; there is so much more. Take a read of https://www.pcmag.com/picks/the-best-personal-data-removal-services and choose a service which will help you automate sending out hundreds of data deletion requests.

I went with https://incogni.com/ and after 2 weeks, I am quite impressed. My information no longer shows up on people search websites and my data is rapidly being expunged from data brokers who profit off of my data but do not pay me anything. You can use my Incogni discount link - https://incogni.cello.so/iCje17eYe7z - to receive 58% off your bill. You may also live in a state - https://pro.bloomberglaw.com/insights/privacy/state-privacy-legislation-tracker/ - with privacy legislation which gives you a “right to deletion”. That is the sharp teeth you can bring out if you have to sue to get your data deleted.

How to prevent the US government from taking your home for medical expenses

2023-07-13T00:00:00+00:00

This is a uniquely American problem, which would be hilarious if it was not so effective at enforcing the US caste system: the Omnibus Budget Reconciliation Act of 1993 requires state governments recover long term care benefits paid for by Medicaid after the recipient dies. Yes, state governments can take your home by filing a lien against it, if you are unable to return home, or other property titled in your name when you die, your (probate) estate.

Exceptions

If you have a surviving spouse, a child under age 21, or a child that is permanently disabled or blind then a state’s Medicaid program will not come after your estate. See Colorado and Florida laws for reference. If one of those situations apply, then stop reading, you’re good to go.

Avoiding Medicaid long term care

If possible, purchase a long-term care insurance plan in your mid 50s or 60s to avoid going into this Medicaid estate recovery situation. A premium of a few thousand dollars a month may be untenable for some.

Moving assets

At least 5 years before applying for Medicaid long term care benefits, you need to retitle your assets by putting them in a business entity or trust. If you give any gifts or transfer any assets within 5 years of attempting to start Medicaid long term care benefits, that will be a penalty considered against your benefit.

If you choose to set up a trust for your assets, you will need a trustee (who will take a management fee); it is most efficient to find a lawyer who will both draft the trust documents and act as the trustee. Largely, you want to compare Revocable and Irrevocable trusts. The former can be changed after creation, the later cannot and confers some estate tax benefits.

If you already trust a family member or close friend then retitle your assets under a business (an LLC is easiest). You will need to create an LLC yourself or have a registered agent company do it for you. You will probably want them to create a manager managed LLC, get a tax id, and file your annual report. The single member and initial manager will be the close friend or family member; they will be reporting expenses and revenue from the LLC on their taxes and could use this to take hefty tax deductions if done right.

Sell the assets to the business or trust at below market value ($1?) and be sure to close with a warranty deed. This will allow the new owner to use a stepped-up tax basis.
Get a real estate insurance policy for the business or trust through National Real Estate Insurance Group.
If you plan on living in the home use a local property manager contracted through the business which will give you some flexibility to create a zero dollar lease agreement. If not, use a full service company like Nomad Lease to manage everything.

What if I have a mortgage?

Most mortgages contain an “acceleration” or “due on sale” clause.

This means that when you transfer a mortgaged property out of your name, the entire mortgage balance is due.

…

However, this is not usually a problem when we are not selling your house but, rather, transferring it for estate planning purposes. In fact, federal law specifically prohibit a mortgage holder from exercising a “due on sale” clause on residential real property containing less than five dwelling units or on a cooperative apartment unit when the property is transferred to a spouse or children of the owner, or a lifetime revocable or irrevocable trust where the borrower retains the right to occupancy.

https://davidowlaw.com/listen-lawrence-answer-irrevocable-trust-mortgage-question/

This came from banks not wanting borrowers to get a deal on a lower interest rate.

If you were to transfer or sell your home to your children where your right of occupancy remained the same, a lender could not enforce an “acceleration” or “due on sale” clause: https://www.law.cornell.edu/uscode/text/12/1701j-3

In Colorado, your interest rate cannot go up by more than 1% for a sale: https://law.justia.com/codes/colorado/2021/title-38/article-30/section-38-30-165/

Long-term solution

The timing of this legislation to recoup Medicaid long term care payments suspicious. From 1981 to 1988 the marginal tax rate on the wealthy at the US national level dropped precipitously from 70 to 28 percent. As shown in The economic consequences of major tax cuts for the rich these policies lead to higher income inequality and no change in economic growth or unemployment.

Ironic that many of the people who voted for the politicians that enacted these policies will now be hurt by these policies in their old age. It does not have to be this way, we could choose to increase taxes on the ridiculously wealthy and fund these domestic health care programs.

Remote working residency

2023-03-29T00:00:00+00:00

As an employee, you generally don’t have to worry about government paperwork and compliance filings. Maybe a few hours at tax time, but nothing compared to your employer.

You may receive notices from your employer like - “you may work internationally for up to one month” or “as long as you stay within your original employment state” - this is because permanently moving or working in different province, state, or country for an extended time is a big compliance headache for your employer.

If an employer has a permanent employee in a region, the employer will have to create a local entity or utilize the services of an Employer of Record to be in compliance with government regulations because of you, the employee.

My suggestion: use a virtual mailbox service to make things easy for your employer by maintaining an address in your original employment location. Services like Anytime Mailbox, iPostal1, USPS PO Boxes with informed delivery + real street address - can be used depending on how you plan to remote work. Just be sure that your final address isn’t flagged as a Commercial Mailing Receiving Agency using the USPS’s address lookup tool if using a US address.

Where to register a vehicle

2023-03-27T00:00:00+00:00

The best spots in North America to register a vehicle by odd fringe benefits.

Canada

British Columbia: Previously held the title for the lowest car registration fees in Canada coming in at $40-100/year.
Ontario: As of March 13 2023 the cost for registering a passenger vehicle is $0. You still have to file yearly online renewals.

United States

Alaska: Permanent registration (pay one fee and never again) of passenger vehicles 8 years or older in participating boroughs. On top of a $3k (for 2022) Permanent Fund Dividend for being a resident.
Montana: Permanent registration (pay one fee and never again) of passenger vehicles 11 years or older state-wide. Also no sales tax in Montana, saving you on purchase fees. Also also low registration fees, especially in Flathead County.

Central America

Panama: Modern, friendly, and a strong democracy (from a memory of a recent autocrat). VAT at 7% + 5% for excise tax on cars. Registration is $20 for the inspection and $20 for the municipal paperwork. An additional $100 for registration through an entity.

The flexibility of a British Columbia Limited Company

2021-05-30T00:00:00+00:00

Why British Columbia?

Canada, and more specifically the province of British Columbia is an excellent place to start a digital business:

Neither sales of software consulting services nor database access pay sales tax to the province.
Website subscriptions with articles that include text only, or text and still photos are not taxable sales to the province.
You pay no sales tax to the national government if you make less than $30,000 a year in sales, and greater than that … only 5%.
There is a 15% corporate income tax levied by Canada and 12% corporate income tax levied by British Columbia for a combined rate of 27%; less than half that if all of your controlling parties are natural-person Canadian residents.
British Columbia is one of the few provinces which allow incorporators AND directors to be non-residents of Canada; Alberta and Nova Scotia will too, but there is no online self-serve portal with Alberta and Nova Scotia has high annual renewal fees.
If you are not a resident of Canada, by starting a business, investing in it, and permanently employing a Canadian resident you can be eligible for express entrepreneur immigration.

Get a British Columbia address

For ~15CAD/month you can get an address in British Columbia with Anytime Mailbox or iPostal1, which you can remotely manage. This will allow you to satisfy the requirement to have an office and mailing address within British Columbia.

Investment Canada Act

If you are a non-resident of Canada, creating a resident Canada business, then you have to notify Innovation, Science and Economic Development Canada of this new investment by filling out ISED-ISDE3675E.pdf and returning it to them by email.

If you make a >1 billion CAD investment then you have to wait for their review.

Get a personal Tax Identification Number

To file paperwork with the Canada Revenue Agency on behalf on your new business entity, you will need to get an ITN from them by filling out and returning Application for a Canada Revenue Agency Individual Tax Number (ITN) for Non-Residents. Be sure to include a notarized copy of your passport with a wet signature from the notary; I did this at my local UPS store for $5.

The Limited Company application process

If you want to use a specific name for your corporation instead of a series of numbers issued by the province, use the Name Request tool to reserve a name for $30. This will take a few days to process before you can proceed to the next step.
Go through the BC Registry Services wizard to incorporate for $350.
Add your name and the business name to the example incorporation agreement and the example incorporation articles … don’t forget section 9.10’s proxy designation. Convert these to PDF and have them notarized online with Notary Pro.

Ongoing upkeep

You need to hold an Annual General Meeting (AGM) and record the notes of the meeting to stay compliant with the BC Business Corporations Act. For a small business with just yourself, this could look like you jotting down actions you have taken or will take in the company minute book. Or with a unanimous resolution of all the voting shareholders (you), can waive this requirement. ¹
Directors (you) must approve, sign, produce and publish financial statements prior to the AGM unless a resolution with unanimous consent from all the voting and non-voting shareholders passes. ¹
An auditor must be appointed, unless by unanimous resolution this requirement is waived. ¹
File an Annual Report with BC Registries within 2 months of your incorporation date anniversary.
File your T2 and tax calculation paperwork with the Canada Revenue Agency. I have been using https://web.taxtron.ca and filing paper since I do not have a Social Insurance Number to be able to e-file.

Family wealth office

2021-03-21T00:00:00+00:00

Running your family’s finances through a business entity makes a lot of sense in many countries. Business entities can be created in any jurisdiction you desire and are typically taxed at lower rates. This course will suggest practiced methods of varying degrees of difficulty to optimize your income and taxes.

Money often costs too much.

Ralph Waldo Emerson

Where the income is made

In any situation, location is crucial.

Gordon Ramsay

Have you ever stopped to think about where you are working? Maybe it used to be in an office building. Perhaps a warehouse. For some lucky folks their workplace might be a lawn chair in the sun.

More specific. Think about the city, county, region, province, and country where you work; at each layer taxes will be imposed to fund services. In the past, when people rarely moved (even across a town), the products of their work touched their neighbors, but that was about it. In the present, the products of my work can touch someone not even on this planet; of course astronauts have Internet access!

With work much less location dependent, how we think about our residency might change too. If I spend most of my time in a particular place (the Denver metro area) that’s easy, but what if I split my time working in a coworking space in Calgary, a townhome in Buenos Aires, and a cabin in Pagosa Springs; each place has different rules about what kinds of work is taxed, and how much those taxes might be. It gets even more complicated thinking about the situation where the means of production (solar panels, land, crops) are managed from several thousand miles away. Certainly one can say I do some of the work from my cabin, but to what government should I pay taxes for money my solar panels generate by selling electricity to a utility in another state?

Enter tax arbitrage: profiting from differences in how income and transactions are taxed in different jurisdictions.

In this first section we will explore the best tax jurisdictions for keeping as much of your income as possible.

US Territories

Most US Territories offer heavy tax incentives to businesses (and people) to relocate to their island shores, but beware if you still reside within a US State! You will be hit with additional penalties for owning or receiving income from a “controlled foreign corporation” and you would be just as well served to create your “foreign corporation” in a truly zero tax foreign location. With spotty internet access and irregular flights; a business could be difficult to run remotely. If it makes you feel any better though, you only pay to the respective territory treasury and never the US IRS.

Puerto Rico offers a tax rate of 4% for export companies
- https://www.ddec.pr.gov/en/puerto-rico-incentives-code/
- https://nomadcapitalist.com/2018/06/02/puerto-rico-tax-incentives/
Guam will offer a 75% rebate for certain industries, assuming you invest at least $10,000: https://www.investguam.com/business-in-guam/investor-incentives/
US Virgin Islands offers 90% income tax rebates if you employ 10 people and invest $100,000: https://www.usvieda.org/incentives/edc-program

From: https://commons.wikimedia.org/wiki/File:US_insular_areas.svg

US States

Certain states have no or low sales taxes, while other states have no or low income taxes. For our purposes we want to find jurisdictions that have the lowest income taxes, but are still relatively easy to do business in (reasonable filling fees, online services, responsive officials). This new family wealth office won’t be selling anything, but it will be earning plenty of income!

From investment management to charitable giving advice, family offices offer a total financial solution. In addition, the family office can also handle non-financial issues, such as private schooling, travel arrangements, and miscellaneous other household arrangements.

What Are Family Offices? – https://www.investopedia.com/terms/f/family-offices.asp

When thinking about managing your household’s money, you will be running the family office and also be the beneficiary of its services. This will come in handy later when we talk about potential tax deductions.

Low income tax US states

There are only two states in the US which do not levy corporate income tax, individual income tax, nor gross receipts taxes: South Dakota and Wyoming. South Dakota has some of the highest filling fees I have ever seen outside of Nevada. Wyoming has fees on the higher side, but you’re paying for lower taxes, right? Both have navigable and responsive secretary of state websites for easy online filing.

Watch out for states with gross receipts taxes! They tend to have all manner of business licenses at the state, county, and local levels you will have to comply with too. Nevada is the prime example: a few hundred dollars at just about every level of government adds up!

Compare that to Wyoming which has no state level business license fee, no annual list filing fee, and very few local municipal business licenses to be sorted through, which are usually limited to certain controlled industries.

There are a few states with flat corporate and individual income tax rates below 5%: Colorado, Florida, North Dakota, and Utah. I’m not going to bother with Florida since it will be underwater in 20 years. North Dakota’s online business filing fees are on the higher side. Utah has slightly higher fees than Colorado’s filing fees.

Taken from https://taxfoundation.org/publications/state-individual-income-tax-rates-and-brackets/

Taken from https://taxfoundation.org/state-corporate-income-tax-rates-brackets-2020/

Conclusions

If you are looking for a state with no taxes, then pick Wyoming; generally they are going to be very hands off.

If you want a progressive state with low taxes, Colorado is the right place to locate; government services are great for what you pay.

Canada

Every Canadian province and territory has income and sales tax. But as we discussed in the previous section, there are always ways to optimize for the intersection of income tax, investment goals, family needs, and DIY options. If you can save a percent or two on income tax, but it is a real pain to manage the legal requirements … is it worth it? Why create a business in a region which will be more unstable due to climate change? For my risk/reward profile, interior British Columbia made the most sense for my headquarters.

Sales Tax

On the sales tax side, the province of Alberta, and the territories of Yukon, Nunavut, and Northwest Territories, are the places where you will only pay the 5% GST to the national government. Moral of the story: purchase your goods in those locations.

From https://www.transfereaserelocation.com/canada-which-region-has-the-lowest-tax-rate/

Corporate income tax

Compared with other regions, Canada allows fewer loopholes when it comes to passive income. Investment income is taxed at a significantly higher national rate and is specifically defined as income from property:

A specified investment business is carried on by a corporation whose principal purpose is to derive income (interest, rent, dividends and royalties) from property, unless the business employs more than 5 full time employees. Income from property would include rental or leasing income from land or buildings, but would exclude income from renting or leasing moveable property such as machinery and equipment.

https://accountingottawa.com/active-business-income-small-business-deduction/

From https://www.taxtips.ca/smallbusiness/corporatetax/corporate-tax-rates-2020.htm

And there is no way to shield your passive income streams by bundling them into a business entity with some or most of its income coming from active sources (unless you have 5 employees or could employ 5 employees).

Personal income tax

The great thing about creating a corporation is that the business entity can retain earnings to keep your personal income tax rate low (by only paying dividends when you need the cash). Or your corporation can be taxed in a jurisdiction separate from your personal income. Like corporate tax rates, the territories have the lowest personal tax rates: https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html#provincial

Conclusions

If you are looking for a province which prides itself on pushing income taxes as low as possible, and other sorts of “business friendly” decisions including allowing foreigners to run their own company, choose Alberta. For the DIYers, watch out, you cannot file directly, you have to go through a service provider: https://www.alberta.ca/incorporate-alberta-corporation.aspx

For a provincial home offering a balance of lower taxes, better services, relaxed director requirements, and automated services, make your base in British Columbia.

Or do what I do and have an entity domiciled and registered, 350CAD registration and 45CAD renewal, in British Columbia, with a location in Alberta as well. Alberta has an automated and cheap (14CAD) online registration to support businesses under the New West Partnership Trade Agreement. You pay income tax on where the money is made. Compare that to direct registration in Alberta which costs 300-500CAD registration and 70-90CAD a year in renewal fees depending on which service provider you find.

Be sure to use BizPal for a comprehensive list of licenses you may need.

Outside of Northern America

Significant international tax arbitrage is outside of the scope of this course, and may be covered in another, more advanced course. In the meantime a few tips for doing business outside of Northern America.

For the Canada Revenue Agency:

If you file an income tax return with the CRA as a Canada domestic entity and hold $100,000 CAD or more in foreign assets you have to file Form T1135: https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/foreign-reporting/foreign-income-verification-statement.html
Canada has a number of income tax treaties to prevent double taxation: https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties.html

For the US Internal Revenue Service:

If you have signature authority over more than $10,000 USD held in foreign financial institutions, whether you are the owner or the trustee, you have to file FBAR: https://www.fincen.gov/report-foreign-bank-and-financial-accounts
If you file an income tax return with the IRS as a US domestic entity and hold $50,000 USD or more in foreign financial assets you have to file Form 8938: https://www.irs.gov/businesses/corporations/do-i-need-to-file-form-8938-statement-of-specified-foreign-financial-assets
The US has a number of income tax treaties with other countries so you won’t necessarily get double taxed on the same income: https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z

Utilizing different tax rates

Even if you create a corporation or LLC in another location, this does not mean that all of your income will magically be taxed at the lower rate, but this is not difficult. At a high level:

Get a street address in another location with Anytime Mailbox or iPostal1, which you will use for your business address and registered agent address. Alternatively, there are plenty of companies that offer these services for you and will manage everything if you pay them higher “all inclusive” fees.
Create a holding LLC in the low tax jurisdiction. LLCs usually have lower filing fees, less paperwork than C-corporations, nor do you have to pay taxes on the business entity’s earnings and what you elect to pay yourself as your personal income.
Transfer the ownership of all assets (intellectual, tangible, or otherwise) from your existing business to the new business in the low tax jurisdiction.
Have the existing business pay significant rent or royalties to the holding company thereby wiping out the tax burden of the existing company. Think about doing this across country borders? Check out the Multi Currency Account from Wise.
Elect to have the holding LLC taxed as a corporation so all of the profits are retained in the low tax jurisdiction, but beware this might set you up for personal holding company penalties. It might be easier to spend down most of the revenue on an American Express company card and let the remaining profits continue to pass through.

For a deeper example with the state of Wyoming, I highly recommend reading: https://www.northwestregisteredagent.com/start-a-business/wyoming/tax-benefits

Business deductions

Earlier in the course we talked about running your household as a business, more specifically a family office. Managing your family’s wealth then becomes a business and allows us to take advantage of all kinds business deductions for the purposes of keeping your family successful, strong, healthy, and wealthy.

All the legals fees for creating a family business are tax deductions. Maintaining a home office and your virtual office becomes a tax deduction. Telecom services. Paying employees (aka family members). Interest on purchases to increase your family’s wealth. Insurance. Family meetings. The list goes on:

Just remember you need to show profit in at least 3 of the last 5 years: https://www.thebalancemoney.com/is-this-business-for-real-or-is-it-a-hobby-397675

The Colorado LLC as a wealth management tool

2020-08-30T00:00:00+00:00

In an economic environment where real wages have stagnated and regular employees are paying a larger proportion of national taxes than shell companies for the rich, why not play the same games until the legislation catches up? By no means do I support an unfair tax system, just trying to let the common people take advantage of the loopholes, while we try to reverse the Citizen United evils of our past.

Creating a new legal entity

This article focuses on the Limited Liability Company, specifically the Single Member LLC, which is the easiest to do the paperwork for and usually the best option for taking advantage of the 20% Qualified Business Income deduction:

Creation is easy:
1. $50 in Colorado to create
2. $150-300 for an hour or two of a lawyer’s time to create a manager-managed operating agreement … or pay me for one of mine.
3. $25 to get your operating agreement notarized
4. (Optional) $10-12 per month for a mailbox with Anytime Mailbox or iPostal1 to shield your home address and move you into a lower sales tax and less regulated municipality (unincorporated Jefferson, Gilpin, or Weld county).
You can do all the taxes with your standard income taxes:

If a single-member LLC does not elect to be treated as a corporation, the LLC is a “disregarded entity,” and the LLC’s activities should be reflected on its owner’s federal tax return.

https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies

If you maintain residence in a high tax jurisdiction, you will need to get more creative here, as the taxable income from your LLC will be taxed at the rate of your home residence; more on that in my online family wealth office write up.
Upkeep isn’t terrible:
1. File a $10 annual report
2. Apply for an EIN and maintain a bank account separate from your personal finances. I really like the Fidelity Account for Businesses, unfortunately they (and American Express) crack down on physical addresses provided by a Commercial Mail Receiving Agent … while other banks will let you use a virtual mail provider for your physical address … more on why that is important later. Be sure to check if your address will be flagged as a Commercial Mail Receiving Agent if using a bank that cares.
3. Setup quarterly electronic estimated tax payments for the US National Goverment and your formation state if you have no other way to do income tax withholding (like through a W-2 employer).
4. File Beneficial Ownership Information with FinCEN or hire a registered agent to.

If your taxable income is less than $157,500 for a single filer or less than $315,000 married filing jointly, and if this new business’s purposes is Investing and Lending, which this is, then the interest income coming through this LLC is Qualified Business Income; that is the interest income is properly allocable to a trade or business.

Physical address matters

The address you use for banking and business letterhead may mean the difference between paying 10% of your Qualified Business Income (QBI) or paying no tax; California vs Nevada or Oregon vs Washington.

As an Investing and Lending business with no employees, no sales, no services, and no tangible property it makes sense to use an address which means low or no income taxes; occupation, sales, and use taxes do not matter here. While everyone talks about creating Delaware (zero sales tax) business entities, Nevada (zero income tax) makes much more sense in this instance; additionally, Nevada does not charge taxes on services.

While it is true Nevada charges no income taxes, Nevada does charge significantly more for business filing fees than Colorado does for business filing fees, which at lower income levels cost as much as the 4.5% Colorado income tax rate.

Additionally, the cryptocurrency regulatory regime in Colorado is much more progressive, which is necessary for my LLC investments.

Saving on taxes now and in the future

To save on taxes, you will need to transfer ownership of accounts and assets to the LLC, known as a capital contribution. Fiduciaries generally want to see:

Articles of organization and/or Certificate of Good Standing from the secretary of state in the incorporation location
Operating agreement (including beneficial owners) … remember getting that notarized?
Government ID for all beneficial owners with more than 25% in the company
Bank statement in the company’s name (with your business address)
In-depth description of the business activity (anti-money laundering reasons)

Depending on the tax jurisdiction and wealth, all of your startup fees could be covered by the tax savings in the first month.

Now given that there is no public market for these LLC assets, gifting membership interests to your heirs while you still are the LLC manager means hefty asset write-downs.