By Dr. James M. Dahle, WCI Founder
Incorporate and Grow Rich! by Al Allen, Cheri Hill, and Diane Kennedy explains the benefits and downsides of incorporation. It is a useful book to anyone considering incorporating. It was published in 2007, and runs 280 large pages, although they read pretty quickly due to large type, many figures, and a fair amount of blank pages designed for notes.
Overview of Incorporate and Grow Rich!
It does a great job explaining the possible benefits of incorporating. It demonstrates how corporations can help you save taxes and protect your assets. It explains how to form a corporation, and the corporate formalities required to maintain it. It may be the best book I've seen yet at explaining these concepts to the layman. Although I'm hoping I can find a better one to recommend to you. There are number of issues not so much with the book's accuracy, as with its presentation.
Criticisms of Incorporate and Grow Rich
You need look no further than the title to see the first issue. Incorporation is hardly a panacea to your ills. The mere act of incorporating is hardly enough for anyone to “grow rich.” The subtitle to the book suggests you can save up to 70% of your taxes just by incorporating. This isn't true for most businessmen, and certainly not true for doctors. In fact, most doctors wouldn't save more than a percentage of their Medicare taxes by incorporating. And, of course, incorporation doesn't protect a doctor from his chief liability—medical malpractice. I'm always hesitant to read a book recommended by Robert Kiyosaki. The “Get-Rich-Quick” mentality permeates his writing, and it permeates this book. The examples and terms (“flaming arrows of challenge”) throughout the book reflect people saving thousands and even millions from their tax bill and liabilities, which certainly isn't what most people, especially doctors, will find from incorporation. That's okay with me, I can look past it, but it adds unnecessary length to the book.
The second problem with the book is it primarily deals with C Corporations. Many of the benefits of incorporating extend to other corporations, such as S Corps, LLCs, and Professional Corporations. The book does little to help you choose which corporate structure to use, nor even to point out which benefits are available to you with a simple LLC (or even just a sole proprietorship). For example, the book lists the “golden tax secrets,” including seminar expenses (think CME trip). As most docs know, those are deductible on schedule C, no corporation required. It's comments on S Corps are even less helpful. I quote:
Robert Kiyosaki, the international best-selling author of “Rich Dad, Poor Dad” likes to say, “The S in S corporation stands for SMALL! The C corporation is for people who want to think big.” This really is true. In most instances, if you don't plan on creating a business with the greatest wealth producing capability, then the C Corporation is not for you.
I'd prefer they just skip the fluff and give some examples of when to use an S Corp preferentially. You'd think from this book there was no reason at all.
The final issue with the book is that it is overly broad. For example, there are big sections on trusts, probate, accounting, life insurance, disability insurance, compound interest, and a number of other subjects. There is even an entire chapter on setting up a trust for your pet. The book would have been better sticking with its subject matter, rather than trying to be a full-scale personal finance and business book. It really doesn't do the other subjects justice.
Should You Read Inc and Grow Rich?