21

HOW TO SECRETLY RUN A HOME-BASED BUSINESS

“Are You Zoned for Business?” That was the title of an article in Home Office Computing. The subtitle was Registering Your Home Office Is a Difficult but Necessary Evil.

In chapter 1, you may recall that I said, “If I mention any procedure, which I suspect might be construed as illegal in some states, provinces, or countries, I will warn you of that fact beforehand.” When it comes to working at home without registering for a business license, consider yourself warned.

However, the authorities seldom if ever send out patrols to search for violators. Rather, they depend upon tips from your competitors or complaints from the neighbors. Further, the usual result of a complaint is merely a warning, so stay cool and keep these tips in mind:

• Never, ever tell your neighbors about your business.

• Do not have your customers or clients come to your home.

• Never receive deliveries at home—but then, you already knew that. The best invisible business is run online. Payments can be either online or money orders received in the mail. No one will know your age, race, background, or if you’re a first cousin to the Roswell aliens.

You can sell such a business to someone else in any state or—in some cases—any nation in the world. In 1989, one of my clients started a mail-order business from the spare bedroom in his cheap tract house in a small town in Nevada. The initial investment was $1,500. The product had to do with a paralegal service that was attractive to Europeans. The first year all he did was break even, so he lived on his savings. Then sales began to grow by word of mouth. In 1992, he withdrew a six-figure bonus (using a convoluted tax-free transaction) and kept working. In 1994, a privacy-oriented entrepreneur from Nebraska purchased 100 percent of the stock in the corporation that owned the customer list for $500,000.

Not a single neighbor knew a business had been run from that home, much less that he had been netting up to $20,000 a month before taxes. And the taxes weren’t all that much—90 percent of the stock was in a charitable remainder trust, not subject to income tax. (A detail beyond the scope of this book.) However, the basic reason for starting the business was privacy. The fact that it did better than expected was a bonus.

HOW TO HIDE BOTH YOUR TRUE NAME AND YOUR SEX WHEN YOU RUN AN INTERNET BUSINESS

Susie—a longtime student of How to Be Invisible—runs a Web site that has to do with selling how-to-do-it information in a very niche field. She uses a man’s name (I’ll say John) because she believes—rightly or wrongly—that anyone interested in this field might pay her less attention if they knew she was a woman. She lists only a mailing (ghost) address and an e-mail address on her site. From time to time, she receives a request via e-mail for a phone number so that the sender can speak with John personally. If you were in this position, how would you respond to such a request?

Susie e-mails back that she (“John”) does business only by snail mail and e-mail. That reply normally suffices. However, if the request involves what appears to be an emergency, she e-mails the man for his telephone number and then calls him from a Tracfone.

“John is not here today,” she says, “but I can solve your problem,” and of course she can, because she owns the business. But what if a caller insists upon a phone number so he can call John another day? Should that ever happen, Susie is prepared with an answer:

“Unfortunately, sir, John is completely deaf, which is why he uses only e-mail or snail mail. But he sure knows a lot about his subject, doesn’t he!”

SHOULD YOU WORK “OFF THE BOOKS”?

If you mean, to avoid paying income tax, then the answer is no. I have never evaded income taxes nor have I ever recommended that course to anyone else. Why be a tax cheat when there are so many ways to make money and keep enough for yourself legally?

Some, of course, are in another country and unable to get a work permit—think of the million of Latinos in the United States, and hundreds of thousands of others who work illegally in Europe, Australia, and South Africa. I have several friends from Spain, for example who are currently in the States on student visas. They are working underground because they do not have and cannot get green cards. One of them has been making notes and plans to write an e-book about how to make money without a green card. If he does, it may be available later on at www.canaryislandspress.com.

ANONYMOUS PROFITS IN REAL ESTATE

In the current recession, you might think that a better subtitle would be “How to Lose Money in Real Estate,” but—as usual—there are niche markets that are doing well.

Years ago I ran across an aging landlord from Chesapeake, Virginia, named Lonnie Scruggs. For the previous ten years he’d been buying old—and I do mean old—mobile homes for a few thousand dollars each. He then made a few repairs, dabbled on some paint, and priced that at double his cost. He then sold them by financing them himself, charging up to 18 percent annual interest. The reason this worked was because his low-income buyers had only two questions: (1) How much down? and (2) How much a month? These deals were easy to sell, because down payments were about $500, and monthly payments were less than $200. (Buyers paid rent to the mobile home park on their own.) Here’s why it’s so great from the standpoint of privacy:

• You purchase the mobile home for cash, so no one asks you for credit information.

• You title it in the name of a limited liability company.

• The renters will either pay cash each month, or make their checks out to whatever name you give them.

Scruggs has paperbacks books and Kindle e-books out on this subject. Check www.amazon.com.

INVISIBLE PROFILE

In general, the idea behind running any low-profile business is to keep your name out of the picture, so that you cannot be named in a lawsuit. You will, therefore, run the business in another name. It can be in the name of a nominee, a pen name, or in the name of a limited liability company. In fact, some persons use two LLCs, with the first one doing business and the second one as the sole member of the first. A totally different method is to use one or more established businesses as a “front,” and I once ran across such a business in Boston. Here’s some background information.

In 1974, I went to the Bombay Bazaar in Las Palmas de Gran Canaria to buy a new watch. At that time, Bulova was at the cutting edge of time-keeping technology, with their electronic Accutron model. Instead of tick-tick-tick from a balance movement, the Accutrons emitted a pleasing low-level hum from a tuning fork, and the sweep second hand moved around the dial with silky smoothness rather than by little jerks.

I bought the Spaceview model with a transparent dial, and it is still my constant companion. Among other things, it reminds me to “always look for a second solution.” That is, even when I find a solution for whatever problem, I look for a second one as well. (Bulova failed the test—they neglected to look into quartz movements as a “second solution.” Later, the Japanese, using quartz movements, ran over the Bulova folks like a steamroller.)

Some years ago, when in Dallas on business, the battery in my Accutron went dead. Thinking there was “no problem,” I had a new battery installed. Unknown to me, however, Bulova’s 1.35-volt mercuric oxide low-drain battery had been outlawed in the United States because of its mercury content, and jewelers were substituting a 1.5-volt battery. The result was that, two weeks later, half of the tuning fork’s electronic circuit blew out while I was in a certain city on the East Coast. When I called the Bulova service department in Woodside, New York, I was stunned to learn that they refused to carry parts or repair Accutrons any longer. Their miserable excuse is that the 1.35-volt mercury-based batteries are no longer obtainable. But they are, in every country of the civilized world other than the United States.

So where am I going with all this? I found a solution with a repairman who is I-N-V-I-S-I-B-L-E!

I started my search by calling jewelers in the Yellow Pages that listed “Bulova” as one of the brands they sold. The first three assured me that Bulova Accutrons could no longer be repaired, but the fourth jeweler was my kind of man. If I’d drop off the watch, he’d see to it that an independent repairman would fix it, and put in a new Eveready #387 1.35-volt mercuric oxide low-drain battery (purchased in Canada).

“May I talk to the repairman, please?”

“No, he doesn’t have any contact with the public.”

At first I thought the jeweler was just trying to protect a commission, but further investigation proved this was not the case. Whoever the repairman was he deals only through established dealers, with all checks being made out to the jewelry store. And—listen to this!—the actual repairman has never been seen, and no one has a clue as to his name, address, or telephone number.

The only contact between the stores and the repairman is a courier known as Tony. Every Friday, Tony, who appeared to be in his late seventies and walked with a limp, made the rounds in the city, picking up and delivering Bulova Accutrons and similar models, receiving payment in cash. The storeowners were happy, because they got a commission and rendered a needed service to their customers, and we Bulova Accutron owners were happy to keep our watches running. Could this repair guy be tracked down? Without a subpoena, some industrial-strength threats, or a PI who successfully trails Tony, I don’t think so. And who would want to? Why would anyone care?

Suppose, then, that you wish to set up an invisible, untraceable business, and for whatever reason do not want to use a corporation, an LLC, nor a nominee. Okay, why not copy the Bulova repairman?

1. Locate retail businesses or public offices where the owners are willing to act on your behalf in return for a commission. Contact them in person or via a representative. Your business could be in repair, replacement, software, small products, information, reports, or any other kind of business where the customer would contact the store or office.

2. Checks will be made out to your dealers, and the dealers will pay you or your rep in cash. They will want a receipt for their tax records, but this can be in any business name you like. Who cares; who would ever check?

3. You keep good records with QuickBooks (no audit trail when you correct errors), list the income on your personal tax return (Schedule C), and all’s well with your world.