In the early stages of your business, you may be investing in the business first and paying yourself later on.

Dividends sound nice. You buy a stock, it pays dividends, and you're a happy investor. In fact, if you own a C corporation and it owns some GM or Disney or IBM, a whopping 70 percent of the dividends your company receives from those great investments are excluded from taxation (as long as your company owns less than 50 percent of GM, Disney or IBM, that is).

One widely used method for building personal wealth, by letting the business compensate you for your financial risk as well as your services, is for you to retain any real estate used in your business in your own name.

As tax-favored, wealth-building vehicles, retirement plans are hard to beat for providing tax deferred compensation for you and your employees. Contributions to a qualified plan are deductible to the business, but not taxed to the individual until distributed at retirement. And income earned on the plan assets accumulates on a tax-deferred basis as well. Hence, profits can be taken out of a corporation without being subject to tax at the corporate level. They are set aside for your later benefit and not taxed to you until you receive them at retirement, at which time most folks are in a lower tax bracket.

Life insurance is the last of the late, great tax exempt sources of cash. The group-term life policies used as a basic fringe benefit are fine, as far as they go. But in the case of most business owners, the coverage provided is inadequate to meet their financial responsibilities. Yet individual, permanent life insurance is a luxury few can afford to buy with after tax dollars. "Split-dollar" life insurance was developed to fill this gap.

Legitimate deductible expenses permitted for travel, meals, entertaining clients, automobile expenses and the like, if properly claimed and documented, give an owner many advantages not enjoyed by regular employees. Considerable benefit can be gained through the use of deductions for company cars and expense accounts, as long as they are supported by extensive documentation that substantiates their legitimate business purpose.

The value of so-called fringe benefits can enhance your total compensation enormously. Many have the advantage of being deductible to your business but not taxable to you. These "welfare" benefits include medical and dental coverage and group term life insurance up to $50,000.

What are loans doing in this list? Loans aren't compensation, are they? Well, the answer to that is that they often get reclassified as compensation (or, worse yet, as dividends) by the IRS, so you may as well think of them in that context from the get-go. Then you'll be motivated to avoid the pitfalls that cause this reclassification.

If your business is structured as a sole proprietorship, you will pay yourself directly through an "owner's draw" and report this through Schedule C of your individual tax return. If your business is organized as another type of "flow through" entity (such as a partnership, LLC or S corporation), all profits flow through from the business to its owners and are taxed once, on the owners' tax returns, similar to a proprietorship. For all these types of businesses, your cash compensation level will be dictated more by the cash-flow characteristics of the operation than by tax law imperatives. Since you will be personally taxed on the profits of any non-C corporation business whether you draw a formal salary or not, it's a distinction without a difference.

Like the poet said, let us count the ways — to get money out of your business. And they abound. The form they take often depends on which structure you choose: sole proprietorship, partnership, limited liability company, C corporation, or S corporation.

Bonuses should follow the same general guidelines used for salary with respect to compensation for C corporation owners. In addition, in a C corporation, paying yourself a large, last minute bonus at the end of a good year is not a habit you want to get into. Particularly avoid paying a bonus that's greater than your usual salary. The timing is often as important as the amount when it comes to raising red flags for a tax auditor.

What if you have created a personal wealth-building plan and have read through the discussion on implementing the plan, but you can't get over a nagging fear that you may have forgotten something? Because of this fear, doing nothing is more comfortable than moving forward.

How to get money out of your business . . . the entrepreneur's eternal quest! Since you're in business for yourself, you can pay yourself what you always knew you were worth or you can elect to plow cash back into growing your business. Of course, investing in growing your own business is also a way to build your personal wealth, although doing so sacrifices some portfolio diversity.

Financial planning can be described as a system to enable you to identify and reach your money-based goals by making wise lifetime decisions about how you make money, how you invest it, and how you spend it. This differs from the related topic, estate planning, which is concerned with what you can do to transfer your wealth at death for the greatest advantage to your heirs (and at the least cost to you while you are still living!).

You probably won't feel much pressure to change your wealth-building plan if your planning computations show that you are on track to reach your goal at the desired time. If you'll end up with more money than is needed to fund your plan, you can redirect excess savings for other purposes, or merely "let it ride" against the eventuality that somehow the goal will turn out to be more expensive than you thought. In any case, you probably don't have a situation that needs to be addressed in a big hurry.

Nothing lasts forever; certainly not a personal financial plan. If you have invested the time, effort, and money needed to implement your financial plan, you definitely don't want changed circumstances to make your plan obsolete.

To compute your after tax yield on an investment, you'll need to know what tax bracket you are in, and the stated (pre-tax) yield of your investments. The arithmetic formula for figuring how much pre-tax yield you'll need to equal a particular after-tax yield is: [after-tax yield / 1.00 - tax rate]

Once you have gone through the important steps of identifying what you have now, setting goals and planning how to reach your goals. But as important as each of these steps is, none of them is as vital as that of carrying the plan forward and making it work.

What's the best way to set goals that will help motivate you to achieve your personal financial wants and needs?

In order to construct your personal wealth-building plan, you need to closely consider what you have now and what you want in the future. As a necessary part of the process of setting a goal, you'll want to make the goal measurable, that is, reduce it to a monetary amount, and set a deadline for attaining it.

This section and the subsections that will follow will tell you how to make your goal measurable, that is, how to provide yourself with a rather clear picture of where the goal is, and how close you are to attaining it.

We've all heard the adage: "Be careful what you wish for, you may get it." A more realistic statement about attaining financial security might be: "Be careful what you wish for and how you plan to get it, or you won't." This may sound pessimistic, but it's really not. You can succeed in reaching your goals for building wealth for your lifetime use and passing it along to your heirs. But, in order to do it, you'll need to do things a bit differently from most people, who rarely create workable personal financial plans, or, if they do, don't follow through long enough to see the benefit in them.

Once you've considered the issues of income budgeting and budgeting for expenses, you're ready to build your personal budget.

While you may want to write on a clean slate when constructing your plan for building wealth and passing it along to your chosen heirs, you should consider the affect that existing legal documents and arrangements may have on your plans.

Many people figure that if they closely watch and diligently control the expenditure side of the budget, the income side will take care of itself. This may be OK for individuals whose only income is derived from fixed salaries. However, individuals whose incomes vary from month to month — like most small business owners — will also want to also track income received as part of the process.