Conversation (Richard Canfield with a business owner) about applying 'infinite banking'—using a whole-life insurance policy as an internal corporate financing/control mechanism. Key points: funding investments from a corporate-owned policy so owners choose timing of repayment; integrating the policy with the 'Profit First' cash-allocation model (tax bucket ~15% monthly, small profit percentages); policy used to provide loans for the first three years and then repaid, creating available internal capital; practical uses include equipment purchases (treatment table, computer) and covering the annual corporate tax bill; non-financial impacts include reduced bank-dependency, faster purchasing decisions, improved customer experience, and positive effects on family/business conversations and long-term visioning (building office, land-based practice).
Chapters
Foreign.
From a different source, investment, related income, capital gains, etc. You've, you've taken some courses, you've put the effort in, you started small, you've built it up to something where you know what you're doing, you're self managing all that in an effective way. The source of funding to create these investments has come from a policy. So it's a control mechanism. You choose when and how you're paying it back. Meanwhile, if you're creating, let's just say $10,000 of income on this endeavor, that's 10,000 you don't need to take out of your corporation now, which means you can apply that to some other future work in that entity. So it's allowing you that balancing act of control now on how you choose to take a tax dollar out of a corporate entity. And I think that's really the empowering force you're talking about. Am I on track there?
Yeah, for sure. So that's where now we have that interplay of the personal and the corporate policies. And I know when we first discussed this when we were getting Christina's policy, I was okay, well do we put it under her personally or what are the benefits and you know, the things that are limitations of putting in the corporation. And ultimately we decided that, you know, it makes good sense to, to do that in the corporation and so now we can just use that. Now we're using that policy in a completely different way than the one that I have personally. So we're using it to kind of piggyback off that whole profit first model with which maybe some of your listeners are familiar with. It's just a way of sort of structuring your income and sort of delineating the percentages of where you want to put it in terms of like operating costs, owner's compensation, taxes, and what's the other one? Owner's comp. Profit. The profit, the fun one. Right. So you're just, you're, you're allocating it that way. And I used to have these five different accounts in our corporate bank account and every month certain percentage like 15% of our income, our gross income would go into that tax account. Then that, you know, 2 to 3% profit would go into the profit account, etc. Etc. And then we got the policy said, oh, okay, well now I'm just going to keep track of those in my spreadsheets. I love my spreadsheets, as you know. And now I'm just going to flow all of that because I'm parking that money in those accounts. I'm parking it for the taxes, but it's just sitting in a savings account. Right. About 15% every month adds up fast. Right. And it disappears fast too, at this time of year.
So we are recording this at tax times.
Yeah. So here we go. So there's been a beautiful tool in the sense that every month I'm putting all of that profit first percentage, that tax percentage into the policy because I have outstanding loans on the policy. Because we drove the first three years of that policy from some loans that we received that had some really favorable payback sort of stipulations. So we use that to drive the first three years of our policy, pay that loan back. Now we have that space in our policy. And so that's another mindset shift for me. It's like, oh, it's, it's spaced like put somewhere to put money that's coming in. Not a scarcity. Where did it go? I have to pay it back now it's somewhere I can put stuff. Which feels different too.
Yeah, it's like an empty shelf on, on. In your grocery store that you just want to restock it when you get a chance.
Yeah, yeah. And there's like a different kind of fun around that for my brain anyway. But that gives us a space. Now I can flow all that money through on a monthly basis, corporately speaking. And that's all just. And then I got to pay the taxes, take out the loan, pay the taxes and start all over again. And so. And then all that interest and all that stuff that's, that's on the corporate. The corporation takes that quote unquote hit. So that's a big way that we're using. That's different than. Than my personal policy. So I mean, there's, there's way more interaction happening on the corporate one where, you know, I've taken out. I don't remember what number it was, but it was several, several loans and paybacks within that. Right. A few dozen or something.
What are some examples other than, you know, say, paying for, you know, annual tax bill as an example. What are some of the things that you've decided it made sense to, to use or leverage a policy in the business structure? Was there from some equipment, materials, POS system. Like what's an example of something that you decided that, hey, this is a good use. We've got this capital here. Let's implement with what we've been setting aside in the machine to help create more value in the, in the business Machine.
Yeah, simple things really, like equipment, like we needed A new treatment table. Right. So, okay, we'll just get what we want and we'll pay it back slowly. Right. So we didn't have to think of what we wanted and then save to get it and all that. We could just like, oh, it's time, you know, we've been dilly dally. It's time to get that new table. We could take that loan out. It's in the bank account in a couple of days and we pull the trigger and away we go. So that's an example. Or, you know, we just have to buy a new computer that we're going to have to fund. So those are really simple examples. But it, you know, those things are more significant investments when you start to add them up. Right.
The impact on your time, the value perception for customer service, the people that you serve that come to see you, that that's where you see it. That, that's an intangible. We would say it's something that's off the page. You know, the spreadsheet. You can see a number on a spreadsheet, you can create a formula to calculate. But how do you apply a dollar value to the streamlined impact of a new computer that's not frustrating you and the tech support calls and the bog down and, and that impact on your life in operating your business, that's an intangible that doesn't show up on a spreadsheet.
Totally. Yeah. And to have that flexibility and to know you're recapturing all of that on some level from the interest perspective, it just feels better because it is better. And it sort of another way that this is helpful is how we can look forward. So if I've got this personal side where I've drawn out of my policy, made some investments that I'm now dripping into my personal income, I'm not taking out as much from the corporation. So that's now sitting there. So it's like, okay, now that's one of the limitations of having the, the policy in the corporation is like essentially the. You're going to have to use the money towards the corporate needs, not towards my personal needs. Right. But now we can think ahead of like, okay, can we start thinking about building that office space on our property to start to work from our land closer to nature, closer to the gardens? Essentially, what the ultimate goal has been for us since the day we broke ground here, way before we broke ground on this property, was to work closer to home on the land and to, to offer that aspect of being closer to nature. Working with the Herbs in a different way, providing a completely different experience for our patients and a completely different experience for ourselves and how we practice. Now we can start thinking about those things more tangibly and say, okay, here's the numbers. We know exactly what's going on. We know what our budget is. We can pull the trigger here, you know, and feel confident that we don't have to have a bunch of meetings with the bank about getting the money and telling them, oh, you know, we're naturopathic doctors. You're what? And you're doing what? And like, well, maybe we'll give you some money, but not as much as you'd like.
You grow mushrooms on your land.
Yeah. Oh, that doesn't sound good. Right, so none of that. Right. So we can now, we can now we have this energy to just dream and act and not be bogged down in the grovel to the bank situation.
And what's the impact on that? From a conversation point with, you know, with Christina, you know, you've got wife slash business partner, but you, you guys both have a dream and a vision of something that you want, that you're. That you're connected with the knowledge that this is supporting you moving forward in that direction. How does that show up in, like, conversations that you guys have now?
It's interesting. I mean, we don't talk about it all the time. We have. There's certain moments where, you know, the energy's right. Kids are quiet or they're at grandma's or whatever, or Ro for dinner.
They're always quieter when they're at grandma's. I. I appreciate that for sure.
Yeah. Because they're not here. I love my children, of course, but to have that capacity and time to connect, it just bubbles up and it becomes just another layer of our relationship, of our growth together. It is part of our ecosystem. Like, ecosystem is a word I like to use with this infinite banking piece, because you're starting to see how these things play off of each other and how different system feed each other. And it's a part of our relational ecosystem. We have our children together and we work as parents together, and we explore that together. And then as a husband and wife, we explore that together and how our relationships developing and from the business perspective. And they all feel like we're. They're. They're different flavors, but it's all the same. It's us, it's our dynamic and it. It's just another layer that has really been able to function, to enhance our capacity to be creative, to. To have dialogue, to connect, to be excited about the future, and to be grateful for what's happening in the present. And a lot of that comes from, I guess, the word, the empowerment of, you know, having more of that control and having that vision and having a plan. Right. Allows you to have these conversations that aren't just pie in the sky or total scarcity vibe or whatnot. Right. They're just realistic conversations you can get excited about.
