You’ve heard about the many advantages to owning a business compared to working in a job.
You don’t have a boss telling you what to do. You control your own hours. There is no ceiling to the money you can make. You can work wherever you want.
There’s another advantage that’s not talked about as much. Tax structures are often more favorable to business owners than to employees.
In this video, filmed at the Platinum Mastermind in Fiji, Paul O’Mahony compares the differences in tax structures for someone who works in a job and someone who owns a business.
WITH A JOB…
In most employment situations, income taxes are taken out of your pay before you even see the money. As are insurance expenses, retirement contributions and medical expenses.
You have little to no control over these expenses and contributions.
Once you do access what’s left of your pay, you then have more expenses to pay. Your mortgage, your car payment, your groceries, your utilities, your kids’ needs. Don’t forget you’re also paying a sales tax on a lot of these expenses as well.
Finally, after all that battering that your money has taken, you get to keep the last piece. Hopefully there’s still enough of it left.
WITH A BUSINESS…
If you have a business, the process works differently.
All of your business expenses – marketing, supplies, staff and even your education expenses – are subtracted from your revenue. Whatever is left is your business profit.
You pay a corporate tax rate on your business profit only. In many jurisdictions, the corporate tax rate is lower than what employees pay. Even better, you have full control over the amount of tax you pay. You deduct all your expenses before your income is taxed.
For the remainder of your profit, you can either reinvest it into your business and scale up, or you can pay it out to yourself.
You may hear experienced entrepreneurs complain about government regulations, but don’t take your advantage for granted. When compared to employees, whose pay is heavily taxed and battered, business owners have a tax structure that allows you to benefit from what you’re doing.
If you needed yet another reason to start your business today, now you have another one.
You can access more beginner business strategies like this one, and learn how to model the “thinking patterns” of the world’s most successful business owners and entrepreneurs, in the MOBE Silver Masterclass. To learn more about the Silver Masterclass, click HERE.