One fact for all of us who live in the U.S. is that no matter what tax bracket we’re in, our taxes are likely going up. For some of us more than others.
And man that gets some of us in a huff. I know when I got the news, I got all steamed up! And for a few minutes I started to fall into panic mode… you know, that feeling you get when you watch all the negative TV news. “Woe is me, there go the kids’ college funds, when is it going to end, the more I make the more they take, I wanted to hire more people and now I can’t, I’m moving to the Cayman Islands,” blah blah blah.
And then I took a deep breath and remembered: No matter what the circumstances are around me, I have an incredible tool to create my own income, and control my own outcome.
I have my own business.
And you should too.
In fact, it’s not just a good idea. I feel this is actually now a NECESSITY nowadays for anyone wanting to improve their financial situation. (And who doesn’t want to do that?)
There are so many financial benefits to starting a business, but let’s look at the three big ones:
Benefit #1: You can increase your income… with no limits.
The income part makes sense, right? I mean, you’ve heard me talk about this for ages, how having your own business means you have no limit. There’s no earning ceiling for you. Sure you have to work hard and figure it all out, and take leaps that may be uncomfortable at first. But then, the machine gets up and running. And then earning. And then soaring!
And the great thing is, with a business, you can pretty much figure out how to use it to attain what you’d like for your life as well. Successful entrepreneurs don’t think of money as something they have no control over. They see it as a tool to live the life of their dreams.
A quick example that maybe you can relate to: I remember in 2006 when I first wanted to get my first nice car. I mean a really nice car! I didn’t even have a car at all in my 20s. And then I had a 2-door Chevy Blazer, which I drove into the ground. Then for a few years I had an adorable VW Beetle Convertible. I loved my Bug! But one day, I got into it, and it just didn’t suit me anymore. I was finally making more money, and was craving a more luxurious car.
I saw an ad for a white Jaguar XK and could not stop thinking about this car. Now, this had quite a price tag too, as you can imagine.
But instead of thinking, “I can’t afford this.” I shifted my mind to work on, “HOW can I afford this?” I worked some numbers and after reviewing my client files, I put together an online course that people loved, and generated me a nice profit as well, that more than well paid for the car.
You can change your mindset here too when it comes to any unexpected expenses or tax increases. In a scarcity mindset, you’ll be thinking, “ Okay, I’m looking at paying X% more in taxes this year. Oh well, it’s time to make some spending cuts. No manicures. We’ll go back to the scratchy toilet paper. And we’ll only eat off the 2-for-$20 menu at Applebee’s.”
Or, you can shift to an abundant mindset and think, “ Hmmm, this unexpected $5,000 bill just arrived. What can I create easily and in joy within my business to generate MORE than that, so it doesn’t even matter?” It’s a powerful shift that puts you in a place of ownership—not victim—no matter WHAT is happening around you.
So ask yourself what you can do this year to increase your cash flow. Even on a small scale. If you work a full-time job, maybe it’s starting a small venture on the side that could bring you an extra $500 a month. Those few extra hundred dollars a month could add up to several THOUSAND dollars a year if you work it right.
Benefit #2: You can pay LESS in taxes, and keep more of what you earn.
This may not make sense to you if you’re new to business. How would you pay LESS taxes if you plan on making MORE money?
Because a healthy economy does our nation well, you’ll find that most of our government’s tax laws are designed to encourage business and investment.
So what does that mean for us? When you consider that your largest single expense is typically taxes, having a business is an incredible advantage for you.
Even a part-time business can help negate your current tax situation, by helping to transfer many of your personal expenses to qualify as business expenses instead. And then you can legitimately deduct them from your taxable income, so you end up paying less taxes. They’re also called “write offs”.
For example, if documented correctly, and depending on your business type, common business expenses could include a new computer, your internet and phone services, home office space, office supplies, car mileage or a car lease, and… my personal favorite… travel! As long as your primary use/purpose for these expenses is truly for business, they’re legit.
Investments you make in your professional development such as coaching, consulting, and training are also typically tax deductible. (For example, a program such as my Elevate® online business training program.)
You may also have the opportunity to write off insurance premiums and health care costs, and save by having access to insurance programs designed specifically for small business owners.
Now, I’m sharing all this with you just to open your eyes and see the huge potential here. It’s important you consult with your own CPA (Certified Public Accountant) on what you can and cannot expense. And you need to take careful note to document things clearly and in detail, which takes work. But you’re doing yourself a huge disservice by not taking advantage of these huge benefits that are designed to help you thrive!
Benefit #3: Your business can give you “equity”—and that means long-term wealth.
The recent recession turned the idea of stock ownership as the safe bet completely on its head. Most baby boomers are not counting on Social Security and their depleted 401K accounts to live comfortably in retirement. It’s a sad phenomenon to see what’s happened to many, but it’s also opened everyone’s eyes. Times have changed, and what used to work just doesn’t work anymore. Now, smart people are turning to building businesses as a more promising form of building long-term wealth.
Owning your own business gives you options, and is truly the more thoughtful way to stay in control of your financial future. Whether it’s drawing a healthy income from your business for years to come, or building up your business to eventually sell it at a big price tag, thinking long-term is the way to go.
So, sorry… no excuses!
If you’re using the fiscal cliff as an excuse to not start a business this year, I hope I’ve just nixed that option. Get excited, because you’re about to change your life forever. You’re about to discover the best kept secret of improving your financial situation in more ways than one.
And if you already have a current business, I hope these benefits above have further inspired you to do the homework, play with your numbers, and think BIG.
Now, go do something you love, get paid well, and have FUN!© Copyright 2013 Ali Brown