Many W-2 employees have this common misconception: that running a small business venture is only for “that other guy,” the one who doesn’t mind taking risks and isn’t afraid to go out on their own. What I try to teach my clients, however, is that those who have learned to master their money and handle their personal finances wisely usually operate a small business venture of some kind, even while remaining a W-2 employee. Starting and operating your own business venture is one of the keys to mastering your money.
2. More chances to “invest” vs. “save.” Starting a small business (“small” defined as any company with 200 employees or less), even if only as a part-time venture in the beginning, takes the control of money-making opportunities away from others and puts it back with you where it belongs. Rather than relying on a W-2 job alone and hoping that if you work hard enough you will earn the cash surplus you need to create wealth, operating a small business makes you a true investor in your own future. It allows you to better control and manage opportunities to create wealth and changes your thinking so you can go from being a simple “saver” to a dynamic “investor.”
3. Save tax dollars! An important benefit you’ll receive from starting a business is the opportunity to save valuable tax dollars. This is the most immediate benefit you’ll realize. Did you know that approximately 42 percent of all revenue for the federal government comes from individuals and that only about 6 percent is attributed to corporations? With your own business, you will be able to deduct expenses that you would not otherwise be allowed to deduct on a W-2 level.
What this means is that the tax system is designed to give you incentive to start and build a business! When I help my clients understand this, they get very excited about launching something, whether it be a dog-sitting service, cutting hair out of their home salon, or selling products from home, it doesn’t matter. The important point is to get started!
It is important for you to understand that the government wants Americans to go into business for themselves and the system is designed to support those endeavors. Are you taking advantage of this built-in opportunity?
4. Become a part of the growth, development, and resiliency of the U.S. economy. Another very important reason why you should start a small business is to be part of U.S. free enterprise that allows the freedom to choose how much or how little money you make. Why is this so important? For two reasons: Small business owners act on their own self interest to 1) build companies that create wealth for them and their families, and 2) benefit the government through the creation of more businesses that employ more people which in turn bring in more taxes. In the case of capitalistic enterprise, everyone wins — ironically due to the self-interest exhibited by both the private citizen and tax-collecting government entities.
Small business owners are the backbone of the U.S. economy, responsible for building America into the world economic power it is today. Congress wants you to have a business so you can contribute to the long-standing history of free enterprise that has made the U.S strong. This nation supports the setup and operation of business better than any other country on earth. Differing from other countries that make it a burden to launch a business, the U.S. does not require several years of compliance with government regulation in order to legalize and operate a company. Instead of enacting laws that limit growth, the U.S. tax laws encourage it. Why not take full advantage of those laws?