Why you should start & never quit a home business

(by Al Turnquist, CEO of Mentors on a Mission)

Why you, and everyone you know and love, should have a home business?

Owning and working a home business is without question the most powerful financial strategy for building wealth and achieving financial freedom in existence today.

Many of the laws that govern our financial lives are on the books to benefit and reward business owners, not employees.

You’ve probably heard the saying that the wealthy pay less income tax than the average working person. You’ve also heard that the rich get richer, and the poor get poorer. There is truth in these statements and when you look beyond the surface you’ll find this is true for the wealthy because they are business owners.

This is so important, I’ll repeat it - the laws of this country are designed to benefit and reward business owners, not employees. And these laws do not distinguish between a part-time home business and a traditional business on Main Street.

For example:

You’re married, both you and your spouse have a job, both of you probably have taxes deducted from your pay cheque every pay period. At the end of the year you file your taxes and hope to get a refund on a portion of what was deducted throughout the year.

That’s your first mistake and here’s why…

You see if you’re getting a tax refund it’s because you overpaid your taxes throughout the year. And what this really means is - you are giving the Government an interest free loan. Unless you’re extremely wealthy, you cannot afford to be giving out interest free loans. This is actually money that should be invested by you towards your financial freedom.

Let’s take this scenario a step further…

You see, employees pay for things they want and need with after-tax dollars, meaning every dollar the employee earns is taxed first and then the employee gets to spend what’s left over.

Business owners, on the other hand, pay for a lot of things they want and need with pre-tax dollars and the cost of those items can be used to reduce the business owner’s taxable income, thereby reducing the business owner’s tax liability. In other words, the business owner gets to buy things he or she needs with money that would normally be paid out in taxes.

For example:

You want to buy a brand new computer for the family and the cost of the computer is $1,000. As an employee you pay $1,000 for that computer but you had to earn $1,300 just to have the after tax $1,000 for the computer.

The part-time home business owner, on the other hand, buys the same $1,000 computer, deducts the cost of the computer from his taxable income and the result is he’s reduced his taxes by $300. The net cost of the computer to the business owner is $600 less than the cost to the employee for the same computer.

Another example:

The employee gives his children an allowance. Most parents do that. They give an allowance in exchange or as a reward for the child doing chores around the house. But the business owner who also gives his child an allowance, because of his status as a business owner is allowed to call that allowance a salary, and again, deduct that amount from his taxable income.

Another example:

The employee takes a vacation, and pays for that vacation with his after-tax dollars. A business owner takes a vacation and does a little business on vacation, which qualifies the vacation as a business trip. Now he can deduct a big portion of the cost of that trip from his taxable income.

Another example:

The employee drives his car to the store to buy some milk. The employee with his after-tax dollars pays for the cost of the petrol in the car. The business owner also goes to the store to buy milk but he leaves a business card at the store and because he did that he’s able to say, “I went to that store to drop off some marketing material and while I was there, picked up some milk.” Now the business owner gets credit for 36 cents a km and again he can deduct that mileage from his taxable income.

Are you starting to see the point?

Starting a home business can add thousands of dollars a year to your household income and that’s money that, for the most part, would be paid out in taxes. This is so powerful, you can own a part time business that is not making a profit, but because of the tax benefits you still have more money in your household to do whatever you want with.

So, if you’re still an employee, and you do not have a home business, get one immediately. If you have a home business and you’re thinking about quitting, think again! You’d be leaving some very serious money on the table. Or maybe you’re not convinced yet, you should be, but you’re not.

So here are additional reasons to start and never quit a home business -

You see there’s no security in a job, especially in our new information based global economy. Companies today will only keep you as long as they’re making a profit on you. The old cradle to grave job market where you go to work for a company and retire after 40 years with a gold watch and a pension, for the most part, has ceased to exist.

And if you don’t believe it - consider this. The job market has a whole new language nowadays, with terms like downsizing, outsourcing, etc. You see, starting a home business is the best way to ensure your financial security. A home business will allow you to build residual income - that’s the kind of money that comes in month after month, year after year, whether you work or not.

In addition, a home business gives you the ability to develop multiple streams of income, you can build one income stream to the point where it’s on automatic pilot, where it only requires a couple of hours a month from you, and once that’s done you’re free to go ahead and create another income stream.

In fact, Donald Trump recently said that he owned over 100 companies - that’s over 100 different income streams. And you can do the same thing with a home business. Presently I own 4 different businesses, each one contributes to my income.