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What are the benefits of being self employed -vs- a W-2 employee? There are a few biggies worth mentioning.
Self employed:
Earn, deduct expenses, pay taxes, keep profit. Being able to deduct expenses before paying taxes is where it all happens for self employed people. Forming a corporation isn’t necessary, but is highly recommended. It can shield your personal assets from lawsuit.
W-2 employee:
Earn, pay taxes, deduct expenses, keep profit. You pay taxes before you do anything else. That’s why you can’t seem to get ahead. Not to mention all the other taxes you pay for everything you buy like food, gas, clothing, etc.
Starting a business:
Don’t go in debt to do it. Start today. Start small. If, after 1 year, you aren’t making any profit then it’s not a business it’s a hobby. If you continue to feed your business with money from your W-2 job, you don’t own a company. You have a hobby.
Smart investors buy assets that put money in their pocket each month (profit). Workers buy depreciating assets (cars, houses) that take money out of their pocket each month (liabilities).
Do your homework, but don’t study forever. Get started right where you are with exactly what you’ve got available to you now. Network and build relationships with others who do what you do. Amateurs compete. Professionals create. Huge difference.
There’s a rat race only if you decide to run in one.
Resources:
Own Your Own Corporation
Give us a call on our voicemail feedback hotline at 615-200-7189 or drop Greg an email at:
greg [at] debtshepherd [dot] com
