Blog | Entrepreneurship

Why Investors and Entrepreneurs Get All the Breaks

How you can leverage the tax code to make more money

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My passion is building wealth for others and for myself. I love the freedom that comes with having enough money, I don’t have to worry about the price of groceries, if I can afford a personal trainer at my gym or if I can afford my mortgage this month.

I haven’t always had the freedoms that I do now. Like many of you, right out of college, I had a job, a mortgage, and a family. It’s only in the last decade or so that I’ve had assets to pay my expenses without having to go to work everyday.

I’ve been fortunate to build my assets, especially with my business, where I don’t have to go into the office very often, and I get the benefit of saving on taxes!

The Tax Law is a Stimulus Package for Entrepreneurs and Investors

I met Robert Kiyosaki when he came to me as a client after I acquired a practice that was servicing his tax needs. I didn’t know who Robert was, at the time. Once I knew we’d be taking him on as a client, I went out and purchased Rich Dad Poor Dad. Who knew we’d become such great business partners all these year later.

One of the first things I learned about was the CASHFLOW® Quadrant and how it separates income earners into different quadrants. Over the years I’ve compared that quadrant to how tax law applies to the diagram.

It was eye-opening when I figured out that those on the right side of the quadrat, the B & I side, pay less in taxes because that’s what government wants.

The government is basically steering the country’s economic behavior through tax law.

For example, two of the government's goals are to create more jobs and provide affordable housing.

Who does these two things? Entrepreneurs and real estate investors.

Those on the E & S side of the quadrant aren’t necessarily punished, they just aren’t rewarded like those on the B & I side.

Plan to Take Control of Your Taxes

You might be asking yourself, “Well what about me?”

Sadly, the deductions available to entrepreneurs and businesses aren't available to you, but they can be. You just need to shift some of your income-earning activities to the B & I side of the quadrant.

The best part, it’s easier than you think!

You don’t need to start an Amazon-sized business. Thousands of people all over the world start home-based business that enjoy saving money through the tax code.

Here’s My Advice for Starting Out

Whenever you start out: Start Small. If you have dreams of being an entrepreneur, take courses on entrepreneurship. That word has changed drastically in the last five years or so and opportunities for digital and online businesses have become easier than ever.

If your dream is to become an investor, you have to be an active investor to enjoy the tax benefits of the B & I side of the CASHFLOW® Quadrant. This means you have to be an investor that actively invests for passive income, not earned income. You must find good, cash-flowing investments that produce passive income.

Whether you’re thinking of becoming an active investor or an entrepreneur, you can start enjoying these tax benefits that others are already enjoying by investing in your financial education.

You don’t need a four-year degree in finance or business, you can simply start reading or taking online courses that help you better understand which quadrant you want be in.

To learn about other tax benefits you might be missing out on, get my book, Tax Free Wealth.

Original publish date: September 17, 2018

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