Think back to those western movies John Carradine acted in. All those shops on dusty Main Street in Dry Gulch, Wherever. The shops all had "Proprietor" or "Prop." above the door. People back then built the country one small business at a time, town by town. Prior to the 16 Amendment (1913) there was no income tax, so one had be pretty poor at handling money not to make a go of it. Those old western folks were the quintessential "sole proprietors." So when someone says your are a "sole proprietor", think of those town folk that dotted the old West--generally unprotected from the chaos of the world. (Things got way better for the shop owner!)Everyone has some talent, knowledge, situation, hobby, sport or side business in which they make a few bucks. Perhaps, you do it out of your home, out of your garage, on the court or course, your kitchen or from your desk. (Ah, yes, this is Desktop Companies' Blog). If you engage in anything to make money, you are in business already. Why not take advantage of your enterprise? (It is still called a "sole proprietorship" in the modern business world.) Add a little effort and use the generous business deductions in the business part of the tax code.
Even of you are just bowling for dollars, chances are the actual cost of making that hundred here and there is substantially greater than two bills total. Presto! You have what an accountant would call "negative cash flow." Or, what us real people call "a loss." Hey, losses are not all bad; they offset other income (wages, for example) and thereby affect your tax level. (Lower what you owe.) The best part is you get to keep the few hundred you made knocking down pins along with the reduction in your (employee) income tax burden. Now there are some rules, but imagine if you understood how it worked.You don’t have to hit the lanes. You could be a mechanic who fixes cars in his home garage. A handyman helping the neighbors with small projects. The stay at home mom taking in laundry. The avid gardener with too many tomatoes. Anything that generates cash is by definition a business. If you do it to make money, you are already qualified. Why not organize and get the tax advantages that goes along with business ownership?
The point is, by taking the business you do already out of your pocket, or from under the table, you can actually retain more dollars by organizing, keeping track of expenses and income, and following it on your desktop computer. Mixed that increased green with a little knowledge (that is where I come in) and you will think differently about business.
Two important external things to consider before clicking off in disbelief: my Washington friends say plans for tax hikes in 2010 are in the pipeline, including the probable demise of Schedule A Itemized Deductions. More taxes are coming your way. Pay less with advance preparation.
As you will discover in future entries, the rich (whomever you think they are) never do things as themselves. Every venture is done within the confines of a business organization and with OPM (other people’s money) whenever possible. That is why when some one like Trump has a casino file bankruptcy, it doesn't kill off the Don.
No, you won't be starting off in Atlantic City. Engage at your own level: your desktop... that's where you can control your money. After control, you begin to build. Rome wasn't built in one blog. Stay tuned.
