Disclaimer: Below is a simplified explanation of taxes as I understand them. I am in no way shape or form a tax expert! In fact, I've used a tax preparer/accountant for the last 15 years I've been in business because of this fact. I recommend you do the same.
Everyone in American should own a business! The reasons for business ownership are endless, but today I'm going to focus on taxes and why owning a business makes sense when the tax man cometh. To start, let's look at the taxes of an employee.
Employee Taxes
As an employee you work and work and work for your paycheck. Payday comes and you're ecstatic to get your check! Upon receiving it though, have you ever looked at your check stub and noticed how much is taken out before you ever receive it?!! As an employee, your taxes are deducted BEFORE you ever get paid. You get taxed on EVERYTHING you make. If your tax bracket is 25%, for every thousand dollars you make, Uncle Sam gets $250 of it! You only get to keep $750 of that $1000 you earned. If you made $100,000 then Uncle Sam gets to keep $25,000!!!
$100,000 x 25% = $25,000 in taxes.
$100,000 (your income) - $25,000 (taxes) = $75,000 leftover for you to live on.
Business Owner Taxes
As a business owner, the tax code is setup to give you a HUGE advantage!!! Let's use a fictitious coffee shop called Joe's Coffee. Let's say Joe's Coffee Shop does $1,000,000 (highly unlikely to make this much selling coffee, but hey it's just an example) a year in coffee sales. Under the tax code, Joe's only pays taxes on the PROFIT he makes from his coffee shop. If Joe's expenses to include labor, rent, inventory, electricity, etc. equal $1,000,000 then Joe's made NO PROFIT this year and therefore pays NO TAXES.
$1,000,000 revenue - $1,000,000 expenses = $0 profit and therefore NO TAXES.
The government has put this system in place in order to create an incentive for those willing to take a risk to grow and business which in turn helps grow the economy. Take advantage of this system for yourself and go out and grow your own economy through business ownership!!! 
Stumble It!
Stumble It!
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