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In colonial and early America there were adventurers, sailors, and traders who ventured into the unknown in order to create a life for themselves. But most people worked on farms and in basic trades. They generally worked at one thing and did it for their entire life. But as the country started to grow so did the aspirations of its citizens.
As we started to move westward we became enthused about quickly becoming wealthy. We were no longer satisfied with being a stable member of the community and doing our job well we wanted to get ahead, to get rich. The path to wealth was business and the entrepreneurial spirit quickly spread.
Entry into the world of business was easy. As a U.S. Circuit Court judge remarked in 1839, “Every man thinks himself qualified to be a merchant. A man says, ‘I will be a merchant,’ and he is a merchant. The creation of light was scarcely more instantaneous.” Spurred on by large businesses that were looking to open new markets eager new merchants funded with easy credit opened the doors.
There were many business successes among the new merchants but with little or no business experience and turbulent financial times most failed. Many failed spectacularly and often they failed more than once. But the red-hot desire to get ahead never diminished.
In fact the country was on such a fast-track that those who were content with the simpler agrarian or tradesmen lifestyle were considered losers. Even businessmen who ran competent and comfortable businesses were put on the “sinking list” if they weren’t aggressively expanding. Meaning if a man could fail simply by not succeeding or not striving, then ambition was not an opportunity but an obligation.
In 1864 a physician reviewed the previous forty years: “Everyone is tugging, trying, scheming to advance – to get ahead. It is a great scramble in which all are troubled and none is satisfied.” It was during this time that the “go-ahead” man came to be defined by the term individualism. As our legal system matured it was the emergence of contract law that allowed the post Civil War attitude of every citizen is an entrepreneur to be solidified.
There was a time, not that many years ago, when average American workers could graduate from school and find work with a company that provided ample and stable income. The company also provided health care and a pension that provided a comfortable retirement. It was a long-term mutually beneficial relationship. The frosting on the cake came from the American government by providing an added layer of financial protection, Social Security. It made for a nice package, workers did their job and their family finances were taken care of.
That seems like a long time ago doesn’t it? Today’s workers change jobs several times throughout their career. In fact they and their spouses simultaneously work multiple jobs. Pensions have turned into 401Ks which must be self-managed. Pensions that still exist are being done away with and even promised benefits are being withdrawn. Healthcare, if its company provided requires worker co-payments while coverage is diminishing. Even the Social Security system has had self-managed systems proposed.
Although the change is not complete the trend is unmistakable, don’t expect any help because you are on your own. Like it or not your financial future is up to you, and you alone.
There is Only You
The good news is that you’ve never had as much opportunity to succeed. Technology and an increasing life-span give us more opportunities to do more things for longer than ever before. The core of your opportunities lies between your ears. An active mind that’s engaged in self-fulfilling activities has the potential to bring outstanding rewards.
Even if you are an employee you must realize that you are selling your time or service to your employer. As such you are the boss of your life.
You can upgrade your capabilities and make yourself more valuable at any time. You can learn a new skill that would benefit your company or one that would lead to better employment elsewhere. This will make you more valuable and increase your income potential for years to come.
The alternative is not pretty. You might get some pay increases as the years go by but you will almost certainly reach a point where a younger worker making less money, a business re-location, or an industry that has become outdated will take your job and leave you with nothing.
Much like the Nineteenth century businessman, if you’re not making progress you’re falling behind.
While advances in transportation and the Internet have made it possible for manufacturing and customer service jobs to be done from anywhere in the world it also means that the world is open to you. Start a website and you could have people coming to it form countries you’ve never heard of. It also means you can communicate, and therefore do business with, millions, I mean billions of people worldwide. And if that scares you scale back and realize you can communicate effectively with people in your city or region.
You have talents. You have interests. You can learn more and become better at what you already know and do.
When you think of yourself as the boss of your own company and your life then your can open yourself up to new income potentials, either through your existing company or through an additional job. You additional job may even be a part-time business that you start. The advantage of starting a part-time business is that you keep your current income while creating something that has the potential to grow into a substantial venture.
Again, you really don’t have much choice. You’d better to learn to take care of yourself because business and government won’t be there for you. In the end there is only you.
You as a Business
If you are an employee of a company then your income comes in the forms of wages. Taxes are withheld and you receive a W-2 every year.
If you’re in business, either as a sole-proprietor, or a shareholder of a corporation or a Limited Liability Corporation (L.L.C.), or a Limited Liability Partnership (L.L.P.) you may have income as an employee but also as a business owner.
The company you work for, or own, could be engaged in any of thousands of enterprises. But there are two main areas of cashflow for us to focus on here. The first is the work that you do to bring the cash flowing to you. The other is what you do with the money once it reaches you. While I’ll encourage you to be creative in finding new ways of bringing money to you once you have it the skills to manage it properly area fairly well defined.
NO matter how the money comes to you unless you learn to harness your money and put it in a place where it earns more money then you are on a financial treadmill going nowhere.
There are numerous stories of people who had mundane wage earning jobs who were able to amass fortunes by using good long-term money management skill. So make that your business. The business of money management will serve you well no matter what else you do.
In as little as two hours a week you will be able to develop and use good money management skills. Then you’ll be able to have your money earn more money. Treat this skill as a business and you’ll find it is not only financially but emotionally rewarding.
Once you have mastered good money management skills then you’ll be in a much better position to look at creating or expanding the concept of you as a business.
Your Legal/Tax Structure
I’m not an attorney nor am I a qualified tax adviser. This is designed to give you general information and, I hope, some inspiration about starting and running a business. Before making any final decisions it is a good idea, and I strongly suggest, that you consult with a qualified expert. That said everyone should own their own business.
Sit down because this may shock you. The rich run the country. Surprised? Probably not. That means the rich write the tax laws to benefit, well the rich. You can complain if you want but you’ll be better off understanding the rules and using them to your advantage.
The worst position you could be in is as a wage earner. That’s because before you receive your money taxes are taken out. You earn, this is for example only, $100 in order to get $75 in your pocket. Everything you buy is purchased with after tax dollars. Even your money making investments are make with after tax dollars.
The way to use the tax laws to your benefit is to own a business. By starting a sole-proprietorship you’ll be able to start receiving money and then spend pre-tax money on the things that the business uses. Your business earns $100 and you get $100. Then you buy supplies and pay taxes on what’s left over. You get your goods but pay less tax. That’s why I believe that everyone should own their own business. If you want to win the money game then your have to understand the rules and use them to your advantage.
If you are looking to protect your assets then consider forming a corporation an L.L.C or a L.L.P.
The more I understand about how the rich become rich the more I see it coming down to two basic fundamentals. Having good money management skills and using the tax laws to their advantage by running a properly structured business.
The good news is for those who are in debt is that starting a business, and being able to increase your income while taking advantage of the tax benefits is not difficult or expensive. It’s still almost as easy as say you are a merchant and you become a merchant. Usually a small filing fee and the printing of a public notice will make your business eligible for a business checking account.
Whether you engage in online auctions, multi-level marketing or provide a product or service you’ll find lots of ways to getting started in a business on a shoestring. If you treat it as a business and put in regularly scheduled hours you’ll find it can grow into something substantial. Perhaps more important is the fact that you’ll have taken control of your financial future.
Multiple Streams of Income
This is going to be easier than you think. In fact you may already be doing it without realizing it. The concept is simple. You can’t rely on an employer to be your sole source of income. Even if you’re well paid today there’s no guarantee your job will be there tomorrow. So in order to protect yourself, as well as simply generate more income, you should have more than one source of income.
Consider the wage earner. The money comes in a paycheck, that’s income stream #1. If some of that money goes into an interest earning account like a saving account, then, by definition, it earns money and is income stream #2. Suppose then this individual collects something, anything, as a hobby and discovers he can buy and sell it at a profit using an online auction, well that’s income stream #3. So far we have three income streams with virtually no additional time or effort.
Then suppose this wage earner has a talent. It could be painting, cooking, gardening, fixing things, entertaining kids, photography, or, well the list could go on and on. And the talent is used on an occasional basis to help others in the neighborhood. Well not only is it another stream of income it’s a perfect way to start a part-time business. That’s income stream #4. Then this individual looks at seasonal income. Things like income tax preparation and home decorating for Halloween or Christmas mad great part-time businesses. Even a temporary Christmas-time job is a good income source. There’s income stream #5.
Well by now you get the idea. You can increase your income and provide safety against uncertainty by having multiple streams of income. The great thing about starting additional streams of income is that they tend to grow as time goes by. By starting small today you could be earning substantial amounts in the future.
You as a Business
I believe that our uncertain economic times as well as the tax laws demand that you treat yourself as a business. More than that, they demand that your business be structured in the proper business entity. Do so and you are prepared to get ahead financially. Do nothing and you’ll get run over. The choice is yours. But then again there really is no choice.
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