Why To Start Your Own Business

Reading this blog will help you to get one step closer to achieve your dream of starting your own business. This will indeed motivate you to think outside the box and bury the conventional-comfortable mindset.

Hello to all my viewers. I am back again with an amazing blog that is specially designed for you to think unconventionally. Because at the end of the day- It all depends on your Mindset.

Before I begin, I need to make one thing crystal clear.

Remember, Anyone can start a Business. Truly, Anyone.

You do NOT need to change the world. You do NOT need an idea that will bring the next big revolution in the Industry. You do not need to be a Genius or Innovator. It's ok if you are not Bill Gates, Mark Zuckerberg, or Steve Jobs. Do NOT get intimidated.

All you need is a specific skill-set or knowledge that can help solve a problem or may have value to other people.

Ideas do NOT come out fully formed - So don't think much.

Having said that, Let's Begin! - Why start a Business?

To answer this question, this blog is divided into four sections:

1) Financial Freedom

2) Ownership & Equity

3) Tax efficiency (Check out real-life example)

4) Conclusion

FINANCIAL FREEDOM

Most of the people in Canada earn money through a part-time or full-time job and that's what the expected path is for most people.

Study till the age of 25 or more- Learn some skills- Do the job- Get in the comfortable risk-free zone - get guaranteed bi-weekly payment and benefits.- Nothing wrong with it!

But here is the problem:

Let's consider you are the best employee. You will get bonuses, and pay raises every year- at least to match inflation.

However, you are only getting paid when you trade in your time. If you don't work, you don't get paid. so technically, if you want to earn more money, there are two options:

1) Increase in Salary

2) More work

However, there is a cap to both of the options. There is always a ceiling or threshold of salary you can get. So no matter how hard you work, you would never get past this ceiling value.

Moreover, remember that- "you are always vulnerable and replaceable "

When you spend more time at work to get extra money, you are using your valuable time, and if you are one such person who does that then please do not fool yourself- it's just a trade.

So you must be thinking- "what should I do"?

Emphatically answering - "Business"

• No limit on how much you can earn
• Can grow year after year if managed well and expanded

So, we all should find a way to make passive income through our investments or side business. And when your passive income exceeds your expenses, you can now sit on the beach the whole day and that is "Financial Freedom".

If you don't find a way to make Money in your sleep, you will work until you Die. - Warren Buffett.

OWNERSHIP & EQUITY

When you are working in a company, you are working to make the company rich.

All the smart work & creativity you put into your work will only give you Salary and that's it. But hey, that's what the deal was.

Don't get me wrong, I am proud of every job I ever did and the accomplishment I achieved doing that. I am grateful that I got an opportunity. But let's face it - I don't have ownership in any of it. I won't be getting any of the long-term advantages after putting in all the work for my whole life. (Except bonuses- but that's one time)

But if you start your business, all the effort and time you put in would help to grow your business and thus you are making an "Equity" in your business.

Now the time you put in your business is an investment as it would lead to the growth of the company over time.

Someone rightly said- "Time is Money, Use it Wisely"

TAX EFFICIENCY (This is my Favourite part)

Do you know that the Employment income gets taxed most heavily? Yes, even more than businesses or investments. Let me tell you why.

When you have a salary, what's the very first thing that happens to your money?- You have to pay taxes and you have NO choice.

It's not about how much money you make, it's about how much money you keep.

Let me give you an example,

If you make a large salary of $100,000 a year but you spent $60,000 a year on rent, car payments, and other expenses, you know that you've only really made a net income of $40,000. That's how much money you get to keep in your wallet. However, the government tax you on 100,000 salary, and all those expenses just went down the drain with no tax benefit offered in return on those expenses.

Now when it comes to business, it's the opposite. You get taxed on the net income you made after deducting all your business expenses. An Example of the type of expenses would be illustrated by a real-life example when I did a self-employed contract job for 3 to 4 months.

I was getting paid $2500 bi-weekly or about 5000$ per month. Note that since it was a self-employed contractor job, I get a full 5000$ and I would have to pay taxes at the end of the year by myself. Now at the end of the year, I showed various expenses which helped me carry out this self-employed contract. Examples of expenses are as below:

• Monthly Car payment (Since I was using my car to commute)
• Monthly Car Insurance
• Car Parking fees
• Rent (since I was doing work from home sometimes)
• Internet bill (Since I was using the internet to work)
• My phone bill (Since I was using it to talk with the client)
• Car depreciation
• 407 toll cost
• Petrol cost
• And more

You would have realized that the expenses I showed above were mandatory expenses that I was going to spend even if I had not done this self-employment contract. So technically - It's so much money saved.

Now when you add all the expenses, the tax accountant helped me showed that the self-employment job which I did was actually in a LOSS.

Not only that, but I was also doing Uber/Skip and even that was shown in a loss.

So technically, I paid ZERO tax on the income of 5000$/month for this employment contract. Making full 15000$ in 3 months. Think of the taxes I saved - about 4000$.

Moreover, for the job I did rest of the 8 months (regular employment job), I got a tax refund of about 1800$. (This 1800 buck is nothing but the loss showed combining both of my business. It shows that I borrowed 1800$ from employment income to sustain my business and thus government gave me the refund)

So total amount I saved by working 3 months:

4000$+ 1800$ = 5800$ (Pretty Cool ha ?)

Now, this is why I love Business. Too Smart.

Now, to conclude this read in few short points:

• It's all about the mindset. Think outside the box.
• Try to solve the problem
• Think of the ways you can achieve financial freedom.
• Be the owner
• Build wealth smartly
• Let's generate jobs and help the community

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Dive Into Canada