The Power of Leverage
As business owner or investor, you generate passive income through leverage.
This is what separates the LEFT from the RIGHT quadrant. The RIGHT side of the quadrant, you are trading TIME for MONEY; on the LEFT, you are LEVERAGING other people and/or money for money.
This also explains why everyone has the same 24 hours a day, but some makes millions a month, and others barely scrape by each month.
A business owner owns a system that generates income. An investor owns investment that generates income.
Tax Benefits for Business Owners and Investors
As an employee, can you deduct your car expenses, driving mileage, dining out, country club membership, entertainment, life insurance premium, laptop, smart phone?
Let’s see what kind of deductions employees are allowed. Let’s use me as a demo.
I have a regular full-time job as a pediatric dietitian. Each year my tax deductions in job expenses includes any fees I paid for continuing education, conferences that I attended, professional membership fees, professional re-certification exams, licensure renewal. That’s about it.
I purchase a car to commute back and forth to my job, put gas in the car so I can drive, pay for registration, safety check, insurance and whatever maintenance fee for my car, just so I can get to work. As a professional, I have to wear nice clothes to be presentable to my patients. I buy lunch in the hospital or I may bring leftover from home for lunch. All these are other expenses that I cannot deduct.
Now let’s look at my tax deduction as a business owner.
I’m in the financial and real estate business.
For my business, I deduct any fees I paid for continuing education, conferences that I attended to learn more about personal finance to help more families, professional membership fees, professional re-certification exams, licensure renewal, laptops and cell phones to write contracts, articles, advertising and contacting clients, legal and professional fees for professional advices, meals when I’m out meeting with clients, part of my car expenses when driving to meet clients, travel expenses when visiting my rental property in California, which happens to be where my daughter goes to college.
I can keep going on with this list. Business owners and real estate owners enjoy tax benefits that employees do not. And the impact of tax on your income can significantly affect how fast your wealth accumulates.
Learn about WFG Business Opportunity