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The Cost of Doing Business (Taxes)

COST OF DOING BUSINESS

There is an enormous bite being taken out of your business every year. Not only this but you get to foot the bill for the honor of paying this cost. About this time every year, millions of people spend countless hours preparing documentation so they can send approximately ⅓ of what they earn off to some Government organization that thinks they can spend your money better than you!

black and silver pen on white paper

If you are a business owner, then you know well this is the cost of doing business. Yesterday, I had to run to the Office Supply store for “red pens”. Today, I have to go back and get “file folders”. Is this a necessary part of my business? NO! (but I get the write off the cost!) Yea, right! I get the privilege of writing off the cost of doing business for an expense that I would not necessarily need otherwise!

HONOR IN TAXES

A long time ago, I was talking to a farmer about a program to reduce taxes. He got irate with me as he made this comment: “When I GET TO PAY TAXES, it means I had a good year!”

For me, I learned a new level of respect for paying taxes.  We complain (me included) for having to pay taxes because we feel they are excessive. I have always been a proponent of the flat tax. Recently, I had a revelation regarding the Tax Code and its intricate meaning.

After reading several books on investing, real estate and business, I had some of the information regarding the tax code filter its way into the crevices of my mind! (and boy, what a trip!)  

What we do not know is why the tax code is written the way it is. Although I have a better understanding, this doesn’t mean I am in full agreement. From my perspective, I see it as a guide to steer the economy by a system of rewards. (Those that do not understand these rewards see them as “big brother taking care of his Corporate friends”). In a way, it is but it is more of a bribe (in a good sense!)

EDUCATION OF THE ONE PERCENT

Now, I’m going to turn over some stones! One of the best authors (in my opinion) regarding this type of information is Robert Kiyosaki. He had the privilege of growing up in an environment whereas he was exposed to both elements of the Financial Education System.

He became famous because of his book, “Rich Dad Poor Dad”. He grew up with his own father that was very successful in the “common” education system. He also had the luck of having a best friend that he spent numerous hours of numerous days over the years that built himself up financially. What Robert learned from his friend’s dad (Rich Dad) became his financial education that they don’t teach you in school (the education of the one percent).

Over the years, I have read many books that I would not otherwise have been introduced to thru our educational system. (The information is out there, you just have to look for it!) One of these books that stand out for me is “The Education of Millionaires” by Michael Ellsberg.

This books stands out for many reasons in my mind but the aspect that grabbed my attention was his education, the 2 courses in his 4 years that he still uses (only uses) and the fact that he had to walk away from everything else in his education in order to be who he is today. (my thoughts)

Am I implying you have to walk away from everything you currently know? NO! What I am saying is you might be stuffing your brain with information you don’t need and you are neglecting information that you may not like!

My answer to your question: There are Secrets in the Tax Code!

About the author

Stephen Sampson is among the founding members of the Compumatrix Bloggers' Network and writes various topics about life and business.

Comments

  1. Yes. Stephen. I read Robert Kiyosaki’s book rich Dad poor Dad. I thought it was an excellent read. One of the things that I have truly learned is that those who are rich and have the opportunity to deal with lots of funds, is that they all know the ins and outs of the loop holes in the US Tax Law.

    1. Thank you for that informative post Stephen Sampson – I too like the Rich Dad Poor Dad because it is written from real life and much easier to understand than some financially related books. The game that can be played following the books principles is also a very good idea to learn and apply the book’s information. Tony Robbins has also written a very good book in which he interviews many successful business people and asks their secrets to success.

  2. Jeffrey, I make it a point to read everything that Robert Kiyosaki publishes. I also have studied his Rich Dad Advisors. It’s not so much knowing the ins and outs of the tax law as it is using the tax code as a guide. When you look at it this way, it is more understandable the meaning of the tax code. The bulk of the tax code is written for the business and investment people. It is a win-win situation for the business/investor and the Government. The code is written as incentives. You create these business practices and we will give you these tax breaks.

  3. With any business endeavor, one should study the trail blazers and learn what they did to get to where you want to go. It is always prudent to follow a bath already taken if that is heading in the correct direction; you can change the direction to fit your goal. Henry Ford built cars, not the first ones but he streamlined the production with assembly lines making it possible to sell cars cheaper and more to the general public. Many Products or services are propagated in the same way, and developed from one idea and morphed into many with each having its own unique purpose not available with the original Idea or product. Innovation and investigation is the process for any business venture including the handling of funds and the Government Rules and Regulations. It is all a total package that is a continuing education to progress.

  4. Ron, I appreciate your reply. HOWEVER, you mention following the trailblazers. On one hand, we can learn so much from the trailblazers and on the other hand, we ARE the trailblazers for our Compumatrix business (methods and design). A study of these trailblazers can give us the insight of what characteristics need a special honing. This is the importance of such a step. Once that is accomplished, we will expect to step out of the “Portal” and into the vastness of Space out there just as Astronaut Ed White took that first step for America in 1965. (The first venture for mankind was conducted 3 months prior by Russian Cosmonaut Alexei Leonov.) From the point of those first Space Walks to present, it is time for us as members of Compumatrix to take that next step and beyond.

  5. Leonardo, I don’t care what country you live in, TAXES will take a bite of your business. This is the one partner that shows up on payday for his cut of the profit and does nothing else for your business the rest of the week. However, the tax laws everywhere are written in a manner to get you to produce something that benefits the needs of the country. As a business producer, it is our objective to understand what the objectives are and how we can align ourselves in the most profitable means.

  6. I live in a country which has one of the highest tax percentage in the world.
    And I don’t mind paying that, as long as I know that my money does some good to other people in my country.
    I thank you Stephen for the recommendation of “The Education of Millionaires” and “Rich Dad Poor Dad” books.
    Will definitely take a look at them as my own business starts growing.

  7. I’m glad I can lend a hand with this information. Bjorn, I have a hard time finding books with current information. For crypto information, I follow online information because when it gets to a hard copy book, it’s ancient information. However, Robert Kiyosaki’s books transverse time. I have his latest book, “Who Stole My Pension”, which I borrowed from the library. I can’t get it back to them since the closures (and I spilt a lot of coffee on one page). When I get paid, I want to donate enough money to them to acquire 2 complete sets of all his books. Likewise, “The Education of Millionaires” was a great read.

  8. having been in a business multiple times in the past and as intricate as Americas’ tax system is and also the legal system has become so much a player in all Business and that was not just this past couple years — it actually is simpler now than its been in the last 25 years — anyways I always paid for Tax help n Legal help to make sure I was good to go —

  9. As the new guy (only 3 years now), I do hear members and outsiders who think that since our company is Decentralized we can slide through the system and not worry about Taxes. False! Speaking about our program and how the US will eventually start tracking how much you turned into Fiat and what you spent it if they haven’t already.

    With the recent announcement about CoinBase handing over the information on how they utilize BlockChain and other proprietary software to the IRS and Treasury some might want to rethink their future plans. CoinBase is a Centralized system and wide open for the government and banking institutions to challenge them about any client.

    Do yourself a favor…. don’t believe that they will never catch up with you. Many of you may not know it but money from outside the US comes in and passes through 27 agencies before it gets to you bank account. Little funds may slip by but the Bank will bring some serious light on your assets and transactions without much hesitation as they freeze your funds in all of your bank accounts.

    Do we all hate paying for useless programs by the governments of the world. The answer is yes, but there are no real alternatives. Save yourself a lot of grief keep good (no… great records), you will likely need them. Once you clear the first withdrawals, put yourself on a salary! It may take a little longer to get that new car or house but, less stress means you will enjoy it all more.

  10. I have read from many authors and listened to many podcasts where the host has stated the tax code is written as an informal guide for business owners and developers. By this, they discuss the tax code does not have loop holes rather they have rewards or incentives built in to guide business decisions based on lowering or eliminating taxes.

    It is always prudent to work with tax professionals to assist you with business decisions. A friend of ours received a phone call from his tax consultant telling him to buy a new truck for his business. Why? Because he could either put those funds to use in his business or give them up as taxes. This was in a way incentive for him to keep his vehicle fleet up to date and spur sales in the truck industry. Just one example I’m sure.

  11. I will also point out from a business standpoint and also from the truth that You must always make sure You are legally up to speed but the more the govt. is involved in your business the less likely in my humble opinion that you will be as successful as You would hope to be — less regulation and more Truth to me means success —

  12. Ahh taxes… I am a firm believer in structuring any business and one’s life to pay as little taxes as the law allows. Income taxes are not what we are trained to believe they are. Pay as you go taxes are what run the programs we are so used to enjoying. Income taxes don’t pay for roads, fire departments, schools or anything else we have as “social” programs. Those are pay as you go taxes. Every gallon of fuel we purchase has a road tax built into it. Nice roads are a good thing and lower the maintenance bills on a vehicle. School taxes help our kids get an education. (topic for a completely different blog). Land taxes pay for infrastructure of the areas we choose to live.

    Income taxes, however, are nothing more than the taxing authority of one’s country to take from the people in order to be able to pay the interest on the funds the country borrows from their central bank to fund any federal programs that are offered. Income taxes are nothing more than payment on the debt created by Central Banking systems.

    To fully understand how a central banking system works, I invite everyone to take an hour and 45 minutes to watch this video. It is US Federal Reserve Based, but the same principals apply for all central banking run countries, which al but 2 or 3 in the world are.

    https://www.youtube.com/watch?v=bboweYuvbB4&t=129s

    Structure your personal and business lives to pay as little income taxes as the law allows. It is our civic duty to do so. Talk to a professional about this. And I don’t mean a tax accountant. I mean businesses that specialize in this type of setup.

    And once the people begin to realize that central banking currency (FIAT) is nothing but an IOU for money owed to the bearers, there will be a mass exodus from FIAT currencies and an new economy built back up on real sound money, as what is available through block chain technologies.

    We are all seeing the impact that Crypto is having on the planet. A money that is untouchable byt any government agencies. They cannot freeze it or seize it. They can ONLY do that with THEIR money. Not ours. (Unless you use Coinbase – Which I do NOT recommend)

    With true wealth as what Compumatrix has the ability to produce for all, comes a great responsibility. Personal responsibility. Not just the lessons learned from Kyosake, Robbins, Vitale and others who teach these things, but lessons on how to maintain control of the time spent earning the money that represents one’s time.

    Blessing to all.

  13. I too fell in love with the author Robert Kiyosaki after reading “Rich Dad Poor Dad”. I also have read three other books by Robert Kiyosaki. I recommend reading “Rich Dad’s Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom”. But I have not read “The Education of Millionaires” by Michael Ellsberg, so I will put that on my list of reads.

  14. Robert Kiyosaki continues to write and what he has been doing lately is co-writing books with other authors. he has one (currently being written) with one of his Rich Dad Advisors. I am so excited waiting for this to come out. I just read one, “Who Stole My Pension”. IT IS A MUST READ FOR THOSE WITH PENSIONS! (If you do, we have a solution called COMPUMATRIX)

    One of my favorite Robert Kiyosaki books is: “THE CONSPIRACY OF THE RICH”

    Albert, Ya: “ah taxes”
    We will be the best advised business people on the planet someday!

    1. Thank you for your continued enthusiasm in my learning experience! I will be reading all your book recommendations soon although sometimes it is nice to just kickback, relax, and listen to a podcast – Dave Ramsey is my favorite. I am young so I do not have a pension yet, but when I am older I will be sure to get one! 🙂

  15. There are many reasons why I love our present government. Aside from its serious drive to clamp down on drugs, criminality and corruption, it understands the plight of both small and medium enterprises and small income workers. Adjustment in the income bracket and its corresponding tax range has been made to an appreciable level, so that those not reaching the required minimum income are exempt from tax on that particular business.

  16. I agree with Veronica on current fed govt. here in the USA — having business people leading we are actually seeing a good turn around here from more govt./socialist intervention back to Free Enterprise principles that once made America Great — I hope we continue back FREEDOM but guess will see soon enough — if the silent majority wants to be Free or not ?? great reading here thank you

  17. When a business or any individual makes money, they have to pay taxes, but the unique thing about businesses is that they do something called “tax write-offs”, which is where the business gets to count their business expenses against their profits which makes their profits go down when they are presenting their profits to the government – hope that made sense. I need to brush up on my tax knowledge. Tax attorneys are golden – lol.

  18. taxes are a legit part of any free society with a govt. however as time has played on and life becomes more and more — I have found that yes pay your legit share of federal n state taxes and when you buy anything you are already paying your fair share — but in a private business do your Due Diligence and surround yourself with legit honest help and true information — jmho

  19. surprised more people have not come back and read this great read — yes taxes are a bummer of subject perse’ but in any free society where entrepreneurs grow their own business and become successful — the learning part of success is also important maybe even more important than the time and effort involved ?? just know now that when success takes place here taxes will be a part of the overall picture and in a biz standpoint make sure you have all bases covered — great reading here still —

    1. I won’t speak for many people but I am excited about taxes! I don’t want to throw money at any government just to say I love paying taxes! I intend to pay what I owe but not a penny more! This is where tax planning has to be a part of your business plan.

      With that said, do you have to be a tax expert? Of course not! Let’s say you have a plumbing business. If you spend all your time on tax planning, you may not have much of a plumbing business left. This is where I always say fine-tune your top skills and outsource your weaknesses.

      A friend of mine told me once his accountant told him to buy a new truck for his business. When he asked why his accountant told him he was going to either spend that money on taxes or new equipment for his business. He needed to choose!

  20. Thanks again for a very detailed blog doing business and taxes. Did enjoy reading Robert Kiyosaki’s Rich dad Poor dad. Now have Michael Ellberg’s on my bucket list.The Idea behind learning and understanding the tax code {it’ tough} is to minimize the tax burden to your businesses without getting afoul of the Law or IRS. We do need some very sharp accountants and lawyers guidance to get us through these very difficult challenges and thereby let us have peace of mind without loosing our sleep thinking the Big Brother is coming after us .

  21. Stephen-great read. I too have read most of Robert Kiyosaki’s works. I believe they should be required reading during the last two years of high school. We just are not thought financial literacy in high school or college. (I am not going down the rabbit hole here on the reasons why we are not). Let me just say if you have not read Robert’s books, please do you will really enjoy them and learn a lot.

    1. Richard, although I agree with you, we will not see the day Robert Kiyosaki’s books are required for high school reading. Basic financial education isn’t taught for the same reason there are no classes in Sales in Business Schools. Those in charge do not want to have too many independent people or entrepreneurs. I’m sure you will remember Robert’s comments about the Hawaii school system failing enough people so the plantations will have enough workers to handle the sugar and pineapple crops.

      1. Stephen, I agree with you also-they will not ever be in the public schools. The public schools are designed to create followers, not independent thinkers and entrepreneurs. Yes isn’t that crazy, the most important skill for a business owner is sales and yet they don’t have classes on it in business school. Well Stephen thank you for your insightful blog and comments I really enjoyed them.

  22. Thank you for your informative blog post Stephen. I have not read the book of Robert Kiyosaki, Rich Dad Poor Dad. One thing I know for sure. I shall pay my taxes, I have done that always and will always do. There is however an important question when you talk about the crypto world. Over which value do I have to pay taxes. In Brasil there is now a law but I still have to ask the advice from my accountant.

  23. taxes and taxes and then more taxes — do understand the thought process of the cost of government — and also understand that the smaller the govt. the smaller my taxes are — however in America over last 90+ years the fed govt. has GROWN unbelievably — and ???? sad actually for a Constitutional Republic —

  24. Stephen, you are right in saying we stuff our heads full of knowledge that is not needed for the successful outcome of our businesses. Right now, we only need to learn and apply that knowledge to our Compumatrix business. We are given the privilege, thanks to our government (not) to pay taxes on the revenue we diligently work to produce from our businesses. Taxes are a daunting aspect hanging over us, mainly because we do not comprehend if it is good or bad. I appreciate you who are conversed in such knowing and even have a desire to learn more about tax laws and the best way to apply them. Thank you for the sharing of your understanding in such matters. Your sharing, therefore, inspires some insight and ease of mind.

  25. Always pay your taxes but let the professionals take care of it I owned a business years ago and got a accountant to take care of all that and it worked out very well. He was a good christian man and had just started his accountant business and was 3 years into it and the IRS lady came every year and did a audit on him the 3rd year he looked at her square in the eye and said I am going to write a number on a piece of paper to never see you again just nod yes or no so he wrote 5000 on a paper and showed it to her and she nodded yes he wrote the check and never got audited again

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