Small business means freedom of production
America has one of the largest (or largest) economic systems in the world and possibly historically … this side of eternity anyway. However, don’t get carried away; nothing is perfect and that also applies to the American economy. Despite its many challenges, one of its shining gems is the ability of any American citizen to add value to others by producing goods and / or services for mutual benefit. Benefit and livelihood of the producer and solutions to the problems and improvement of the life of the consumer. Most of us are trained to work for others in the form of employees rather than being exposed and trained in the other ways that income is generated. One of the best ways to learn and train in the various forms of income generation is through a basic understanding of the U.S. tax system.Administered by the Internal Revenue Service (visit the U.S. Treasury website USA). The IRS looks at the following types of income in detail:
- Earned income
- Passive income
- Investment income
- Rental income
How to maximize earnings from self-employment
Self-employment accounts for a large portion of income generated in the US When someone thinks of self-employment, they usually envision someone who is a home-based business owner or possibly someone who is a worker. Independent. In addition to these categories of self-employment, some others include contract workers with medium and large corporations and even partnerships (general and limited) and limited liability corporations. Income from self-employment is derived from the production and delivery of services and / or products from one person to other companies and individuals for profit. The beauty of self-employment income is that there is no limit to how much a person can earn. The only downsides are the limited amount of time someone has to complete and deliver the product and / or service and the amount of taxes payable due to the amount of profit made. The following tactic is a simple but effective way to increase your earnings from self-employment:
Double your rates and / or prices !!!
Scenario one: Let’s say you are a business consultant and you have the opportunity to hire a potential client for a 3 month contract payable by the hour. Your hourly rate is $ 50 per hour with a projected total hours per week of 20 hours or not to exceed 80 hours per month. Based on these variables, the total weekly payment is $ 1,000 and the total monthly payment is $ 4,000. To keep things simple, you are single and plan to earn $ 95,000 in annual income from self-employment. Based on the 2016 tax bracket, it is projected that you will owe $ 19,637 in taxes. You owe approximately $ 5,000 in quarterly taxes. Under our potential 3-month contract, you can earn $ 12,000, of which $ 5,000 is owed and payable in taxes. How can you change this to get more profit and cover more taxes? Simple … LOAD MORE! Based on the perceived value of your product and / or service, double your rates and / or prices.
Scenario two: Now, you charge $ 100 per hour with all other variables constant, except that you now project to earn $ 115,000 in annual income from self-employment. It is projected that you will pay $ 25,237 per year in taxes or $ 6,309 per quarter. Instead of making just $ 4,000 per month or $ 12,000 per quarter in Scenario one, you now make $ 2,000 per week, $ 8,000 per month, and $ 24,000 per quarter!
It’s up to you: Net of taxes due, would you rather earn $ 7,000 or $ 17,691 per quarter simply by DOUBLING YOUR RATES AND / OR PRICES? The choice is yours and it’s called Entrepreneurship.
