2 answers
Adan
Student
San Luis, Arizona
2
Questions
Updated
441 views
When do small businesses get rich?
Starting a business is good so you can be your own boss and not listen to anyone and do whatever you want but how long does it take to profit without putting in any work and is it worth it
2 answers
William Walter
Facilities Engineer
3
Answers
Reston, Virginia
Updated
William’s Answer
Hi Adan, I'll break your question down into a couple pieces:
"Starting a business is good"
Starting a business is not always good. According to various statistics, ~50% of all new businesses fail within 5 years.
"so you can be your own boss and not listen to anyone and do whatever you want"
Not listening to anyone and doing whatever you want can quickly put you in with the 50% of new business that fail within 5 years.
"but how long does it take to profit without putting in any work and is it worth it"
It depends, as most businesses require a significant amount of work to make a profit. If you have a good idea and execute that idea well you could make a profit, but the timing of that is dependent upon a lot of things.
So, find mentors who have done something similar to what you want to do. Learn from them and continue both your formal and informal education. Try different things and work hard when you do. When your great idea comes to you, you will then have a solid platform from which you can launch.
Good luck! Bill
"Starting a business is good"
Starting a business is not always good. According to various statistics, ~50% of all new businesses fail within 5 years.
"so you can be your own boss and not listen to anyone and do whatever you want"
Not listening to anyone and doing whatever you want can quickly put you in with the 50% of new business that fail within 5 years.
"but how long does it take to profit without putting in any work and is it worth it"
It depends, as most businesses require a significant amount of work to make a profit. If you have a good idea and execute that idea well you could make a profit, but the timing of that is dependent upon a lot of things.
So, find mentors who have done something similar to what you want to do. Learn from them and continue both your formal and informal education. Try different things and work hard when you do. When your great idea comes to you, you will then have a solid platform from which you can launch.
Good luck! Bill
Aaron Escamilla
Mining Technology Developer
62
Answers
Gilbert, Arizona
Updated
Aaron’s Answer
Small businesses often don't necessarily become rich in the way you'd think. This is why it looks like so many are unsuccessful. The majority of small business owners who don't intend to grow it to have more employees realize it's all about building a business around your lifestyle. It's more about capturing equity and assets. Have you ever played the game "cover your assets"? There's actually more truth to this than you'd think. If you have your own business, becoming an expert in taxes is crucial as you protect assets and obtain assets for business use. Lots of youtube influencers for example have their cars listed as a business vehicle and if it's over a certain weight then you can write it off as a business cost in your schedule C, etc. This lowers your taxable income so on paper, your "earnings" are as close to 0 as you can get them but your business assets could have increased by tens of thousands (car, home office, subscriptions and licenses, utilities, laser printers (for example)). The closer you get to 0, then the less taxes you have to pay and may often get a return instead. Lots of businesses that build larger buildings as an example end up getting huge tax write offs since they can claim depreciation on all the equipment they just put in the building and certain costs for renting equipment, etc.
I'll give a few examples of how your business can be successful/meet your lifestyle.
1)A baker who loves baking decides to make macarons. The baker decides to sell them in the farmer market and starts to get contracts with small stores to make money. (Tax write-offs are cost of documentation for business, assistance acquired from accountant and tax attorney to set up LLC papers and trust, etc) The baker then decides to upskill and chooses a school in France that has a 2 week course where you learn baking 4 hours a day with a french baker. (Tax write offs are cost of course and travel as long as it's not 1st-class tickets but does business class). They enjoyed their trip to France since they buffered it with a couple days on both sides of the trip due to "jet leg." Coming home, they realizes it's killing their profits to rent a kitchen so they build one on their home property that meets commercial kitchen standards. They can now claim square footage of their personal property in taxes for home office, etc and all the cost of the commercial equipment can be "depreciated" in taxes. ....the story goes on but the point is the baker could have made $250k in cookie sales ($4 a cookie..you really can) but on paper only made $60k after all the business expenditures but now they have an amazing kitchen and went to France.
2) A web developer makes their home office at home. Things get fancy to meet their business needs (microphone, double screens, amazing desk, etc)...these are all tax write-offs. They can claim a square footage amount as their home office which means if they spent $1,200 on Air Conditioning, $700 on internet, etc...they can claim the percent of this (square ft. of office/square ft. of house) as a business cost in taxes. They also airbnb their house on the weekends so when they need to upgrade their AC unit they go fancy and get to write off the whole as a business cost since you can't have airbnb guests with a broken AC, etc. Essentially slowly making their house amazing while writing things off as business costs :)
3) You time share your vehicles or use an app where you can rent them. You like fancy cars...you turn them into a business. They all become write-offs as you put them in and out of service depending on when you want to upgrade them.
Complete a tax course (i.e. H&R block Tax Specialist course, Coursera Intuit Bookie certificate, etc)
I'll give a few examples of how your business can be successful/meet your lifestyle.
1)A baker who loves baking decides to make macarons. The baker decides to sell them in the farmer market and starts to get contracts with small stores to make money. (Tax write-offs are cost of documentation for business, assistance acquired from accountant and tax attorney to set up LLC papers and trust, etc) The baker then decides to upskill and chooses a school in France that has a 2 week course where you learn baking 4 hours a day with a french baker. (Tax write offs are cost of course and travel as long as it's not 1st-class tickets but does business class). They enjoyed their trip to France since they buffered it with a couple days on both sides of the trip due to "jet leg." Coming home, they realizes it's killing their profits to rent a kitchen so they build one on their home property that meets commercial kitchen standards. They can now claim square footage of their personal property in taxes for home office, etc and all the cost of the commercial equipment can be "depreciated" in taxes. ....the story goes on but the point is the baker could have made $250k in cookie sales ($4 a cookie..you really can) but on paper only made $60k after all the business expenditures but now they have an amazing kitchen and went to France.
2) A web developer makes their home office at home. Things get fancy to meet their business needs (microphone, double screens, amazing desk, etc)...these are all tax write-offs. They can claim a square footage amount as their home office which means if they spent $1,200 on Air Conditioning, $700 on internet, etc...they can claim the percent of this (square ft. of office/square ft. of house) as a business cost in taxes. They also airbnb their house on the weekends so when they need to upgrade their AC unit they go fancy and get to write off the whole as a business cost since you can't have airbnb guests with a broken AC, etc. Essentially slowly making their house amazing while writing things off as business costs :)
3) You time share your vehicles or use an app where you can rent them. You like fancy cars...you turn them into a business. They all become write-offs as you put them in and out of service depending on when you want to upgrade them.
Aaron recommends the following next steps:
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