Taxes and debt – these two words are enough to make most people feel anxious and keep many of you up at night. That is because most people, especially Americans, are highly educated people with a salary of six figures but they surely lack the basic financial knowledge on how they can use debt to make money and ways to avoid paying taxes ethically and legally at the same time.
What you don’t know is that President of the current USA knows quite a bit about debt and taxes. He knows the best ways to use debt as a tool for building real estate and business. He further knows the actual purpose of US Tax Law. That is to offer incentives to investors and business owners. When Trump’s federal tax return of 2005 showed that he actually paid $38 million in taxes on income of somewhat around $150 million, it was quite surprising. If you dig deeper, you will find an anomaly. Most of the time, it is likely that Trump might have paid little or no taxes. Well, that clearly proves that he is smart.
More to know:
Now the main question over here is how can taxes and debt make someone torch and others poor? Why do you think this paradox exists? The culprit is mainly not the gap in earning career opportunities, potential or social advantages between poor and those who are rich. It is mainly the nationwide gap in the current financial education.
In schools, you don’t teach kids about finance or money. When they actually grow up and land a job, parents ask them to save money. The money needs to be saved for the future by putting in 401(K) plans. So, multiple people are working hard these days and all their lives and even can’t afford to just retire without any governmental form of support like Social Security.
Checking on with the financial gaps:
The financial education gap mainly leads to cash flow divider. On one part, there are small entrepreneurs and employees, which include specialists like lawyers and doctors and then you have owners of some local burger stands and start-up ventures. The people on that part of the divide will work for money and will pay somewhat between 40 and 60% of income to the government, in forms of taxes.
Then you have another side, where there are ultimate entrepreneurs and big business entrepreneurs. There you have investors too. The people residing in this site will work to make money work for them instead. So, they end up paying around zero to 20% of their earnings in terms of taxes. For the details, you are asked to check reviews and learn more.
Right now, it might be shocking for you to understand but debt is mainly the new money. However, that does not make all kinds of debt to be a way to earn bucks. There you have good debt and bad debt. The rich section of people will work for the good debt, which is often termed as investor debt. Then you have another side of the coin as bad debt, which is also termed as consumer debt.
In case, you are a small entrepreneur, then it is mandatory and quite critical to understand various types of debt. You have to make way for some smart and informed decisions, which will help you to use some money for growing business and also making money. So, just stop thinking debt as a four-letter word and look on the other side as well.
Best points to learn:
Some of the small entrepreneurs and hardworking employees complain that rich don’t have to pay their share of fair money as taxes. They are actually quite ignorant about how well the tax code works for keeping the country up and running. Whenever you are partnering with the government for creating jobs, you are providing housing, supply food or drill for oil, which are things that government in the free market and democracy economic cannot perform alone. In return, the government offers you tax benefits. For the professional investors and business entrepreneurs, minimizing taxes form to be a powerful incentive.
So, to be one of those rich entrepreneurs, you have to learn more on ways to use debt and then reduce taxes. The steps are rather simple once you get to know more about it.
You have to accept risking factor:
All markets have their share of risks. Whether you are just investing in real estate, agriculture, energy or just making business bigger, there is always the risk of losing money. The more you end up learning about trends and markets, the more control you can have over investments. It will help you to manage risk better than usual. On the other hand, a thorough financial education can provide you with utmost control in this session.
Have to work hard in conquering audit phobia:
Some of the bugger business entrepreneurs will often let fear of an audit just holding them back from taking the possible advantages of every possible tax benefits over here. So, you have to work hard in being audited as an opportunity to just learn about and then improving the health of the business. You might also have to think about an audit as the annual checkup, just like your physical exam. If you have already chosen your accountant or CPA, the person will take the lead from here on should you face an audit or not.
Check both the sides:
If you are working as an employee and hold the dream of being own boss one day or an owner of a small business, you have to focus on working for money and also trying to avoid debt. You might think that 1% might bear more of the tax burden. You have to check out on the other side’s perspective. You have to stand at the edge of the coin. From that point, you need to look at both sides and then end up making the smart decision.
Marina Thomas is a marketing and communication expert. She also serves as a content developer with many years of experience. She helps clients in long-term wealth plans. She has previously covered an extensive range of topics in her posts, including business debt consolidation and start-ups.