Tammy Broccas June 22, 2019
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There is a clear and distinct relation between debts and taxes which all entrepreneurs must know and understand the intricacies of it. This will make the road to become a rich entrepreneur smooth.

There is a lot of significance to take on ‘good’ debt and to be savvy with the tax codes and laws. It is crucial for the financial success of the business. If you wonder how then this article will tell you how people having a debt of thousands of dollars pay little or nothing in taxes and sleep well at night. These are the people who are pointed at for the economic inequality that exists in almost all countries across the globe.

Debt and taxes

These are the two most common words that keep people awake at night and cause a lot of anxiety. The simple reason behind this is the little or no knowledge amongst people, even those who are highly educated and earning in six or seven figures, about the basics of using debt beneficially. They do not know how to make money from it and the ways in which they can avoid paying taxes both ethically as well as legally.

  • You can use debt as a tool if you want to build a business and real estate. For this, you will need to know the real purpose of tax laws which is offer incentives to both investors as well as business owners. However, there is more to it.
  • Smart people who know how to make the most of the debt and taxes will become rich and the other people poor. The reason for such a paradox to exist is not the difference in the earning potential of the people which is usually believed.
  • It is ideally the social advantages between the rich and the poor as well as the career opportunities. There is a huge gap in financial education, and it all starts right when you are in a school where nothing is taught about money and taxes.
  • On the contrary, kids are pursued to get good grades so that they can get a good job and earn more. When they do, they are told to save money by availing plans such as 401 (k) and that is just about it all.

It is for such lack of knowledge and conventional approach that most of the people have to work hard all their life but still cannot afford to retire with getting government support such as Social Security.

Cash flow divide

Most people being born in middle-class families always feel they are poor. They struggle with their financial management and health even if they have top-level education and a Ph.D. and also hold a prestigious and high earning job. The reason is simple. There is no knowledge about money and its effects and management. This ultimately results in a cash flow divide.

Even the game of Monopoly can teach children a lot about money, debt and its management. This game shows what assets to buy and when to exchange these with other assets for a better return and high yield.

Whether it is the employees or small entrepreneurs including specialists such as lawyers, doctors, owners of startup ventures or large entrepreneurs, the picture is same across all platforms.

People who are on the other side of the divide usually end up paying anything between 40 and 60 percent of their entire income back to the government in taxes. On the other hand, large business entrepreneurs and investors on the other side make money work for them to earn more. In spite of having lots of money, these people typically end up paying taxes anything between nothing to 20 percent of their entire income.

Debt is money

In this modern world, debt is the new money though there is both good debt and bad debt. It is here that the rich and the poor show their smartness. While the rich people work for investor or good debt, the poor people continuously pile up consumer or bad debt and look ways to get rid of it visiting sites such as nationaldebtreliefprograms and others.

It is therefore required to know the difference between good and bad debt and their significant effects, especially if you are a small entrepreneur. Stop thinking debt to be bad be smart to make smart and informed decisions to use your money to make more money and grow your business.

Stop complaining that the rich do not pay their reasonable share in taxes but know about the working of the tax code instead that keeps the country running.

The money earning process

Be smart enough to use tax and debt in a proper way and partner with the government in various jobs that the government cannot do it alone in a free market economy or a democracy. This will help you to create jobs, supply food, provide housing or even drill for oil. In return, the government provides you with tax benefits enabling you to minimize taxes making it your powerful incentive.

Steps to follow

If you want to be a rich entrepreneur, there is no other alternative but to use debt proficiently and reduce the burden of taxes on you. It is that simple. Well, the steps that will help you to achieve this include:

  • Accept risk – It is a fact that all markets involve risks whether it is energy, real estate, or agriculture. Know more about the market and its trend to eliminate the risks of losing money.
  • Investment control – The more control you have on your investment you will be better at risk management which is why financial education is so important.
  • Conquer audit phobia – Do not the fear of audit hold you back to avail likely tax benefit or to know the ways to improve the financial health of your business.

Lastly, look at both sides of the coin to make smart decisions as you will be able to hold two contrasting ideas at the same time in your mind. This will provide you with more ability to perform better taking on to all future challenges.

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