One of the best ways to financial success is a successful business. If your business is profitable, the equity you build can lead to big money. In fact, the miracle of equity is that it can build itself. All you have to do is reinvest your profits successfully and the value of the entity that made them will increase accordingly.

Even if your business never becomes profitable, it can certainly help cut your tax bill. A small business is still one of the best tax shelters. Even if it never grows larger than a tiny “small business”, it can mean the difference between financial independence and life as a wage slave. If you own a small business, you may be able to:

• Turn personal expenses into tax deductible dollars
• Split income among family members to avoid progressive tax rates
• Have your business pay you in tax free fringe benefits
• Deduct vacation and travel costs
• Write off your home office

Starting your own business doesn’t require a radical departure from your current income. There are two ways you can profit from business ownership while, in effect, keeping your present J.O.B.: “Independent contracting” and a “sideline business”.

Independent Contracting

Become an Independent Contractor doing the same work you do now!

If you structure your job properly, it’s possible to turn your employer into a client and get more money for doing the same job by becoming an independent contractor. Don’t dismiss this option as some wild-eyed dream because thousands of mainstream folks do it every year. Researchers, writers, engineers, carpenters, electricians, insurance claim processors, bookkeepers, house painters and people from dozens of other fields successfully turn to private contracting.

Your former employer no longer has to pay your Social Security, unemployment insurance, workers compensation, health benefits, sick leave, vacations, etc. And is free from the bookkeeping headaches of income tax deducting, processing paperwork for health insurance, and all the other expenses incurred just by having en employee. As an independent contractor, you could split these savings with your employer when you go solo.

Independent contracting won’t relieve you completely of taxes, but you pay your income and self-employment taxes (Social Security) only after deducting all your business expenses including some personal and fringe benefit expenses.

Eventually – the sooner the better – you’ll need to pick up more clients. Try to line up small assignments with other firms as soon as possible. This may sound tough, but you would be surprised at how many new independents get flooded with work.

On the “Sideline”

If your unable or unsure about breaking away from the security of your present job right away, start with a sideline business in your spare time. You can keep your present job while starting on the road to self-employment and make the full-time jump later.

The easiest way to do this is to make a business out of something that you love to do and are spending time and money doing anyway. Whenever you convert a personal expense into a business expense you save tax dollars. Even if you’re not realizing a profit on it, you may as well gain the tax advantage.

There are countless sideline business possibilities:

• Real Estate (flipping, rehabbing, renting, etc.)
• Accounting
• Free-lance writing
• Graphic Arts
• Auto Repair, Auto Sales, Customization
• Teaching, Tutoring
• Crafting

This list goes on and on….

Let’s make an example of my friend’s Home-based business:

A very dear friend of mine loves vintage costume jewelry. Always has. She likes to wear it and she likes to collect it. She got started collecting when her aunt passed away and left an extensive collection to her. She would always look for pieces to collect at garage sales and flea markets. She would research her pieces on the internet and became quite knowledgeable about her favorite pastime. When the house became so full of her collection of several thousand pieces, she decided she needed to sell some of her collection. After all, she would never be able to wear a fraction of the jewelry she collected.

She signed up for an Ebay account and listed a few items that she felt she could part with. Then the excitement began. The items sold for much more than she thought they were worth. She discovered there was quite the market for collectible vintage costume jewelry. Again and again she listed some of her items. First it was 5 items, then 10, and then 20. Now she feels she must list at least 20 items every week.

Now her summers consist of garage sale-ing several days a week and regular trips to the flea markets all year long. Let’s not forget “The World’s Longest Garage Sale” which is an exciting vacation for her. She has discovered that she can buy the items she knows are in demand at a fraction of their value on Ebay. After all, she is catering to a worldwide audience. Finding the bargains is great excitement for her.

Now her love of costume jewelry has turned into a very lucrative part-time business.

A simple matter of creating a small business out of something you love to do.