Posted June 30, 2022
By Sean Ring
The Joy of Running Your Home Business
- Home brewed coffee, a seconds-long commute, and more family time are just some of the perks.
- The tax advantages can be numerous and meaningful.
- And the extraneous costs like eating out for lunch and drinking multiple Starbucks coffees disappear.
Good morning on this fine Thursday!
Tomorrow Ill produce the Monthly Asset Class Report, loaded with charts visualizing just how bad things are.
It seems every headline I read details some sort of catastrophe or disaster or maelstrom.
I, myself, have been contributing to it.
But today, Id like to be positive, or better, act positively.
As you know, the Rudes Four Pillars of Financial Freedom are:
- A second passport
- An online business
- A bit of crypto
- Getting in great shape
Most of the time, the above, or plans like it, seem to encourage running away from governments and their associated tyranny.
What if I told you that you could stay in one place and accomplish the same objective of being free?
In this edition of the Rude, I will detail how owning my home business has allowed me to stay in one country with minimal interference from overarching bureaucrats.
The Home Office
One of my good friends from childhood had a father with a perpetual scowl on his face.
He was the most miserable man Ive ever known.
To be sure, he was always kind to me.
But he never smiled for any reason.
I realized that my friends dad didnt drive to work.
Hed walk a couple of blocks to the bus stop and then commute into New York City for his big corporate day job.
During the 80s, if you took the bus to work in New Jersey, you were poor.
He wasnt. He owned a car. Nevertheless, he commuted by bus, day in and day out, for decades.
I never understood why my friends dad was so miserable.
Until I started commuting from New Jersey into New York City for my job at Lehman Brothers.
Id get a ride from my mother to the train station. Then Id switch to the PATH train. Then Id navigate my way from under 1 World Trade Center to 3 World Financial Center.
Then Id reverse the process at night.
Make no mistake: commuting day in and day out sucked.
After about three months of that commute, I resolved to find a better way.
When I moved to London and worked in banking, I cut my commute to 25 minutes on one train.
Then, I started to work - at least sometimes - from home as a financial trainer.
This was in 2007, long before the term digital nomad was invented.
Besides my enormous mistake of returning to a big bank in Hong Kong for three years, Ive been working from home, at least partially, for 15 years.
Reducing or eliminating commuting is the only reason you need to find a way to open a home business.
And erasing the additional commuting costs is enormously beneficial.
Im not just talking about the cost of train tickets and the time it takes to get from A to B.
No stupid Starbucks coffee bills every month.
Pam makes a pot of fresh Lavazza coffee every morning. Much better than SBUXs burnt offering and way cheaper as well!
No ad hoc drinks after work that cost a ton in a city center.
No overpaying for lunch at Chipotle every day.
Oh, you miss walking the city streets and browsing through Barnes and Noble?
Think about how much time youll have to enjoy it once you work from home.
More Time to Do What You Want
Ive known friends in banking that barely have a passing acquaintance with their children.
But other than the first year and a bit of Micahs life in Hong Kong, I havent missed anything.
Its great not noticing how fast hes growing up.
As I see him every day, he looks the same to me.
Pam and I know each other. Like, really know each other.
Sure, Ill enjoy my upcoming business trip to New York. Ill be away for a month.
Itll be the first time in years Ive been away for that long.
(Pam cant come along because she cant leave Italy while waiting for her residence card. Its unavoidable. I usually take both Micah and her on my business trips.)
But all in all, I love being with them both every day.
And its not just family.
You can see friends whenever they can get away from their work.
Havent been reading enough?
Want to learn that skill youve been stalling on?
Just want to drink a cappuccino at a lovely cafe every day?
You can do all that while building your home business.
Paying Taxes Differently
I dont mean to insult most Americans. But if youre doing PAYE, youre doing it wrong.
PAYE stands for pay as you earn. As in paying taxes as you earn your money.
Unless youre an investment banker, corporate lawyer, or neurosurgeon - jobs with incomes so far outrunning expenses that taxes dont matter - you want to own your own business.
PAYE allows the government to take your money too early and earn interest on it.
PAYE disallows you the privilege of getting paid your gross amount, saving for upcoming expenses like taxes, and then paying them when theyre due.
PAYE infantilizes the population by letting the nanny state privileged access to their funds.
And then the populace celebrates - celebrates! - getting a refund from the government.
Im positively embarrassed for those celebrants.
When you own your business, you pay taxes differently.
You work with your accountant - and yes, hire someone to do this for you - to set aside the right amount of money to pay the government when its due and not one microsecond before.
In the meantime, your accountant works with you to maximize your income by taking advantage of any legal means possible to reduce your taxes.
Youd be shocked at how the tax you wind up paying as an entrepreneur is nowhere near what youd pay on the equivalent income as an employee.
The truth is, how you make your money (income versus business revenue) matters more than how much money you make.
With all the negativity flying around, I wanted to remind you that now is the best time to open your own business.
Youve undoubtedly got something unique to offer, even if youre not aware of it yourself.
Its incumbent on you to find out what that particular skill is and get it into the world.
Youll be richly rewarded for doing so.
Everyone gets paid in two ways: time and money.
Owning a home business allows you to maximize both.
All the best,