Business Opportunities Weblog

February 8, 2006 by Dane Carlson | 0 Comments

The Entrepreneurial Mind:

I am not so much of a conspiracy theorist to assume an intent (nor do I think politicians are smart enough to think this far ahead), but the withholding system for income tax has had an interesting psychological impact on many Americans. They don’t really pay that much attention to the taxes being taken away from them. This has become even more true now that we have electronic deposits.

But once someone becomes an entrepreneur, this all changes. Quarterly taxes become a common event for many business owners. Most entrepreneurs choose some form of pass through entity for their business, such as S-Corp, LLC or Partnership, so any profit on the business becomes their personal obligation. While this saves double taxation on profits, it also creates the need for careful tax planning. Four times a year, many of these entrepreneurs have to write a check for their taxes. And boy does that wake you up!

Also, if the entrepreneur now understands the true cost of social security. That part of the social security tax that the employer “pays” (which is not really true as that money would be available to the employee without that tax), or so-called employer match, now becomes the responsibility of the entrepreneur.

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Tags: Entrepreneurial Lifestyle, Government