It is kind of a big dilemma in our generation whether to go for a high salaried job or start your business.
Honestly, in my opinion unless you have a family business, one should start with a job, learn the ground rules, play a bit on someone else dollar then scrutinise oneself on grounds of qualities required for running a business (leadership, communication skills, blah blah blah). But this thing will require a post of its own. So let’s just skip this for now.
So, what’s better Business OR High Salaried Job?
In one word BUSINESS. If have a clear idea what is about to come, feel free to skip the post. But if have a doubt please read ahead.
What causes this dilemma?
These days big business are ready to offer high salaries even houses, transportation, etc. Whereas business has competition. Business brings an air of uncertainty while job offers security (kinda).
Why shouldn’t you get an interview and go for a job?
Because the problem is not exactly earning money. Say What? Yes, earning money is the simple part, the problem comes when TAXES come into the picture.
Let’s say you are an employee in USA. Here are the taxes you will have to pay:
- Federal Income Tax.
- State Income Tax.
- Social security Tax.
- Federal & State Unemployment Tax.
- Workers compensation Benefit Tax.
This accounts for 20-30 %( depends on the state you work in) deduction in the amount earned. i.e. if you earn a Million dollars you will get to spend only 700,000.
The scenario is more or less similar for self-employed.
But when it comes to business they may not pay even any amount of money in taxes. Example – Amazon.llc paid 0 dollars Taxes in 2018 while also getting 129 millions as rebate from the federal government. (all legally). I.e. if earn a Million you get to keep a Million. Or in this case, get additional money.
WOW! That sounds insane. But why does there exists such inequality?
Let me explain, here’s how government sees it. When you start a business, you provide employment to a lot of people thus, increasing public earning, spending, economy booms, GDP, and pretty much all good things. Hence these nice businesses should be forbided of some taxation. But, when a person gets employed, he/she technically takes somebody’s job (mostly) and they don’t give employment to others hence,they should be taxed more.
How, do businesses pay less to no taxes?
This will be explained in further posts.
I hope you liked the read, in case you didn’t I am sorry but there is no dislike button, you can always use comments though.
By Bhavik Gandhi December 28, 2019
Easy Economics 