By Lina Bryce
To be an entrepreneur requires enormous sacrifice as well as a financial risk that not everyone is willing to commit to. Despite this, it hasn’t stopped individuals from attempting to discredit the hard work that goes on behind the scenes.
Here are some things you should never say to a business owner and why:
#1. “Can’t you just write it off?”
Most people don’t even know what the term means. They think that somehow a “write-off” is free money for business owners, but that’s just not what a tax write-off is. TurboTax, defines it at a “legitimate expense that can be deducted from your taxable income on your tax return.”
A business owner might spend $6,000 in operating expenses in the first year, thereby “writing-off” that $6,000 as an “expense”, thereby lowering that individual’s taxable income-and rightfully so, since that money is not going towards the individual’s paycheck. This does not mean they don’t pay taxes on it. It only means that it would put their taxable income in a lower tax bracket, which applies to the income range. Without this, very few businesses would survive their first year, drowning in debt from accumulated start-up costs.
This does not mean you can lower your income bracket by writing off the cost of a new swimming pool you installed in your home or summer vacations. The IRS is very clear on the very fine line of what is considered a “business expense”, so either they have to be very careful or hire a very good accountant to keep them out of an orange jumpsuit.
Bare in mind that money we are talking about “writing off” was created by these entrepreneurs. They decided to take the leap and forgo a secured job working for someone. It isn’t the government’s money in the first place. The government doesn’t make anything, yet the more you make, the more they take.
#2. “You can hide money by paying in cash.”
What cash? A legitimate business can’t take cash and hide cash. Besides the fact that is illegal and punishable by imprisonment, a legitimate business has to account for every dollar it takes in and pays out to, for reasons that include the aforementioned taxable income.
Businesses that they may purchase equipment from also keep purchase orders for this reason. So, you can try to pay cash, but records will show where the money went with plenty of paper trail to prove you are evading taxes. There is no hiding money and getting away with it. When the IRS comes to audit, even for the sole proprietor who runs a cash-only business, attempting to hide income will eventually catch up to them.
#3. “There are loopholes so you can get around paying taxes!”
The only way a business can get around paying taxes is currently illegal. Accounting for every dollar and making sure that business owners aren’t simply improving their quality of life too much is what people like to call “corporate tax credits”. This is a politically manufactured term that literally means, lowering your taxable income. For example: because you had to purchase a piece of equipment for $30,000 that year and it wouldn’t be fair to tax you at $100,000 that year, when you technically only made $70,000. The government isn’t “crediting” anything. If anything, the businesses are sacrificing a better lifestyle to benefit the greater good of the business-or-the government gets it to do what they want with it.
The privilege of being a business owner is the added benefit of figuring out how to finance their own retirement, how to pay personal expenses, and purchase their own health insurance-after meeting their tax obligations. So, if there is a way out of doing that without paying taxes, business owners would love to know where these magical “loopholes”are.
#4. “You can do whatever you want. You don’t have a boss!”
The biggest misconception about being your own boss is that you have carte blanche. You don’t have to answer to anyone! Well, the customer is their boss. The individuals who voluntarily exchange their dollars for your product are essentially the ones who tell you what time you need to get to work, how much you can charge for your product, and how much lead time is acceptable. You can deny them of all this, but the customer will walk and go elsewhere-with their money too.
90% of startups fail, the 10% that do not, have to contend with the reality that they must meet the demand of the market.
In business, the customer is always right. Why? Because you don’t bite the hand that feeds you.
#5. “You can take a vacation whenever you want and how ever long you want!”
This is very similar to the idea that somehow entrepreneurs can do whatever they want because they don’t have a boss. Business owners make money when they are working. Taking vacations as much as they want or as long as they want is not only a myth, but impractical.
In fact, most business owners put in 60 hour work weeks or more and truly feel like they are a slave to their business. They are motivated by a dream that one day their business would grow large enough so they don’t have to suffer grueling work weeks. If they do take time off, it’s never truly “time off”. They are still answering emails and have to be ready 24/7 in the event of an emergency. Businesses do not grow on their own, and most people aren’t going to work your business the way you would, which means the owner has to be available all the time and that includes having to work on days they thought they would have off to do whatever they want.
#6. “You’re lucky.”
If you really want to piss on a business owner’s Cheerios, just tell the person who worked his tail off to hardly paid himself and works 60-80 hour weeks to pay off large amounts of debt to pursue a dream “you are lucky”. Luck had nothing to do with it. Luck is a word that implies that persistence and hard work had nothing to do with it. That person who is financially successful, didn’t start out that way. If you want to say something complimentary, tell them that their hard work paid off. In fact, consider yourself lucky for having people like them who are risk-takers, because they create jobs and give us the products we are willing to pay for.
[divider]”Opportunity is missed by most people because it is dressed in overalls and looks like work.” – Thomas Edison[/divider]
#7. “Can’t you just pay someone to do that?”
People who start their own business share a common motivator…profits. If they had to pay someone to do the work they can easily do themselves, it not only increases their overhead costs, but reduces their own personal income, which is why they do it in the first place.
Who wants to own a business and not be able to reap the rewards of their hard work? Sure, eventually, after paying all your taxes and overhead expenses, perhaps they might increase earnings enough to be able to pay someone to lighten their workload, but anyone who is in business knows that their time is actually worth nothing. Working day and night with only the hope of earning is all they need to sustain them. Until that day arrives, they will do what it takes. After all, they have the most to lose.
#8. “You’re rich! You own your own business!”
Have you ever heard of living expenses? College tuition? Retirement? Health Insurance? Business owners aren’t guaranteed these things, which is why it is a huge risk to be one. Unions fight and demand these benefits for their members, but the business owners have to fend for themselves. Often, they are making just enough to live on and make too much to benefit from any financial aid with regard to college tuition for their children. They must prepare to independently finance their own retirement-if they are fortunate enough to be able to. Just because it appears that a person has a successful business, doesn’t mean they are good at money managing, or don’t have to live within a budget. You don’t know what the individual’s obligations are and it really isn’t any of your business anyway. The reality is that the bigger the business, the bigger the problems get.
Remember, they didn’t get there overnight.
#9. “You should pay your employees more!”
No one is forcing their workers to work for these business owners. They willfully applied for the job at the wage that was promised to them. The employees are free to leave and are under no obligation to keep working at a wage they are unhappy with. It’s the business owners’ responsibility to keep good workers happy and to hire individuals who are willing to work for the wage the market demands. Anyone who isn’t the owner doesn’t know the details of the businesses’ financials. They didn’t contribute to its success to be able to afford hiring people. Therefore, they are out of line to tell a business owner how to run their business, much less, force businesses to by way of government mandates.
Let entrepreneurs continue to do what the government can’t; create jobs by creating a product the marketplace demands.
#10. “You didn’t build that!”
President Barack Obama’s remark was a strike to the heart of every heard-working entrepreneur who only wanted to lift themselves out of poverty, to do better than the previous generation. In the end, this will arguably help the greater good, but not for reasons the president believes. The president’s remark imply that somehow, citizens who are self-made or wealthy should pay higher taxes to serve the public good, disregarding the fact that they are already doing so by creating products, services, and jobs for people. They already pay taxes and this president set a terrible precedence to imply that job creation isn’t enough. The president thinks that he knows how these businesses were built and made generalizations on the wealthy as if they were one collective group when he said,
They know they didn’t—look, if you’ve been successful, you didn’t get there on your own… If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen.
Without individuals who are willing to take these risks that are required to create, build, and work for you, there would be nothing to tax. There would be no innovation. There would be no business. There is no “somebody else” in owning and operating a business and yet, there are no paid sick days. The American Dream was founded on the concept of pulling oneself up and doing what it takes to succeed-as long as the opportunity existed. This is the opposite of what President Obama said.