After a few years of working in companies as a wage slave toiling in cubes, or “pseudo cubes” I decided to leave the work force and try to make it on my own. Although I do not necessarily make as much as I did working full time, if I look at things differently I will earn more than I ever will in a full time job.

Here are my top 5 Reasons to Work for Yourself

5. No More Commute or Rush Hour I am sure this does not apply to all business owners, but this is a huge perk that most business owners get to enjoy. You can choose to work from home, or visit your store office on non peak hours. You do not have to battle people to get on the train, or sit through another traffic jam.

4. Wake Up When You Want Similar to the commute, most of the time you can wake up when you choose. Granted you may have client meetings and other things that need to get done, but there will be plenty of days where you can just sleep in to catch up on some well needed sleep.

3. You Decide How Much to Make You are now in control of how much you will earn. When you are in business for yourself there is a much higher correlation between amount of work and payout, both long term and short term. When you work for someone else they get to decide how much you earn, regardless of hours spent, or effort exerted.

2. You Choose Line of Work The best part about being your own boss is being able to choose what to work on. If a project interferes with your ethics, morals, or you just flat out don’t like the guy, you can find something else. On the other hand if a boss hands you an assignment often times you won’t have enough leverage to refuse the work, and rarely will you get a chance to truly pick what you want to do.

1. Tax Benefits - I am going to explain something as best as I can, to illustrate how working for yourself allows you to earn much less than as an employee, yet have much more spending power.

Exhibit A - Wage Slave earning $100,000 total a year (salary plus bonus)

• Minus 40% on income tax and bonus

• Works at least 50 hours a week (lets face it if you work less than that your prob not earning six figures)

• Commutes to work 1 hour round trip = 5 hours

• Pays for Own car $500/mo. = $6,000

• Pays for Own Gas $200/mo. = $2,400

• Pays for Own Insurance $100/mo. = $1,200

• Rents apartment for $1,000/mo = $12,000

$100,000 - 40,000 tax - $6,000 -$2,400 -$1,200 -$12,000 = $38,400 @ 55 hours a week (including commute) x 50 weeks  = $14.000/hr… bear with me

Exhibit B - Works from home on home business earns only $40,000 a year. Charges about $50/hr for freelance/consulting work. Works about 800 hours a year or 16 hours a week with 2 weeks for vacation.

• $5,000/yr Travel Expense - Tax Write off

• $5,000 Computer, Software, Desk, etc - Tax Write Off

• $3,000 Advertising - Tax Write Off

• $5,000 Outsource 20% of Consulting Work - Tax Write Off

• $1,500 Apartment - 1/3 Tax Write Off

$40,000 - $5,000 - $5,000 - $3,000 - $5,000 - $6,000 (apt $500 x 12) = $16,000 which puts him in the 10% income tax so another - $1,600 leaving you with $14,400 cash… but wait there is more

800 hours - 160 hours (20% outsource) = 640 hours…. $14,400 / 640 hours = $22.5/hr

Conclusion Exhibit B the Self Employed Business Owner only works about 13 hours a WEEK and make more money in that week per hour of work then his $100k salary man. He has more free time to enjoy life, spend time with his family, and do what he wants.

Now don’t get me wrong this math is not perfect, and there are expenses and other things I am missing. But the point I am trying to get across is when you are a business owner you are much more in control of your money. The money you make as a salary man goes to taxes, when you are a business you can choose to use that money for investing in the growth of your company. You also get to write off more thing than you can imagine, and with a little creativity you can use tax money to pay for vacations, computers, and more!

I will be starting a new series called Tax Tips for Small Business… if you would like to follow this series, please fill out the email form on the right ======>

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Recently I just finished reading the 4 Hour Workweek after months of making excuses why I did not have time to read it. The title alone was enough to get me curious, but once I started reading I could not put the book down. I pounded through the 300 some odd pages in less than two days. Finally I found a book where everything that has been floating in my head for some time has finally been put together on paper in a comprehensible and actionable form.

Here are the biggest takeaways for online small business.

First insight that I got from 4 Hour Workweek was that in order to truly enjoy the benefits of being an entrepreneur the goal should be to build sustainable business which can be set on autopilot. This is something I am sure many of us fall into, where before long we feel like our business owns us rather than the other way around. A business should function whether you are there or not. You should be the business owner who empowers others to get the job done while you sit back and collect the checks.

Another great takeaway that seemed to pop up throughout the book was about being a minimalist. Using the Pareto Effect you can reduce your workload focusing on the things that matter most and will have the biggest impact on your ROI. As a business owner you wouldn’t waste your time with advertising that brings in few sales and where margins are poor, then why waste your precious time performing tasks that don’t impact your business. Checking email, unnecessary meetings, and more can all either be reduced or find someone to do the tasks for you.

The last point that really had an impact on me was the idea of freedom. Most people become business owners in hopes of becoming free. Either free from fear of not having enough money, freedom to make decisions, and freedom to pursue your dreams. We need to stop evaluating our business on how much money it makes and instead focus on how much freedom it gives us to do the things we truly want to do.

Of course this article is not going to replace 300 pages of rich content with great resources and links to everything you need to get started. You can buy 4 Hour Workweek from Amazon Here.

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I will outline how you can make money with an online business no matter which one of these paths you choose.

Product - If you want to sell products online there are many ways to go. The first and most common is selling your products on Ebay. Of course you have heard of the people who make a killing, and it is true I had a privilege of meeting such a person. He simply bought Lacoste polos in bulk and discount then resold them individually on eBay. This was very time consuming and the competition was fierce. Only when he got into selling his own product wicked lasers did his business really grow. If you want to test the market to see what kind of items are hot, you can always try drop shipping before investing in creating your own product. What is important to keep in mind with this option is the end goal is to sell your own product. Here is why.

• The margins will be much higher
• You can find business to distribute your product for you
• You will have full control over design, shipping, etc
• You will build equity which can then be sold

Service - If you are a professional, rather than starting from scratch this might be a great way to go. For example, if you are an accountant, freelance writer, tutor, or masseuse, you can market your services online. The reason why this option is great is that you can establish a presence much quicker than through traditional off line methods. You can also continue doing what you love. Here are some pro’s of choosing this model.

• You do not have to learn a new skill that is the core of your business
• As your client list grows you can start being much more selective with whom you work with
• With improved online reputation you can charge much higher rates

Content - Content online businesses can be anything from news, how to’s, to entertainment. A site like this is a perfect example. The key here is to continue to ad value to people who visit your site and grow your traffic. These sites are supported by ad revenue. There are many ways to monetize your website, you have to test different combinations to figure out how to maximize revenue.

• Getting paid for people clicking on ads (AdSense)
• Getting paid for number of times an ad appears (CPM Networks)
• Affiliate and referrals revenue share models (CommissionJunction)
• And more

If you have any questions or other points to make please post a comment.

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And if you do not have anyone to ask then read this.

In order to start a small online business you need to know what your goals are. Without a plan it is futile to start a small business, regardless if it’s an online small business or not. A business plan will keep you on track and work as a valuable guide when things get hectic or you feel you’re losing sight of your goals.

If you are serious in your endeavor to start a small business you’ll need to ask yourself a few questions.

• Are you providing a service, product, or content?
• Is there a definitive need or demand for what you are offering?
• Do you have the capital to start a small business and sustain it?

In the next few posts I will explain why each one of these questions is so important in running an efficient online business.

Remember if you are starting a small business online then profits can come in much sooner than those the traditional small business sees. It is still important to remember that when you start a small business you need to give yourself at least a two-year window before profits can be factored in. How you support yourself during the interim is something that will need to be addressed before you even start. If you’ve fully dealt with these questions and are confident this is something you are ready to do, then go forward with your ideas and see your dreams become reality.

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I started small business online tips to give back to the community. One of the most important parts of being an entrepreneur is to give more than you receive. Only in that way can we ever expect to build true value. It has been this building of value that has led the human race to keep layering advancements from one generation to the next. Money has no intrinsic value, value is what one human can offer another.

In this blog I will be exploring tips to keep you sane from day to day. In addition I will be reviewing great business books and the important points behind them. Because this is a blog you can probably guess online technology is important to me, and I will try to share a list of online tools to help streamline your business.

Lets build a community of business owners who add value by commenting and directing the conversation to topics that will most effect growth both business and personal. Please contact me with any suggestions.
Sincerely,
Alexander Tsatkin entrepreneur

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