WHY THE RICH GET RICHER
The rich don’t work for a salary and they pay as little income tax as possible. If you work for a salary, you always receive your income after unemployment and tax – you are last in the queue.
If you run your own business, you pay yourself first and then the rest of your debtors and then income tax. The rich know that the best way to avoid taxes legally is by generating income out of their own businesses.
For a person who earns a salary, there is virtually no tax relief what so ever. For a business owner there are many tax advantages.
What are the tax advantages? Let me explain it with an example.
Let us say you earn a salary of R10 000 per month. You might have a retirement annuity deduction of R300, medical of R1500 and unemployment of R100.
Your tax calculation will be: R10 000 – R300 = R9 700. The tax on that might be R1746. The balance of R7954 is after tax income.
As a business owner your turnover is R10 000. Your legal deductions against that income are: Your remuneration of R8000, entertainment R300, telephone R350, travel R750, and electricity R600. Total taxable income: R0. Therefore tax payable: R0.
This IS just a simple example to show why the rich get richer. They pay themselves first. You can only do that if you have your own business.
If you want to start your own business, you are prepared to work hard at it and can follow simple instructions then visit my webpage: http://myhome.mweb.co.za/~21020239/Your_Own_Home_-_Based_Business.index.html.
