After being an employee for 4 years and now approaching my 1-year anniversary as a business owner, I figured this would be a perfect time to reflect on the two very different lifestyles. I am often asked “what is the biggest difference in your life now that you work for yourself?” or “How does it feel no longer having to clock in?”. So I decided to create a post to shed some light on these questions. My goal here is to show you how my life has changed since transitioning from employee to business owner and how I save thousands on taxes (that’s right thousands!).
(Disclaimer: I want to preface this post by stating that I am not telling you to quit your job and start a business that you haven’t planned out thoroughly. This post is to show you the financial and life perks of being a business owner).
Life as an Employee
So let’s start with life as an employee. I worked as an employee for four years and worked 9am-6pm for the most part (except busy season in public accounting >_<). I commuted 1-hour to work and 1-hour home, and by the time I got home all I had time to do was eat and relax until the next day. I always liked what I did but never loved it and spent most of my days looking forward to the weekend. Let’s understand this point for a second. The weekend only lasts for 60 hours (Sat & Sun + ½ Friday), so I was only actually happy 35% of the time. I don’t know about you, but life is too short to be happy 35% of the time. At my last employer, I was making about $75,000 before taxes, not too shabby right. But let’s break down my actual income:
Total income: $75,000
Taxes: $21,231
Commute: $1,200 ($100 per month)
My actual income: $52,569
Moreover, as an employee, I spent money on excess items because I was in the office. These general expenses were: lunch, coffee, happy hour drinks, etc. So on top of not being truly happy, my actual income wasn’t even close to what I was making on paper. So a question I had to ask myself was; how much was my happiness worth? Well, certainly more than $52,569 so I quit and started my business.
Life as a Business Owner
I must be honest here, life as a business owner did not start out easy and still is not easy to this day! I work about 60-70 hours a week, don’t really know what a weekend is, I am constantly reading to stay on top of my game. But I can tell you one thing…… I HAVE NEVER BEEN HAPPIER! Every day I wake up with purpose and gratitude because I get to spend my days doing what I love. My morning looks like this: wake up and listen to motivational speeches, go to the gym, and take the elevator down 21 floors to my business center (often in comfy clothes) and begin the workday. My daily costs have substantially decreased as well; free coffee in my lobby, I eat lunch at home, no commuting cost, and I rarely go to happy hours. Also, my tax costs have decreased incredibility. How you ask? Well, as a business owner you can turn regular expenses into business expenses. For example, my phone bill of $125 per month (which I must pay anyway) is now a business expense since I take business calls using it. This is just one of the MANY examples of regular expenses that I can now allocate as business expenses saving me thousands of dollars on taxes.
Which is Best for You
I’m afraid this is a question that only you can answer. But I will give you my advice. If you have a hobby or activity that you love doing every day and would literally do it for free, find a way to monetize it! One of my clients loved doing yoga with her friends on the weekends. Once I brought this point up to her, she started hosting yoga classes for $20 per person and now earns an extra $800-$1,500 per month. Soon she may be able to quit her job and do what she loves to do full time and get paid nicely for it. This is just one example of the various ways to monetize a hobby and turn it into your full-time profession.
In conclusion, my life is infinitely better as a business owner and it has nothing to do with the money that I currently earn. It’s because I get to spend every day doing what I love to do and I have complete control over my life. Moreover, I get the opportunity to help others every-day. There is nothing more gratifying than someone thanking me for changing their lives for the better. I encourage everyone to search for this feeling until they find it because it is truly something that money can’t buy.