THE TRUTH ABOUT TAXES AND HOW WEALTH IS CREATED MATT THERIAULT
The basic quadrant breakdown is this:
•
E’s and S’s desire security and either work for
someone else or for themselves.
•
B’s and I’s want freedom and have other
people, their own money, or other people’s
money working for them.
If you want to know more about this philosophy, I
recommend reading Rich Dad’s CASHFLOW
Quadrant.
We’re talking about taxes and how wealth is
created today, but in order to understand some of
the principles I needed to familiarize you with the
quadrant.
So, how do I reduce my taxes?
• If you’re an employee?
Whether you’re a CEO or a janitor, while you stay in that quadrant, there’s not much you can do. It’s the way
tax laws are structured.
• If you’re a small business owner or self-employed.
Start thinking like a B. Hire employees, invest in equipment, and set up your company the way a big business
would by using an entity such as a Limited Liability Corporation, S-Corp, or C-Corp. Most self-employed or
small businesses are set up as sole proprietorships or partnerships. These entities pay the most tax possible.
Chances are you’re not yet in the B or the I quadrant, so let’s talk a little about what that means.
• If you’re a business owner?
As a business owner, success lies in grand ideas, hiring the best people, taking on a leadership role, and
working with a team. The opportunities to reduce taxes here are limitless. The reason for this being that
businesses invest directly in the economy, something the government cares very much about. In result, the
government rewards business owners with significant tax deductions.