Children need to know about tax breaks and benefits

Children need to know about tax benefits and tax breaks

If you want your child to learn about money, business and be successful – talk to them about the benefits of “Tax write off’s”. That is right, tell your child about the wonderful world of taxes and then tell them the deference between the write off’s a regular person has and that of a business owner has.

Why do I bring this up, because as I spent some time with my daughter last night – making jewelry pieces; she said something that gave me hope. She said “Dad, it’s good to have your own business.” She doesn’t realize how good it really is just yet.

I have spoken to my daughter about the general differences in tax burdens between the rich and the poor [ meaning the working class ]. She understands that the working class pays more taxes than the rich because of the lack of knowledge and no working class tax breaks. But once I am done with this years tax process – I have decided to show her how it works in the real world.

Now, I’m not going to bore you with all the possible tax write off’s a business gets – you should get professional help for that. But in general I will tell you how I plan to explain a difficult tax system to my 12 year old and the benefits I personally see.

Tax benefits for having own business [ * even if only side business ]

1- Tax write off’s : you can write off in whole or in part things like a new car, a new computer, business supplies, and even things like health care. Yes it all has to be for the business but – it belongs to you, you use it and you get tax break.
2- Deferred tax burden: employees have their taxes taken immediately they get paid, companies can have their tax burden deferred to every quarter or even till the end of the year.
3- Pay less taxes: here is a double whammy (a.) business’ like corporations can pay fewer taxes than the average person even though they make much more money. (b.) if you have a side business you can claim all your dependants pay as little taxes as possible on your employee check and still get government money back at end of year.
4- You can itemize: my tax guy told me not to itemize on my personal taxes unless my itemizing gave me more than the government allowed tax break for being married ($6,000) and of course there are little to no tax breaks to itemize on the employee side of the tax table. But, in a business you can itemize several items and as you can see by example #1 it can get very beneficial.
5- You do not have to cheat, lie, steal: it’s all legal and above board. All you have to do is know the laws, follow them and get the benefits [ this is where a good tax person helps ]. Plus your tax person should always prepare you for next year.

Now what does all that mean to a twelve year old ?
It means that even though a business can be fun and can be difficult – when you look at the big picture you can see the larger benefits, gains, monetary value. Most people say they want to be in business because they want to be the boss, in control, have freedom. But the truth behind it is based on money. Not to sound greedy or too capitalist, but think about it, being the boss, freedom – it is simply away of saying I have the money to do what I want.

My daughter tells me that she wants her own business but still wants to grow up to be a doctor. Hey, that’s fine with me. Having a business will give her the freedom she needs to do what ever she wants – be a doctor, lawyer, a school teacher if she wants, as long as she has a profitable business to take advantage of all the American opportunities.

Does your child “Have big Dreams”

children business taxesLike I said, my daughter wants to be a doctor, for awhile she wanted to be an astronaut – all children have big dreams. Like me and many Americans those dreams are squashed or pushed aside because they do not have the financial freedom to even try to attempt them.

As a parent we all want the best for our kids, but between high cost of living, taxes and living – some of us can barely afford to live week to week. Your child may not become the next Bill Gates or even a millionaire, but you don’t need millions to live comfortably. Then again, your Childs small business may propel him / her to bigger and brighter opportunities. All I am saying is, atleast give them a chance.

Children, Business and who is the Boss ?

Children, Business and who is the Boss ?

One of the problems teaching your child about money and starting or creating a business - is when you run into the issue of : Who is the Boss?

It is hard enough dealing with your child in a parent child relationship and they reach that point that they believe they are independent individuals who do not need to listen to mom and dad. That stage most parents call “rebellion” is only multiplied when your trying to teach your child how to be a business owner and not just an employee [ follower].

You tell your child that they have to think, be independent, don’t let their friends influence them, learn how to deal with rejection - but what does a parent do when their child says: “this is my business and I think I can do it like this”…..

I’ve been thinking about this for the last three weeks. I saw an altercation between my daughter and my wife over how a piece of jewelry needed to be fix. A piece of jewelry my daughter sold to a customer had broken and the customer [ a friend ] asked if it could be fixed. My daughter, the twelve year old was dragging her feet in fixing it. When “Mom” forced her to fix it, she did just that, she fixed it. But Mom wanted more, she thought she should improve the jewelry, that it was too short, not centered and so forth. Ofcourse my daughter argued back that she only needed to fix the clamp and that she put everything back the original way - just like when the customer bought it.

That started a long debate which ended in “Mom” playing the parent card. She scolded her for being an individual and told her that she was “MOM” and that she had to do what she said.

That left me in the middle - First, she had to fix the jewelry piece. Second, she should put more effort in pleasing customers in order to retain repeat loyal customers. But she did put it back just the way the customer first bought it. So here I am trying to ease my wife’s ego - trying to help her understand that even though she was right, she is not the boss, her daughter is the boss of her business. Succeed or fail, we can only advise.

Children,money, Business and who is the Boss ?On my daughter’s side, I explained to her that Mom just really wanted to help, that she wants her to succeed and just pushed a bit to far. But that she should learn to be more open to suggestions, just because she is the Boss does not mean that she is always right. The Boss can learn to improve, that she should stop and listen because someone else may have a better way or idea.

So what advice do I have to give:

1. Parents have to understand the dynamics of the relationship with your child. They run their own business [ depending on age] so you advise, help, encourage, help some more and work with them.

2. Understand that they are children - plus individuals, they have their own ways of doing things and yes they will falter, make mistakes and even fail. That is part of the learning process.

3. Remember your not the boss - but you are an investor, chairman of the board and the bank, so you have a say in the business. You want them to succeed, they need you to start and to succeed. So compromise, find a happy medium where both of you can agree to do what needs to be done to make your Childs learning experience and business a success.

4. Be ready to let them fail and to let them succeed. If they fail help them back up with encouragement, if they succeed, help them use that success to move forward.

Please, tell me what you think, and I would appreciate any advice. Leave me a comment below and I will be sure to read it.

Teaching Kids 2 important business & life concepts

Teaching Kids 2 important business & life concepts

I was joking around with my daughter and my wife got very offended at a joke I made. I thought about what we talked about and realized this was a good opportunity to talk about two very important business and life concepts that children today are not taught.

The joke, well it was what I thought to be a witty childish comeback – I told my daughter that she was a garbage picker and my wife mistook it as a put down on the fine institution of Sanitation. Which it wasn’t, but she wanted to point out that people always look down at people who work in certain jobs.

So, while I explained that the joke was not a putdown intended to insult the fine profession on the sanitation department – I quickly informed both my wife and especially my daughter about two important factors in life:

1- It is not how you start but how you finish.

2- It is not about what you do, but if you are the Boss.

money children businessI know that society [ especially parents ] view doctors, lawyers and so forth as wonderful prestigious professions that their children should aspire to attain. Few parents tell their children “Son, your life will be great if you grow up to be a janitor”. No, we all want our children to be the next President of the United States or atleast the next CEO of a large corporation.

But the truth is, if you are happy in the sanitation field or picking oranges – that is what you should do. No one should feel ashamed of their profession – But with that said: we need to teach our children that while they should not be embarrassed or ashamed of a profession, they should not settle for less either.

Concept # 1: It is not how you start but how you finish.

Not everyone is born with a silver spoon in their mouth or a parent that sacrifices everything to help their child reach high goals. Most if not 90 percent of all the population in America have to start at the poor or middle class level. That means we all come from or are all working class individuals who have to struggle through life.

Weather you started as a Sanitation workers child or a janitors son – be proud of an honest days work. There is nothing wrong with having a dirty job – some one has to do it, do it with pride. But also plan for the future, to improve your life. A couple of Blog post back I wrote about an elderly woman who I worked with, she was a millionaire and she showed up at work everyday with a smile on her face. Was she happy because she had money – yeah, I am sure of that, but she also enjoyed her work. I have known people who have large business, a lot of money, big houses and are the most miserable people on planet earth.

A job is just a job – you may need this job to reach your goal, you may need this job until you get a better job, then move to the next and so forth. But ultimately your success is based on you reaching your goals and being happy with what you do and how you live.

I received an email a while back with a wonderful story about being content: the short version of the story is that this big business man saw a fisher man in Mexico and asked him why he stopped working so early in the day. The Mexican fisherman said that he caught enough fish to feed his family so he is going home to play with his children, love his wife and spend time with his friends at the bar.

The man said no, you should work hard all day and catch more fish. The fisherman ask him why – the man replied by saying that if the fisherman worked hard he could get extra fish to sell to the cannery, then with the extra money and work he could get more workers, extra boats, eventually have his own cannery and then do so much more. The Mexican fisherman asked him “after I do all this, what do I do then?”

The man said, well after ten or twenty years and your successful, then you can spend your time playing with your kids, loving your wife and hanging out with your friends…

Concept # 2: It is not about what you do, but if you are the Boss.

When I was a child all I wanted to be was a lawyer. That was it for me, be like Perry Mason and all those rich smart TV lawyers, ofcourse my family could not afford that kind of an education so I settled for air force pilot, then I just did like everyone else – took what ever job I could get.

But I have learned one thing, it doesn’t matter what you do – what really matters is, if you’re the Boss.

The last year I have meet some very interesting people, they love what they do, enjoy going to work in the morning and most of all – they are pretty much content. Why, because they are owners, not workers – owners. They all owned one form of business, some were large business, others were small business – what mattered to them is that they loved what they did and they owned the business.

Now, I know everyone can not be a business owner – everyone can not be a chief, we need Indians [ a work force ]. But not everyone has to be a worker for life, living pay check to pay check, struggling to get by.

Remember, it is about your goals and what makes you happy and content.

The reason I say it is best to be the boss is because of the freedom it affords you. A worker has to ask for days off, a boss just takes the day off. A worker needs to work everyday – the boss just needs the business to work. Don’t get me wrong, I know several business owners who love working at and in their business every day. The difference is they go to work because they want to; the employee goes because he/she has to.

Again, you may love your job; you may love your life – that is ok. What I refer to is, how long before you can no longer do your job anymore? I have a friend I’ve mentioned on this blog before. She cleans houses and she’s proud of what she does. Her customers can’t live without her so she doesn’t have too much trouble making a living. But a while back I talked to her about maybe expanding and starting a business where other people would work for her. Her response was: my customers only want me and it’s too much trouble to have people working for me. We talked for some time and I could not change her mind – what concerned me most was “time”.

Time is a factor in everyone’s life. Eventually she will get too old to be cleaning homes, then what? What will she do if she is too old or if she gets ill and can not work? Being the boss, being an owner is not with out its pit falls and trouble. Being the boss, an owner has it’s ups and downs – but if you’re the boss [ owner ] when you get sick, old or lazy – you can stop working and still earn an income. Every time I visit my local grocery store I am reminded of that fact – people who are 65, 75 years old working as cashiers or baggers because what they use to do when they were young and healthy – they can no longer do now.

I think of my situation, how long it took me to get my head on straight – I do not want the same for my children, I want better. Does my daughter have to end up a millionaire? No. But I would like to think that her situation turns out better than mine – time, it’s the only thing in life that can not be restored, replaced or manufactured. Once it is gone, time, it is gone forever.

So remember to teach your children these two essential concepts: 1- do not be ashamed of what you do, it may just be a step on the way to something better – be proud and do it with pride. 2- Plan for more, plan for something better in the future. Do not get stuck or content with doing what is easy, one day you may find that it is no longer easy and you have nothing to fall back on.

In the end, be happy with yourself and what ever you do, do it right, with pride in the work you do.