One businessman I visit with regularly put it most succinctly: 'If all
of the US's 130 million taxpayers would take the normal tax credits and
deductions of about $4k they would get in the first year for starting a
micro-business, they would instantly deprive the government of $552 billion
(over half a trillion!) dollars in tax revenue. My question is: why isn't
everyone who believes in this country starting a tiny business? With such
sudden and huge fall in revenue, the government would either have to openly
enslave us or reduce big government to a much more realistic scale! And
the new business owners would have total job security because they can never be
Pajamas Media's Dr. Helen has been discussing
'going Galt' or just 'Galting' for short. Galting is the idea that you
have the option and even the patriotic duty to legally reduce your income and
taxes owing to deprive the government of revenues to over-regulate your life.
My friend's company and my own company have become highly successful
laboratories for Galting while still continuing to contribute to our improving
lifestyles. Yes, I am saying that you don't want to hurt yourself by
reducing your taxable income to the poverty level voluntarily, but there are
legal ways you can shield income, benefit from tax deductions and credits,
creatively domicile your business or revenue streams, and reduce the taxes you
must pay while still improving your lifestyle. All while being your own
boss and getting to make the final decision as to whether you get fired or laid
off by your company!
Our biggest question to each other, of course, was why aren't more people
doping this? We decided it was because there are many myths about small
business that must be exploded before potential small entrepreneurs take the
leap. Full disclosure: I help manage an ecommerce service that has
helped over 10,000 online merchants, so I have lots of opportunities to talk to
small businesspeople who are highly creative about making their small businesses
appear as big businesses. Including 'going international' in micro-ways
that make mega-contributions to their profits, without being a big 'mutinational
Myths Exploded About Starting a Small Business
( for everything below, consult your accountant and and local regulations, but
Myth: There are too many regulatory hurdles to starting a business.
Truth: You own a business when you say you do - not when the
government agrees to it. Many businesses are started for $12.00 by simply
publishing a fictitious business name in the local paper (or purchasing a local
business license for $50) and for the first year or two, run out of the owner's
personal checking account. As long as your business revenues are less than
'in the millions' (even the SBA considers a $19 million business a 'small
business') the government bodies at all levels have almost zero interest in you!
This is especially true if you own an online business, which is the most popular
type of business to start these days on a micro-budget. The simple fact is
that new small businesses fly almost completely under the government's radar -
the sums involved are simply too small to trouble governments that need BIG
revenues. Also, a few simple strategies (discussed below) can take
you mostly off the 'local domicile' radar.
Myth: The tax credits and deductions for new businesses are hard to get.
Truth: nothing could be further from the truth! You have to be honest, and
your tax preparer can help you with this, but one thing the Obama administration
has not been able to do yet is take away the honest (and by some lights,
generous) tax deductions and credits for small business formation.
Myth: I will be regulated to death. Truth: Nonsense. It is indeed
scary when we read about the regulations that will be applied if the Obama
agenda is furthered. But most of those regulations apply to businesses
with 50 or more employees. Some of the scarier proposed new ones apply to
companies with only 10 employees, but how big can your own paycheck get with
still only 9 employees? My friend and I, who both own B2B businesses, both
have clients who are making millions online with only half a dozen employees.
Is your goal to produce an IPO within 2 years (which will put you in a big
compliance posture really fast!) or to simply provide for yourself and your
Myth: Our local economy is more depressed/compliance is more expensive here
than in the rest of the nation. Truth: that is why so many are starting
internet businesses! They reach a global market and have high flexibility
for domicile decisions, and so are much, much less dependent on their local
economy. Think for a second: even if you are in Boqichita, Oklahoma,
rent a web server outside the US then were does your business really live?
What if you decide to hire a programmer
from India help you build your web site for a very cos...?
Just got a little more vague, didn't it? Who has jurisdiction over you?
What if you decide to
bank outside the US for at least part of your company's revenues? What
if you take advantage of this highly electronic world we live in to pay for
offshore services and products with an offshore debit card? Or even if you
pay for US business services and products with an offshore debit card? If you
take a few measures like this (or many other measures you could think of
yourself), does your business really fall under the law in Boqichita, Oklahoma,
just because your brain is located there? What if you never inventory
product, but have it drop-shipped instead? What if you don't sell tangible
products at all, but sell downloads, content or advertising on a well-visited
Better still, what if you spend $400 to set up an offshore management company
that charges steep fees to your domestic company for expert management services
(ie: the use of your brain)? So far, there is no law that says the fruit
of your imagination and skills must be paid for in the same country where the
biological process that produces your great ideas takes place! If the
Obama administration ever figures out how to tax my brain, (and I think they
will really, really try) then I'm moving to Costa Rica!
Myth: I don't know how to raise the capital. Truth: you don't
have to raise any 'capital'. Or, more realistically, your 'capital'
comes in the form of small monthly charges you can already afford, and the
'sweat equity' of learning to build your own web site. We've seen it done
using all FREE tools (yes, there are
free web sites and
free domain names and
free web editors) and all the tax deductions for home office (up to 20% of
your rent or mortgage), transportation/auto expenses, internet connection, phone
bills, office supplies and much more suddenly become tax breaks. And
nobody (even in government) says you have to learn how to use all these tools
before you can start your business. The company I work for was started in
1994 with a $15/month Earthlink account (which was actually free because we
signed up other customers) and a guy who had decided he was going to learn how
to write web pages and learn some programming.
Sometimes it takes fear to get us to take bold action. If the fear for
your country isn't enough to do the trick, then perhaps the fear of unemployment
(or continued unemployment) will get you to take the bold step to start your own
But for my friend and I and for many others we know, starting a business
meant actually living the attractive concepts of freedom and liberty; of being
the one on the spot to succeed of fail; of getting up every morning with a
splendid mission; of rising to the many fun challenges of winning in business.
And serving our country by being a provider rather than a taker. You can do
the same! Just click.
The author is a senior executive at 800Cart Shopping Cart/SEO an advanced ecommerce solution that combines cart, chackout and payment processing PLUS highly advanced, relevant SEO in one simple solution that takes only minutes to set up and copy/paste onto your web site (any web site).