You not might realize this, but when you work for a paycheck, you are getting screwed by the IRS! Working as an employee can have its benefits, but in the end, you hand over too much money to the IRS. It’s money that should be kept in your own pocket! I know this might be difficult to fully grasp because working for a paycheck is what we are all familiar with. But this doesn’t mean it’s the best path to take, especially when taxes are concerned. If you want to learn more about paying less taxes to the IRS, take a look at these three factors that can play a part in losing out financially while working for an employer, as compared to working for yourself.

1. You’ll Pay Much Higher Taxes as an Employee

You will want to sit down for this one…You may be paying 40% in taxes while business owners enjoy a tax rate of around 15-20%. That’s a considerable amount of money you are losing out on. The unfortunate truth is that there is nothing you can do about it when you are in an employee-employer relationship. If you’re wondering how this can be true, the simple fact is that the tax code favors businesses. Businesses can keep cities flourishing, and they also hire employees, who just happen to pay taxes to the IRS. So, the IRS seems to like this scenario.

“The sad truth is that If you’re working for someone else, the government taxes you at the highest possible rate. The moment you leave that job and start your own company, the government treats you like a partner. Your taxes immediately plummet. Warren Buffett isn’t joking when he says his secretary is taxed at more than twice his rate. She pays close to 40%, he pays 14% as a business owner that invests.” ― Clayton Morris – President, Morris Invest

If you are starting to see the big picture, and would like to move away from your W2 status to pay less taxes, you may find that starting a business as a blogger might be your thing. You can actually make a large amount of money doing this, and still be charged less in taxes than with your 9-5 job.

2. You Miss out on Incredible Tax Deductions if You Work for a Paycheck

As someone who is working for a paycheck, there are only a handful of tax deductions that you can write off. Most are not common, like teaching supplies. Before the new and current tax bill, employees enjoyed more deductions, like writing off union dues, for example. As mentioned, the tax bill favors businesses, because without a thriving economy, there wouldn’t be much money circulating for anyone to hold on to.

Tax deductions give you more control over how much you hand over to the IRS, and how much you keep for yourself, your family, and your business. Each business entity offers various tax deductions. Typical business structures include C-Corporation, S-Corporation, a Limited Liability Company, and Sole Proprietorship. There seems to be a tax break for every type of business entity, just as long as you don’t work for a paycheck.

Even everyday expenses are eligible for a write off if you are not working for a paycheck. This would include a portion of your utilities, your internet, car repairs, even travel expenses. These deductions just scratch the surface. There are many more that you are eligible to deduct if you are working for yourself.

3. You’re Forced to Hand Over Your Money to the IRS

If you work for a paycheck, then most likely you have been contributing to what the IRS calls “withholding taxes” since your very first job. Even so, most employees take it for granted and don’t even pay attention to how much they may be missing from their earnings. Because it comes out in increments throughout the year, it’s not as noticeable. In a sense, it’s like loaning the government your hard earned money, interest free. Shouldn’t you have the choice to be able to place your money in a high-interest bearing bank account instead?

Many people who work for a paycheck have the sense that their tax refund is something fantastic. What they don’t realize is that it was their money to begin with. They could have utilized it during the course of the year. This is what business owners do all the time. No one takes their money from them. They earned it, it’s theirs! They can take advantage of smart tax strategies to hold on to as much of it as they can come April 15th.

Keeping your money throughout the year would enable you to:

It wasn’t always this way. Before 1943, employees could hold on to their money and pay their taxes at the end of the year. This put the employees in the driver’s seat.

Stop Working for a Paycheck and Take Control of Your Money Now

Take the IRS out of the driver’s seat and gain control of your hard earned money! You will be amazed at how much money you will be able to hold on to if you start a business and stop working for a paycheck. By simply making the switch and saying goodbye to a paycheck the IRS withdraws money from, you will be able to gain greater control of your finances, and start building wealth!