Alchemical Wealth Builiding

My FA-O (First Attention-Outer) wealth building strategy is currently focused on a blend of the self-employment and business quadrants (see sources of cashflow). While someone is self-employed is usually considered to have a business, the idea suggested in this distinction has do with whether the business owner ais essential to the business’s operation on a day to day basis. For example if you have a consulting business and you are the only consultant, then you are self employed, even if there are people who work for you. Basically, the income that comes in rest solely on you doing the consulting. If you hire other people to be consultants for your business and you could, at least in theory, hire someone else to run the business (office manager or CEO depending on the scale) then it is a business. If you are a consultant and also have product that you sell and the mechanisms that sell and deliver them does not require your participation then you are both self employed and a business owner.

Self-employment, on its own, is limited in its cashflow capacity by the number of hours you can devote. You can increase how much you earn per hour of time invested but after a point that becomes hard to do. Also if you don’t work then there is no cashflow. A business has unlimited potential because it is not bound by the time availability of one person. It can also create cashflow while you are not working, potentially even 24 hours a day.

Being self-employed and owning a business both have significant tax advantages but owning an incorporated business has more tax advantages as well as other wealth building strategies that self-employed and non-incorporated business don’t

I am currently self-employed because the business I am building currently requires my effort and will not produce any income without it. However, by wealth building plan is designed to build my business to the point where it can operate without my personal involvement.

Technorati Tags: Business, Cashflow, cashflow quadrants, Self-Employed