The Person Who Signs Your Paycheck Controls Your Life

The Person Who Signs Your Paycheck Controls Your Life

“The person who signs your paycheck controls your life. Shouldn’t that person be you?” ~ Robert Kiyosaki

I just saw this quote from Robert Kiyosaki’s facebook page today. Many of us know him as the author of “Rich Dad Poor Dad”. I am one of the millions of people who got inspired by his book “Rich Dad Poor Dad”.

I am almost embarrassed to admit that I had no idea what asset meant at one point, even though I was professionally trained to understand what assets and liability mean in school! Asset, according to Robert Kiyosaki, is something that generates cash flow and returns on a monthly basis.

Looking back in the last few years, this book, together with a few other things, had transformed my life entirely.

I left my 6 figure cushy corporate job, refinanced my principal residence and purchased a student rental the same year. Now we have a few of more investment properties, generating passive cash flow and steady return monthly. We even turned our principal residence into a partial asset – we are generating sufficient cash flow to pay off a big chunk of expense of our house.

The journey wasn’t always easy. There were moments I questioned why I left the cushy corporate job, especially when I was pregnant without mat leave pay and when I had to pay for my own prescription drugs.

At the most recent Mr Hamilton Inner Circle meeting, Quentin of Durham Real Estate Investing spoke about his property management philosophy and his new book. As always, he gave away so many great tips on dos and don’t on managing property. Even Robin got to learn a lot from him!Quentin & Robin at Mr Hamilton meeting

Quentin was a teacher before. He left his job, and big pension, to become a full time real estate investor.

He mentioned in his speech that there were so many benefits of owning your own business. One of the biggest advantages is the tax write-off you get.

If you use a portion of home to operate your business, you can write off that portion of the home office expense, subject to certain criteria set out in the Income Tax Act.

If you use your car to meet your clients, sometimes you may get reimbursed by the company for the mileage, but for the most part, the cost can’t be written off. Going to office everyday isn’t an allowable deduction in your tax return unfortunately. As a business owner, mileage for the purpose of earning business income is deductible.

Most importantly, for small business owners who do not need every penny from the business to support their daily lives, we leave as much earning within the corporation as possible and enjoy the low tax rate of 15.5%.

If you earn $250K with a job, you pay $96,610 tax, roughly 39% of tax in 2015. If you own your business, you pay $38,750 within the corporation.

There isn’t much of a difference, just $57,860 more if you leave the income in the corporation. Imagine what you can invest in using this additional $57,860 within the corporation!

It is a tax free and interest free government subsidized investment that all small business owners qualify for.

With a corporate job, the person who controlled my life had usually been my direct boss. Today it is myself.

The benefit of owning a business just outweighs all the employment insurance benefits and dental care benefits I missed.

Until next time, happy investing.

Cherry Chan, your real estate accountant

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