Why The Government Wants You To Start Your Own Business

The government wants you to start your own business because small businesses are the fuel that drives our economy. According to the Small Business Administration, there were 27.5 million small businesses in the United States in 2009, providing employment for more than 57 million workers - which is to say roughly half the jobs in the country.

Even more important, small businesses are responsible for creating the lion's share of new jobs in the United States. Throughout the 1990s, they generated between 60% and 80% of new jobs, and over the past 17 years, they have generated 65% of the net new jobs in the United States. The government knows that a business being started today in your garage, kitchen, or even dorm room could be a future Fortune 500 company that someday will employ thousands of people.

How The Government Helps You Become Rich

In order to encourage people to start their own business, the government has created a wide variety of tax breaks for business owners (including independent contractors with direct selling companies).

The most obvious and immediately useful of these are the benefits you get from a self-employed retirement account. When you own your own business, you are allowed to put more money in a pretax retirement account than an employee. A self employed person can save up to $49,000 pretax in a SEP IRA. By contrast, the most an employee under 50 could contribute to a 401(k) is just $16,500.  In other words, if you are self-employed, you can save at least $32,500 more a year tax-free than an employee can. This is a huge difference. (If you're already contributing to a 401(k) or other qualified plan at work, your ability to contribute to a SEP IRA may be limited. Check with your accountant.)