I’ve intentionally simplified my income to just keep EVERYTHING simple. I’ve many times thought about starting a business but I just can’t deal with how much bowing to the government I’d have to do to do it. So I remain and always will be, of “average” income because I don’t want to mess with the Kremlin.
The IRS likes to enforce the tax law selectively—if you (or your industry’s professional association) keep your Congress-critter in the lifestyle to which they have become accustomed all will be well.
I have told this story before, but it is worth repeating.
I had a very bright young (at that moment naive) friend who used to work for the IRS. He decided to visit some city halls in his district and pull a random sample of building permits. Building permits include the cost of the construction covered by the permit. He then pulled the tax returns of the contracting businesses and compared the building permits to their IRS returns. He brought the results to his boss and said “if we audit these guys we will collect millions”. His boss checked up the line of command was told—”no audits, don’t go there”.
I don't have three businesses to make more money like you imply. I run the businesses to to avoid paying higher taxes.
I run my businesses my way and pay my taxes. Paying taxes is the only way I "bow to the government" but then you have to pay taxes too so there is no difference between what .
I make approximately $18,000 a year before the losses on my businesses help reduce that for tax reporting purposes. Being self-employed allows you to realize more bang for each buck you make because you can expense things through your businesses before reporting your income to the "Kremlin" as you call it.
I'm not sure what "average" income has to do with it but I'm guessing my $18,000 annual income is less than your "average" income.
And you say you pay taxes every year but I get all of my money back from the IRS every year.
Like I said, running a small business for me is not about making more income, but in reducing the taxes I have to pay the IRS, which allows me to keep what I make.