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Hello to all,
The thread title is purposely provocative.
I would like to write a post, maybe long and a little heavy, but that I would, selfishly, become a brainstorming corner on a topic that often divides.
I read the story of @Axe ; beautiful and I want to congratulate him most sincerely.
I also read the thread, opened by Axe, @Change MY MIND - Getting A Job Is Better Than "Fastlane", which generated many comments and many points of view.
I’ve opened this issue before, in response to other threads. But Axe’s post made me think.
I see that all the comments are about one kind of mindset rather than another. Who thinks, like Axe, that finding a job is better than jumping directly to Fastlane and who claims the opposite.
I’ll probably take a good dose of shitstorm, but that’s okay.
I read a lot of stories similar to Axe’s, where from scratch you managed to make a business of five, six, seven, eight figures. And that’s great.
As I wrote in the title, though, Fastlane doesn’t just depend on skills and a good deal of luck. Fastlane also depends on where you were born.
And if you are born in the wrong place, yes, Getting a Job is REALLY BETTER than try to build a Fastlane business.
Let’s talk about data. About figures.
Italy has 3 type of “entrances” in business world.
You have a normal job. Also paid fairly well. Your annual income exceeds 30,000 euros. Then you have to open an ordinary VAT number. And your income from work is added to the revenue you will make with your business.
You have a good idea and open a small ecommerce.
To start, as mentioned, your income from work is 30,000 euros, which becomes cumulative to the turnover. So we go to pay 4,200 euros + 24.48% on the difference (30,000 - 17,504 = 12,496 euros), then 3,059 euros.
Total cost Social Security: 7259 euro.
Total income from the business: ZERO.
Year 2023: taxes eur 7,259
E-commerce brings you a small profit, say 100,000 euros throughout 2023, net of operational expenses for maintaining ecommerce. It is a round figure, which simplifies the calculation.
Let’s assume that, in the last three months of 2023, you paid 10,000 euros of VAT.
And now we have fun.
It starts 2024. And here are the costs:
- Advance VAT year 2024 = eur 8.800. Pay on a turnover assumption. Hypothetical because you have not yet invoiced anything. This is 88% of the amount of VAT paid in the last three months of 2023 (88% of 10.000 euros).
- Social security contributions 2024.
Base calculation eur 130,000 (100,000 business profit + 30,000 eur employee work): 4,200 eur + 24.48% on difference between 130,000 and 17,504, the basis. So 27,539 euros.
2024 Total social security: 4,200 + 27,539 euros = 31,759 euros
IRPEF 2024 tax brackets:
Up to 15.000 eur, tax 23% = 3.450 eur
From 15.000 to 28.000 eur, taxes 25% = 3.250 eur
From 28.000 to 50.000 eur, taxes 35% = 7.700 eur
Over 50.000 eur, taxes 43% = 34.400 eur
Total IRPEF 2024 = 48.800 eur
Total general taxes per year 2024 = eur 8,800 + 31,759 + 48,800 = 89,539 eur
Percentage of paid taxes = 68.88%
Net profit = eur 40.461.
Earnings from employees, as we said = 30.000 eur
Net Business profit = 10.461 eur
To earn 10.461 eur, or 872 euro per month. Sleepless nights, risks, stress. To earn 872 euro per month.
And it’s not just about revenue. With that 40,000 euros, you have to invest to grow the business the following year.
But you also have to pay the bills, the rent or the mortgage. If you have a family, even worse.
If you don’t invest, how long does your "I want to be Fastlane" business become obsolete and fail?
I would like to create a sensible thread, with suggestions from you, on how you would approach such a Behemoth.
The thread title is purposely provocative.
I would like to write a post, maybe long and a little heavy, but that I would, selfishly, become a brainstorming corner on a topic that often divides.
I read the story of @Axe ; beautiful and I want to congratulate him most sincerely.
I also read the thread, opened by Axe, @Change MY MIND - Getting A Job Is Better Than "Fastlane", which generated many comments and many points of view.
I’ve opened this issue before, in response to other threads. But Axe’s post made me think.
I see that all the comments are about one kind of mindset rather than another. Who thinks, like Axe, that finding a job is better than jumping directly to Fastlane and who claims the opposite.
I’ll probably take a good dose of shitstorm, but that’s okay.
I read a lot of stories similar to Axe’s, where from scratch you managed to make a business of five, six, seven, eight figures. And that’s great.
As I wrote in the title, though, Fastlane doesn’t just depend on skills and a good deal of luck. Fastlane also depends on where you were born.
And if you are born in the wrong place, yes, Getting a Job is REALLY BETTER than try to build a Fastlane business.
Let’s talk about data. About figures.
Italy has 3 type of “entrances” in business world.
- If your revenue does not exceed 5000 euros, you can work under “occasional performance” system. It has a lot of restrictions on what you can and you can’t do. Basically, it is made to who want to sell consultancy or to be a freelancer, because you have to pay attention to several things that you usually do not pay attention to (for example, you cannot bill the same customer two times, and you have a cap on how much you can bill to each customer itself). You can issue your bills with your personal tax code ID.
I used occasional performance billing in past. One year, for my own mistake, I billed 6.000 euros in total. Since I overcome 5k, I had to paid 2.500 euro in taxes. And I was forced to quit my copywriter career. Why? Because if I had declared that in the current year I would have had other extra incomes, I would have to pay 4.500 euro: 2.500 in taxes plus 2.000 in fines.
- The “flat-rate” scheme is a facilitation that allows you to pay less taxes than the amount that would be payable by opening a regular VAT account in ordinary regime.
Let’s assume your annual income is 30.000 euro, with flat-tax regime, you will end in pay 9.600 euros in taxes, plus your operating costs and accountant costs, usually around 1.000 per year. And this is a facilitation.
- Ordinary VAT account: where the magic begins.
Despite opening a tax position is free, you have to pay social security contributions. The minimal amount to be paid, even if you do not have any income is 4.200 euros. It means that, only for the idea you have to open the business, you have to pay over 4k, with zero revenue. In simple terms. If you do not have money, your dream of being an entrepreneur can remain a dream.
You have the money. You start. If you exceed 17.504 euros in revenue, you have to add 24,48% on the excess over 17.504 €. Then, you have to add accounting expenses, around 1.000 euros.
You have a normal job. Also paid fairly well. Your annual income exceeds 30,000 euros. Then you have to open an ordinary VAT number. And your income from work is added to the revenue you will make with your business.
You have a good idea and open a small ecommerce.
To start, as mentioned, your income from work is 30,000 euros, which becomes cumulative to the turnover. So we go to pay 4,200 euros + 24.48% on the difference (30,000 - 17,504 = 12,496 euros), then 3,059 euros.
Total cost Social Security: 7259 euro.
Total income from the business: ZERO.
Year 2023: taxes eur 7,259
E-commerce brings you a small profit, say 100,000 euros throughout 2023, net of operational expenses for maintaining ecommerce. It is a round figure, which simplifies the calculation.
Let’s assume that, in the last three months of 2023, you paid 10,000 euros of VAT.
And now we have fun.
It starts 2024. And here are the costs:
- Advance VAT year 2024 = eur 8.800. Pay on a turnover assumption. Hypothetical because you have not yet invoiced anything. This is 88% of the amount of VAT paid in the last three months of 2023 (88% of 10.000 euros).
- Social security contributions 2024.
Base calculation eur 130,000 (100,000 business profit + 30,000 eur employee work): 4,200 eur + 24.48% on difference between 130,000 and 17,504, the basis. So 27,539 euros.
2024 Total social security: 4,200 + 27,539 euros = 31,759 euros
IRPEF 2024 tax brackets:
Up to 15.000 eur, tax 23% = 3.450 eur
From 15.000 to 28.000 eur, taxes 25% = 3.250 eur
From 28.000 to 50.000 eur, taxes 35% = 7.700 eur
Over 50.000 eur, taxes 43% = 34.400 eur
Total IRPEF 2024 = 48.800 eur
Total general taxes per year 2024 = eur 8,800 + 31,759 + 48,800 = 89,539 eur
Percentage of paid taxes = 68.88%
Net profit = eur 40.461.
Earnings from employees, as we said = 30.000 eur
Net Business profit = 10.461 eur
To earn 10.461 eur, or 872 euro per month. Sleepless nights, risks, stress. To earn 872 euro per month.
And it’s not just about revenue. With that 40,000 euros, you have to invest to grow the business the following year.
But you also have to pay the bills, the rent or the mortgage. If you have a family, even worse.
If you don’t invest, how long does your "I want to be Fastlane" business become obsolete and fail?
I would like to create a sensible thread, with suggestions from you, on how you would approach such a Behemoth.
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